Tesla Motors Inc (NASDAQ:TSLA)’s stock price seemed like it was finally coming down to earth (even CEO Elon Musk thought it was too high), but a spike on Tuesday may be proof that the recent dip wasn’t just a round of profit taking like the rest of the market has recently experienced. The rally came just as a German report that the Tesla Motors Inc (NASDAQ:TSLA) Model S is perfectly safe was released, implying that investors may have been more concerned about the spate of car fires than originally thought, reports Tim Parker for Benzinga.
Tesla fires actually proof of safety, say regulators
Auto fires probably aren’t as rare as people imagine, especially after hitting something in the road or having an accident as was the case in all three Model S fires, but the US National Highway Traffic Safety Administration is investigating the car’s design to see if there is an underlying fault that is putting people at risk. No one has been hurt so far, but if the car is more likely to catch fire when there is a serious accident and the driver can’t get out, it would be putting people in serious danger.
But the NHTSA investigation isn’t alleging that this is the case. Regulators went out of their way to say that the Tesla Model S protected its drivers very well when they launched the probe, so it seems that they are checking things out just to be safe, not because they expect to find a problem.
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Tesla Motors’s stock is now down 25%
Musk has said that he’s confident there’s nothing wrong with the car, and that there’s no need for a recall because the three fires are just coincidence. Now it seems that German regulators agree with him. The NHTSA hasn’t finished its own review, but this is still good news for the company. If the NHTSA does come back with a clean bill of health, you can expect a nice bump in stock price then as well. Tesla Motors Inc (NASDAQ:TSLA)’s stock is now down 25% from its $193 high, but still up more than 300% for the year based on positive earnings and a major re-rating now that investors believe in the company’s business model.