Shares of Tesla Motors Inc (NASDAQ:TSLA) took a very brief pause in their rise last week after photos and a video of a fiery Model S accident. It seems clear that the company’s reputation hasn’t been damaged much by that accident. Investors and drivers both still see the vehicle as being safer than cars with traditional internal combustion engines.
Tesla retains reputation for safety
Jefferies analyst Elaine Kwei issued a report to investors after discussing the Model S accident with investors and current or prospective Model S owners. She reports that most of the people they spoke with consider the vehicle to be one of the safest vehicles on the road.
The fire in the Model S last week happened after the vehicle ran over a metal object in the road which punctured the battery. As soon as the vehicle detected that something had happened it ran some checks and warned the driver that something was wrong and told him to get out of the vehicle. After he exited the vehicle, the fire started.
Tesla’s cars have a low risk for fires
Tesla Motors Inc (NASDAQ:TSLA) CEO Elon Musk allayed the fears of investors and drivers on Friday by explaining what happened. He also said the probability of a vehicle fire in a conventional vehicle is five times greater than in one of Tesla’s vehicles.
It is believed that firefighters at the scene of the wreck accidentally spread the fire by spraying water on it, which causes lithium ion fires to burn larger. Tesla does not think the National Highway Traffic Safety Administration will investigate the accident and isn’t planning on changing the design of the Model S. The fact that the owner of the wrecked Model S said he wants to buy another one stands as a testament to the vehicle’s safety in spite of the fire.
Tesla estimates raised
Kwei said she increased her third quarter delivery estimates for Tesla Motors Inc (NASDAQ:TSLA) from 5,250 to 5,500 units based on the vehicle identification numbers which have been reported, plus deliveries in Europe and higher production rates. She notes that just in Norway, Tesla delivered 616 units in September, plus 185 units in August. According to Kwei, assigned VIN numbers have reached the 22,000 mark, which suggests production even as high as 6,000 to 6,500 units during the third quarter after subtracting estimated cumulative production through the second quarter.
She continues to rate Tesla Motors Inc (NASDAQ:TSLA) as a Buy and has increased her price target from $160 a share to $210 a share. She said the company’s “track record of innovation and groundbreaking products” gives them confidence that the company will be able to execute future vehicles.
As of this writing, shares of Tesla were down 2 percent.
Do you know which under-the-radar stocks the top hedge funds and institutional investors are investing in right now? Click here to find out.