SEATTLE _ A fire that destroyed a Tesla Motors Inc. (NASDAQ: TSLA
, Stock Forum
) electric car near Seattle began in the vehicle's battery pack, officials said Wednesday, creating challenges for firefighters who tried to put out the flames.
Company spokeswoman Liz Jarvis-Shean said the fire Tuesday was caused by a large metallic object that directly hit one of the battery pack's modules in the pricey Model S. The fire was contained to a small section at the front of the vehicle, she said, and no one was injured.
Shares of Tesla Motors Inc. fell more than 6 per cent Wednesday after an Internet video showed flames spewing from the vehicle, which Tesla has touted as the safest car in America.
The liquid-cooled 85 kilowatt-hour battery in the Tesla Model S is mounted below the passenger compartment floor and uses lithium-ion chemistry similar to the batteries in laptop computers and mobile phones. Investors and companies have been particularly sensitive to the batteries' fire risks, especially given issues in recent years involving the Chevrolet Volt plug-in hybrid car and Boeing's new 787 plane.
In an incident report released under Washington state's public records law, firefighters wrote that they appeared to have Tuesday's fire under control, but the flames reignited. Crews found that water seemed to intensify the fire, so they began using a dry chemical extinguisher.
Shares of Palo Alto, Calif.-based Tesla have risen more than 400 per cent this year. But some investors likely were alarmed that the fire could be an indication of a flaw in the company's battery packs, and Tesla shares fell $12.05 to $180.95 Wednesday.
The stock was down another 6.1% to $169.99 in early trading Thursday, leaving Tesla with a market cap of $20.8 billion, based on 121.4 million shares outstanding. The 52-week range is $194.5 and $26.86.
Also contributing to the stock's decline was a rare analyst downgrade. R.W. Baird analyst Ben Kallo cut his rating on the stock from ``Outperform'' to ``Neutral,'' telling investors that while he's still bullish on Tesla's long-term prospects, the company has ``significant milestones'' during the next 18 months that come with risk.
The company's battery system and the Model S itself have received rave reviews, including a top crash-test score from the National Highway Traffic Safety Administration and a tie for the highest auto rating ever recorded by Consumer Reports magazine.