Tesla Sales Up, Despite Stock Price Burned by Second Fire

Another Tesla caught fire but sales are up.  The Motley Fool did a nice piece on this recently.  I don’t know why the stock is down, probably because stock prices tend to have short term responses to media hype.  And the media has been creating the perception that  that Tesla has a problem.  And a relatively small percentage of shares have a lot of leverage on how a stock price moves.

But why would an informed buyer purchase a car that is always catching fire?  Good question.  Most cars are powered by an extremely energy dense, highly combustible liquid fuel.  And as I pointed out in an earlier post, over 190,000 of these catch fire in the US every year.  So maybe the reason an informed buyer would go with a Tesla is because it is MUCH safer than a typical gasoline powered car.  And it is already widely known that Tesla is one of the most crash safe cars ever built. 

I think Bloomberg got it right when they quoted a Tesla spokeswoman saying, about the second fire:

“We were able to contact the driver quickly and are pleased that he is safe,” Jarvis-Shean said yesterday in an e-mailed statement. “This was a significant accident where the car was traveling at such a high speed that it smashed through a concrete wall and then hit a large tree, yet the driver walked away from the car with no permanent injury.”

And they followed up with this comment about the first fire:

“The National Highway Traffic Safety Administration said last week it found no evidence that a Model S fire on a Washington state highway this month resulted from defects or violations of U.S. safety standards. In that Oct. 1 incident, the car struck metal debris that pierced its lithium-ion battery pack, according to state officials and Tesla.”

So the emerging story is that the Tesla is a very safe car.  Most who follow the Tesla story already are well aware of the the crash tests.  Now real world examples of the efficacy of the crash protection are emerging.  And as the smoke clears, we are learning of the extensive design efforts that have gone into minimizing fire risk.

As news comes out, the fire risk inherent in a Tesla is turning out to be a red herring.  Yes it is good to know that lithium batteries can burn up.  And I suppose if gasoline were inert one could ask whether this is an unacceptable hazard.  However gasoline is highly flammable.  And I have seen no evidence to suggest that lithium ion batteries present any more of a hazard than gasoline.  In fact, Tesla makes a very convincing case that the batteries are far less hazzardous than gasoline, particularly when protected, as they are in the Tesla.

There is another sub-theme emerging.  And that is that Tesla cares.  People in the executive offices are personally contacting those that have had these experiences.  They appear to care about their customers and they clearly care about gaining an understanding of what is happening to their cars and why.  This will undoubtedly have long term positive impacts for the company.  The cynical might say that it is all marketing and PR, well then lets see GM match it.  Lets see people from the GM executive office and executives from Toyota’s executive offices reach out to individuals.  They apparently cannot even be bothered to do it for publicity.  So Tesla still is head and shoulders above, even if this is a publicity stunt.  And I don’t think it is.  I think Tesla is a mission driven company.  They are multi-bottom line company that strives to serve all of their stakeholders.

Years ago, in his best selling book In Search of Excellence, Tom Peters, identified this as a trait of Americas most successful companies.  That is, he pointed out that the most successful companies did not view themselves as serving only their stockholders.  They also view their employees as stakeholders and their customers as stake holders.  All are part of the family, and are recognized as worthy of the company’s efforts at service.

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