Tesla stock recovers after a Jefferies analyst visits the factory & takes a test drive


Keeping jittery investors happy is clearly a priority for Tesla after the Model S fire last week, and Elon Musk knows a thing or two about managing investors… well respected Jefferies analyst Elaine Kwei took a tour of the factory, test drove a model S and spoke to investors, after which she voiced her support loud and clear:

“Based on our discussions with investors and opinions expressed by current/prospective owners, it appears the Model S is still considered safer than conventional vehicles, in contrast to media headlines questioning electric-vehicle safety. Risk of a vehicle fire is still far lower in a Tesla”

“…demand remains strong for the Model S and is confident the stock price will quickly rebound from last week´s decline. The company´s track record of innovation and ground-breaking products give us confidence in the execution of future vehicles”

She also boosted her price target on the company’s stock to $210.

Both Elaine Kwei and Elon Musk are mirroring their message on the safety of the car, and referenced “the incredible safety of the company’s vehicles”.

On the Tesla blog, Elon has this to say about the saftey of the Model S vs ICE cars…

“Had a conventional gasoline car encountered the same object on the highway, the result could have been far worse… …the combustion energy of our battery pack is only about 10% of the energy contained in a gasoline tank and is divided into 16 modules with firewalls in between. As a consequence, the effective combustion potential is only about 1% that of the fuel in a comparable gasoline sedan.

The nationwide driving statistics make this very clear: there are 150,000 car fires per year according to the National Fire Protection Association, and Americans drive about 3 trillion miles per year according to the Department of Transportation. That equates to 1 vehicle fire for every 20 million miles driven, compared to 1 fire in over 100 million miles for Tesla. This means you are 5 times more likely to experience a fire in a conventional gasoline car than a Tesla!

For consumers concerned about fire risk, there should be absolutely zero doubt that it is safer to power a car with a battery than a large tank of highly flammable liquid.”

It’s worth having a look at Tesla’s website: they published the correspondence between Tesla service staff and the customer who’s car it was that caught fire. As it happens the owner is also an investor (!), but here’s what he said:

“Thanks for the support. I completely agree with the assessment to date. I guess you can test for everything, but some other celestial bullet comes along and challenges your design. I agree that the car performed very well under such an extreme test. The batteries went through a controlled burn which the internet images really exaggerates. Anyway, I am still a big fan of your car and look forward to getting back into one. Justin offered a white loaner–thanks. I am also an investor and have to say that the response I am observing is really supportive of the future for electric vehicles. I was thinking this was bound to happen, just not to me. But now it is out there and probably gets a sigh of relief as a test and risk issue-this “doomsday” event has now been tested, and the design and engineering works.”

See the Tesla summary of the fire and the correspondence with owner here: www.teslamotors.com/blog/model-s-fire

Jeffries website: www.jefferies.com

News on the stock recovery:

Tesla Motors Inc (TSLA) Rises As Jefferies Say Electric Cars Are Safe – News Walk

Tesla Model S Is ‘Safer Than Conventional Vehicles’: Analyst – Wall Street Journal

Tesla Rises as Jefferies Sees No Long Term Damage from Fire – Barrons

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