Tesla CEO and futurist Elon Musk on Tuesday condemned the media coverage of three accidents that set fire to the company's Model S car as "extremely unreasonable," defending the safety of the vehicle after news of the accidents caused the company's high-flying stock to plunge.
Tesla's stock has boomed since going public in June 2010, when it was priced at $17. The stock closed at $137.8 on Tuesday. News of the fires caused Tesla stock to drop approximately 22 percent since Nov. 5, when it closed at $176.81.
"I don't believe in talking up the stock," Musk said, acknowledging he is wary of high investor expectations. "I think the stock is a good deal where it is right now."
The electric Model S is "as safe as any car" Musk said during the New York Times Dealbook Conference on Tuesday, alluding to its high safety rankings from Consumer Reports Online and the National Highway Traffic Safety Administration.
"The headlines are extremely misleading," Musk said about reports of the three accidents that caused the electric car to catch fire, the first of which occurred on Oct. 1. When Musk referred to reports from the National Fire Protection Association that in 2010 there were 184,500 vehicle fires recorded in the U.S., he said, "How many times have you read about that?"
Tesla has reported selling approximately 18,000 Model S cars since launching the car in 2008 and plans to build approximately 20,000 new Model S cars in 2013.
When asked whether a regulator has contacted him about the car fires and what, if any, changes there might be to the flagship Model S electric car, Musk said he was "a perfectionist" when it comes to safety, and said there have been no serious injuries in any Tesla cars.
A spokesperson for the NHTSA, who declined to be identified by name, forwarded an official agency statement about the car fires.
Tesla's stock price has boomed since going public in June 2010, closing at $137.8 on Tuesday, despite dropping 22 percent since Nov. 5 after incidents where the company's electric Model S cars caught on fire. (Justin Sullivan/Getty Images)
"NHTSA is in close communication with Tesla and local authorities gathering information about the incident to determine if additional action is necessary," the statement said.
Tesla may decide to take greater steps to protect the Model S battery pack, which is located under the passenger compartment and protected by a metal shield, but it likely does not need to fear regulation, says Thilo Koslowski, an analyst on the automotive industry for Gartner technology research firm. It's too early to say whether the fires are a frequent problem with the cars or what caused them, Koslowski adds.
The NHTSA investigated fires in 2011 that occurred with the Chevrolet Volt before an investigation determined the car did not pose any unusual risk of fire, so regulators may come to the same conclusion with Tesla, Koslowski predicts.
"I would not be afraid of the investigation," Koslowski says.
Serial entrepreneur Musk made his fortune as a co-founder of PayPal, which was acquired by e-commerce giant eBay in 2002. Musk used his profits from the sale to fund rocket ship company Space Exploration Technologies in 2002. Musk founded Tesla in 2003 and solar energy company Solar City in 2006.
The car fires are not as big a story as they seem, says Max Wolff, chief economist at ZT Wealth investment firm, but they are a problem for the company's public perception, he adds. Wall Street "has a crush" on the company and the stock is "ridiculously overvalued," despite the merits of the company, Wolff says.
"Tesla is a good company with a good product. But Tesla stock is priced as though it is going to take over the automotive industry, and it's not going to," Wolff says. "Tesla is showing there is a demand for these vehicles. They are going to be in pole position on that for the near future. Other boutique makers are going to enter the market. Not so boutique car makers are also going to expand into the electric market, like Ford."