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Elon Musk and Tesla under fire after latest mishap

Co-Founder and Head of Product Design at Tesla Motors Elon Musk

Last week a Tennessee man's car caught fire and was destroyed after he ran over a metal trailer hitch. There are about 150,000 vehicle fires in this country every year, but this one made national headlines because it was a Tesla. This is the third Tesla to catch on fire. Within three days the company's stock was down 22 percent.

For a company so focused on a single product, even just a few fires can have a huge impact. But no other car company has Elon Musk at the helm.

When the New York Times came out with an unfavorable review of the Model S, Tesla's CEO accused the author of ethics violations, "which is sort of hilarious and also very Nixonian," says jalopnik.com editor in chief Matt Hardigree. He wrote an article that compared Musk to the famously paranoid president, saying, "both Elon Musk and Richard Nixon had great Visions for the future."

It's that vision of the future that lots of people credit as the reason for Tesla's success, which at the moment is built around a single product, the Model S electric car. "Whether that's Ford and Henry's model T or Volkswagen and Dr. Porsche's Beetle, all the world's largest car manufacturers started with one," says analyst Eric Noble.

But with Tesla it's a little different. What's different, says Noble, is "there is a very strong argument that the cost of producing Model S is well above the transaction price for the vehicle."

In other words, the company loses money on Model S. As a result, Tesla more than any other car company, relies on investor goodwill and high share prices to stay afloat. Those are things that can be influenced by a charismatic, visionary leader who's great at generating buzz. But there are limits to that charisma.

When the company's defining product burst into flames not once, but three times, the National Highway Traffic Safety Administration started considering an investigation. All three incidents were the result of punctured batteries and not product malfunctions, but nonetheless, investors are starting to worry.

About the author

David Weinberg is a general assignment reporter at Marketplace.
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" ...The company's defining product burst into flames not once, but three times"

This is very misleading. Much UNlike the Volt, the Fisker karma, or even the Boeing, the Model S did not "burst into flames". It was ripped apart in the first, hit a cement wall (then a tree) at 90 MPH in the second, and hit a tow hitch in the third. We can debate the exact proclivity for the car to catch fire, but Marketplace and Mr Weinberg should clarify this statement. Having the car spontaneously burst into flames is the greatest concern potential buyers have, and this has never happened, neither with the Model S, nor the Roadster years before it. Saying the car "burst into flames not once, but three times" is, itself, incendiary. Marketplace's audience and Tesla's marketplace overlap significantly, and Marketplace should retract/clarify that statement. Disclosure: Model S owner, 23,000 perfect miles.

Really? Even Marketplace sensationalizes and misconstrues these events as "...bursts into flames". Unlike gas cars that DO burst into flames, the Model S's notified the driver of a problem (and notified Tesla), and allowed them ample time to drive safely to a stop and exit. Only after all that time did the car begin to smolder, eventually starting a fire. No one was injured, the flames never even made it into the passenger compartment, and each driver wants another Model S! Of course they do. They feel safe in it because they are. These events are success stories, not Chicken Little fodder for sensational Journalism. Shame on you.

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