Model S fire video adds to Tesla woes pre-results
* Video shows Model S emitting smoke, bursting into flames
* Tesla says no one was hurt in the incident
* Incident comes as Tesla is trying to drive sales in China
* Shares fall 4 percent
(Recasts; adds analyst quotes, updates share price)
By Brenda Goh and Yilei Sun
SHANGHAI, April 22 (Reuters) - Video of a parked Tesla Inc
Model S exploding and a Wall Street downgrade of the
electric carmaker's stock pushed shares down 4 percent on
Monday, as it prepared to issue results for a troubled first
Brokerage Evercore cut its recommendation on shares of the
Silicon Valley company to "sell", becoming the twelfth brokerage
to ask investors to abandon billionaire Elon Musk's venture and
raising bearish sentiment to its highest ever.
Musk and Tesla have faced a range of challenges over the
past year as one of the leaders in electric vehicle technology
sought to ramp up production, deliveries and sales of the Model
3 sedan seen as crucial to its long-term profitability.
The company, which is struggling with deliveries of its
higher-priced Model S and X luxury cars, said it has sent a team
to investigate the video on Chinese social media apparently
showing the latest in a string of fires involving its cars.
The video, time stamped Sunday evening and widely shared on
China's Twitter-like Weibo, shows the parked vehicle emitting
smoke and bursting into flames seconds later.
A video purportedly of the aftermath showed a line of three
cars completely destroyed.
Reuters was not immediately able to verify the origins of
the video, which Weibo users said was taken in Shanghai.
The cause of the explosion could not be immediately
ascertained from the videos.
"We immediately sent a team onsite and we're supporting
local authorities to establish the facts. From what we know now,
no one was harmed," Tesla said in a statement.
It declined to comment further when contacted by Reuters.
There have been at least 14 instances of Tesla cars catching
fire since 2013, with the majority occurring after a crash.
"The car fire is just another data point of continued
difficulties," Roth Capital analyst Craig Irwin wrote in an
email. "Not a lot of good news for Tesla these days."
Tesla will report its first-quarter results on Wednesday and
had flagged in February that it expects to post a loss as it
launched a cheaper $35,000 Model 3 sedan.
"We remain encouraged by Tesla's vision and future growth
prospects, but there is increased uncertainty around near-term
demand versus previous bullish forecasts and growth cannot stall
for a growth company," Evercore analysts wrote in their note
downgrading the shares.
The change meant 38.7 percent of analysts now have a sell
rating on Tesla, topping the previous record of 36.8 percent in
REPUTATION IN CHINA
The latest fire incident comes as Tesla tries to push sales
in China, where its prices were impacted by tit-for-tat tariffs
imposed during Sino-U.S. trade tensions last year.
The automaker currently imports all the cars it sells in
China, but is building a factory in Shanghai that will initially
make its Model 3 and help reduce the hit of a trade war.
In March, Tesla was also on the receiving end of a labelling
mix-up at Shanghai customs that led to a temporary suspension of
clearance for a batch of Model 3 cars.
Analysts said the latest fire incident would likely increase
attention on the safety of EVs, but was unlikely to have a
significant impact on Tesla's sales or reputation in China while
the cause was being investigated.
"Tesla had fire incidents before, but they didn't have a big
impact on its reputation in China," said analyst Alan Kang at
"Since its consumer base is not particularly conservative,
and China is pushing the electric vehicle market, if this
incident is just accidental, it will not have a big impact on
Tesla," he said.
"Tesla self-ignites" was one of the most popular hashtags on
Weibo on Monday, racking up over 20 million clicks. Some users
urged the automaker to quickly find the cause, whereas others
speculated over the impact to the value of Tesla cars currently
on the road. Still more found humour in the situation.
"One lesson I learnt from the Shanghai self-exploding Tesla:
Don't park your car next to a Tesla," said one commentator.
The company is expected to host an Autonomy Day later at its
headquarters in Palo Alto, focusing on its autonomous driving
In a separate, unrelated incident, Tesla's rival in China,
Nio, said in a social media post that an ES8 electric
sport utility vehicle caught fire on Monday in a Nio service
centre in the central city of Xian while under repair.
"Nio has launched an investigation to determine the cause of
the fire," Nio said, adding no one was harmed due to the
(Reporting by Brenda Goh and Yilei Sun in Shanghai, Akanksha
Rana in Bengaluru; Editing by Christopher Cushing, Himani Sarkar
and Bernard Orr)
First Published: 2019-04-22 03:02:19
Updated 2019-04-22 18:33:48
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