Tesla Motors Co (TSLA) stocks slumped 6 per cent or $3 billion after photos posted by an automotive blog showing the company's burning Model S electric sedan went viral. According to reports, the Tesla vehicle burst into flames after an accident in Seattle, Washington.
Jalopnik, the automotive blog, posted a video and several photos of Tesla's Model S on fire. Tesla has confirmed that the images shown in the blog were genuine. The electric car company explained that the vehicle caught fire after colliding with a large metallic object. The car's front end reportedly sustained extensive damage.
After the video and pictures went viral, Tesla stocks dropped 6.2 per cent at $180.95 on the Nasdaq. It was the biggest stock price decline for Elon Musk's Tesla since the middle of July 2013.
It was not clear whether or not the lithium-ion battery of the Model S was heavily damaged. Firefighters who arrived at the scene found it difficult to put out the flames. Washington State Patrol spokesperson Chris Webb said it was also challenging to determine the extent of impact the metallic object had on the car due to the fire.
According to the driver of the Model S, he ran over metal debris while driving along State Route 167 in Kent, a city in Seattle. Mr Webb said the driver smelled something burning. The car burst into flames shortly after.
Tesla's Model S and other electric cars are running on lithium-ion battery packs. The technology is considered relatively new in the automotive industry. Battery experts said although electric car batteries carry more power than the conventional lead-acid batteries, lithium-ion batteries also have a bigger risk to safety.
Tesla is currently investigating the incident to determine the cause of the problem. The company is selling the Model S for now but a new vehicle, the Model X, is expected in the future.
Meanwhile, Ben Kallo, an analyst from Robert W. Baird & Co, has downgraded Tesla Motors Co (TSLA) stocks from "outperform" to "neutral."
Before the Model S incident, Tesla shares enjoyed a 400 per cent rise due to the successful market launch of the Model S. However, some analysts think that Tesla shares are over-valued. Shares are currently valued at $23 billion.