German regulators cleared Tesla Motors Inc (NASDAQ:TSLA) in their investigating related to the Model S Fires. Investigators concluded their investigation with a statement that “no manufacturer-related defects could be found.” The stock price of the electric car manufacturer climbed more than 16% to $144.70 per share after the good news.
Tesla Motors Inc (NASDAQ:TSLA) suffered a 20% decline last month after three Model S vehicles were caught into fire in a span of six weeks. Investors became worried that the flagship electric car might have bigger problem, and the incidents could led to a recall. The drivers of the Model S vehicles involved in the accidents were safe.
The National Highway Traffic Safety Administration (NHTSA) is currently examining the “potential risks associated with undercarriage strikes” in the Model S vehicles involved in the accidents that happened in the United States. The electric car manufacturer requested the agency to conduct full investigation regarding the fire incidents. In its statement regarding its preliminary investigation, the agency gave credit to Tesla Motors Inc (NASDAQ:TSLA) for integrating audible and visible warnings in the Model S vehicles. The drivers had plenty of time to pull over and exit from their vehicles safely before the fire broke out.
Tesla CEO Elon Musk emphasized that the primary concern of the company is the safety of its customers and their families. According to him, there is a zero percent chance for the driver and passengers to get hurt in a Model S based on the record of the vehicle. He noted that the NHTSA awarded the Model S with a 5-star safety rating in August.
Prior the Model S fire incidents, the stock price of Tesla Motors Inc (NASDAQ:TSLA) surged 470% this year. Investors became bullish on the stock after the company reported its first quarterly profit and increased the production of the Model S to meet the growing demand for the vehicle. Some analysts issued a warning on the stock citing that it is overvalued. Musk previously acknowledged that the company was given a higher valuation than it deserves.
Meanwhile, Morgan Stanley analyst Adam Jones wrote a positive conviction regarding the shares of Tesla Motors Inc (NASDAQ:TSLA). According to him, the negative news regarding the Model S fire is clearly disruptive to the momentum of the stock, but it will not cause material damage to the business of the electric car manufacturer. Jones has a $153 price target for the stock.
