Tesla founder Elon Musk knows from success. Musk started and sold Zip2, a web software company, pulling $22 million out of that sale. He rolled that into the company that ultimately brought PayPal to market, got about $175 million in stock when eBay bought PayPal. He used that nest egg to create Space Exploration Technologies (SpaceX) in 2002 and to fund Tesla Motors in 2004. Nothing but hits.
A lot has been written over the past few days about a fire in one of Tesla’s cars. A video of a burning Tesla S went viral, creating a large PR problem for the company.
Elon Musk took the wheel on this, so to speak. He wrote a calm narrative that laid out the facts, as he saw them. If you have any interest in electric cars, take a minute to read Musk’s blog post. Here’s how the accident happened:
Earlier this week, a Model S traveling at highway speed struck a large metal object, causing significant damage to the vehicle. A curved section that fell off a semi-trailer was recovered from the roadway near where the accident occurred and, according to the road crew that was on the scene, appears to be the culprit. The geometry of the object caused a powerful lever action as it went under the car, punching upward and impaling the Model S with a peak force on the order of 25 tons. Only a force of this magnitude would be strong enough to punch a 3 inch diameter hole through the quarter inch armor plate protecting the base of the vehicle.
Clearly, this accident was no fault of the car design.
The Model S owner was nonetheless able to exit the highway as instructed by the onboard alert system, bring the car to a stop and depart the vehicle without injury. A fire caused by the impact began in the front battery module – the battery pack has a total of 16 modules – but was contained to the front section of the car by internal firewalls within the pack. Vents built into the battery pack directed the flames down towards the road and away from the vehicle.
Read the rest of the post. The car is designed with safety in mind. Certainly no more dangerous than any of its gasoline-filled brethren.
So how does the market react? From the linked article:
Tesla’s stock had been on a tear after the company announced its first quarterly net profit and began expanding into Asia and Europe this year. But share prices declined 6.2 percent, to 180.95, the day the video was released, and kept falling the next day. (It closed Friday at $180.98.)
To be fair, if you read the article, there were a number of factors that influenced the market reaction. But I think the timing of that stock plummet rests largely on the release of the video showing the burning Tesla S. The market reacts quickly to news, slowly to reason.
Apple shares a common fate with Tesla in this regard. Some of the news that impacts Apple’s stock price appears made up of whole cloth, based purely on an analyst’s misunderstanding of market forces. That is unfortunate. Personally, I want people like Elon Musk, Tim Cook, Jony Ive, and Craig Federighi to worry less about analysts and spend their time making great products.