Tesla Shares Plunge Amidst Federal Probes, Credit Downgrade
Two US federal agencies have sent teams to investigate a fatal California highway crash and the vehicle fire that followed
Shares in electric car maker Tesla dipped sharply for a second day on Wednesday amidst a pair of federal investigations into a fatal crash last week, a credit downgrade by Moody’s Investors Service and concerns about production of the Model 3 four-door sedan.
The firm’s shares dropped 9 percent before rising again to trade about 6.5 percent lower than their opening price. The drop follows a similar plunge on Tuesday, when shares fell by 8.2 percent to their lowest level in almost a year.
Tuesday’s drop came after the National Transportation Safety Board (NTSB) said it was sending field agents to investigate a crash and vehicle fire that took place in California last Friday.
On Wednesday, the National Highway Transportation Safety Administration (NHTSA) said it was also sending a team to the site.
Fatal crash
The accident involved a Tesla vehicle striking a highway median. The highway was closed for six hours afterward because fire officials believed the car’s battery might explode, according to local reports. The 38-year-old driver later died in hospital of his injuries.
It wasn’t clear whether Tesla’s Autopilot control system was activated when the accident took place, and Tesla said it hasn’t yet determined whether that was the case. Tesla has said its vehicles have traversed the same stretch of highway with Autopilot engaged “roughly 85,000 times… and there has never been an accident that we know of”.
Tesla has also said a protective barrier that should have been in place around the median had been removed or had not been replaced following a previous accident, adding to the force of the crash.
Credit downgrade
Adding to the firm’s woes, Moody’s late on Tuesday downgraded Tesla’s credit rating to B3 from B2, citing a shortfall in the production rate of the Model 3 and liquidity pressures due to Tesla’s “large negative free cash flow”.
Tesla declined to comment on the downgrade. It’s planning to provide an update on Model 3 production next week.
The firm’s share prices have undergone large changes in the past as investors alternate between concern about its finances and confidence in founder Elon Musk’s ambitions for a future free of fossil fuels.
The company posted its largest-ever quarterly loss at the end of calendar year 2017.
On Tuesday, shares in Nvidia showed an 8 percent loss of their own after the company said it would suspend trials using its self-driving car technology in California, New Jersey, Japan and Germany.
The move followed a fatal crash involving an Uber self-driving car that was being tested in Arizona. Following the accident, in which a pedestrian was killed, Uber temporarily halted its trials across the US.
On Tuesday Uber it indefinitely suspended testing in California, according to the state’s department of motor vehicles. Uber uses Nvidia’s technology.
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