Some thoughts on the Tesla Model S fire sagaS

What happens when you take a 4,000lb man-made container filled with potential energy, propel it at 110 feet-per-second and put Earth’s biggest fool, man, in the driver’s seat? Disaster. One way or another, this always ends in some form of disaster.

The objective of regulatory safety standards is to reduce the risk of injury and death. In other words prevent disaster.

To date, there appear to be three incidents involving a Model S fire. All three incidents involved some form of accident meaning that none of the cars decided to fireball while sitting parked.

Two of the accidents share striking (pun intended) similarities: striking large pieces of metallic road debris at highway speed. In none of these accidents were injuries reported. And as Michael pointed out this morning, buyers seem overjoyed to get back into one of Musk's luxury EVs.

The media, and special interests groups, appear to have concluded two things:

1. NHTSA needs to investigate the Tesla Model S fires

2. Tesla’s stock is sinking because of said fires

A Hot Investment

Tesla has won over buyers and investors. Owners love Tesla’s products and investors their stock.

I’ll quickly take up the stock topic as I’m oblivious on the notion of how business works, let alone speculative investing. My venture know-how is limited to a $500 day-trading game I played in college.

I have no idea what non-GAAP net income or convertible debt is, but looking at this historical graph of Tesla’s stock price, I find myself asking how a hockey stick curve such as this can be sustainable for such a young and untested company.

Is Tesla’s stock slipping because fires are making investors wary of the product safety or has the fire burned off the glittery sparkle leaving less-attractive things like long term cash flows and losses? Are the flames a finger-snap back to reality for those tanked-up on Tony Spark-iritas? Maybe the stock is self-correcting and isn’t a direct result of three fires. Then again where is the fun and link bait in an article titled, “Tesla’s stock self corrects after period of market speculation.”

Safety & NHTSA

As most of you know, and has been reported, the Model S went through all the required tests that every other automaker is required to participate in and scored very well (amazing, spectacular, better-than-any-other-car-EVER, etc.).

Those tests (see above) include various barrier impact tests and a rollover (car-on-a-rotisserie) examination.

After an EV has gone through the impact tests that simulate typical road-going accidents it is required to adhere to Federal Motor Vehicle Safety Standard (FMVSS) 305 - Electrolyte Spillage.

“FMVSS No. 305 specifies performance requirements for limitation of electrolyte spillage, retention of propulsion batteries, and electrical isolation of the chassis from the high-voltage system during the crash event. This standard applies to vehicles that use electricity as propulsion power.”

This is where things get interesting.

As far as I can tell NHTSA doesn't have a "large piece of metal in the road" testing requirement. The standard for battery survival is based on the battery's condition after the tests administered to every light duty vehicle (described above).

As you can see from the pictures above, the armor plating that protects the Model S’ battery packs was barely impacted by traditional impact testing. The report also indicated there was no battery leakage.

But the armor plating isn’t tested against direct impact. The car isn't flipped over and stabbed with a metal pipe moving at highway speed. While the fire in both cases was likely caused by thermal runaway, a chemical reaction in a battery leading to fire, the catalyst for that runaway could have been a short circuit. Meaning the batteries aren't to blame, but rather the vulnerability of the armor protecting them.

That raises the question - should there be a standard for hazardous debris and floorboard protrusion in EVs? If the fuel source has moved from the rear of the vehicle to beneath the vehicle should the government consider a new stress test that focuses on direct impact of the underbody?

NOTE: I couldn’t find any testing or standard that addresses underbody or hazardous road debris.

Controlling thermal runaway is good, preventing it is better.

While doing a bit of research last night I came across a patent filed in March and published November, 5 by Tesla regarding the subject of batteries and thermal runaway.

The patent titled, “"Hazard Mitigation within a Battery Pack Using Metal Air Cells,” deals with how to expend the buildup of gas in a thermal runaway to lower “the risk of collateral damage.”

What the patent doesn’t speak to is the penetration vulnerabilities of the armor plate protecting the batteries. Ensuring the batteries can vent during a thermal runaway is good, but preventing a thermal incident, say a short circuit caused by a trailer hitch would be an evenwiser investment.

Seeing that the plate that protects the battery is an easily accessible component and wouldn’t likely require a large investment to re-engineer or strengthen, I imagine Tesla is exploring options to upgrade, reinforce or redesign the armor to withstand a stronger direct impact.

Another thing to consider is that any change to the batter plate might also impact the planned battery-swapping option.

What does this mean for Tesla, EVs, America? (OK, maybe not America)

If Tesla addresses the issue head on, or at the least publicly states their case why this isn’t an issue, they’ll get through this without too much pain.

With new technology comes new issues (i.e. could ride height from the first performance EV contributed to a risk in hitting things on the road?).

While I encourage the regulatory body to follow these issues, I hope they’ll be cautious to ensure that any action they take isn't seen as an unfounded risk.

If there is a risk associated with having a fuel source under a vehicle, perhaps NHTSA should consider a hazardous debris tests for EVs?

Until we have more information, we can conclude that Tesla's are safe, the company's stock is (likely) overvalued and NHTSA will, eventually, do something.