Tesla is a Buy

Last week, Paul Walker got killed in a shocking car accident. I am a fan of the the “Fast and Furious” series, and admire Paul's work. His death is unbelievable. It was reported that the fire, which engulfed his Porsche, started within a minute after the crash. That reminded me of Elon Musk's arguments around the Tesla Model S fires.

Recently, Tesla stock (NASDAQ:TSLA) has taken a beating. It's crashed 40% within two months from an all time high of $194.50. Before the crash, Tesla was a darling of investors in 2013 rising all the way from low 30s. But in recent times, 3 Model S cars caught fire. Subsequently, the safety agencies opened an enquiry to examine whether the vehicle design, and specifically the advanced lithium-ion battery pack, are defective and the cause of the fires.

Elon Musk wrote a blog post in response. His core arguments highlighted the safety design features of Tesla.

1. The Model S owner got warned by the onboard alert system. So, the owner was able to stop the car and depart the vehicle without injury. How cool is that!
2. The fire in the battery was contained to a small section near the front by the "internal firewalls" built into the pack structure. At no point did the fire enter the passenger compartment.
3. A typical gasoline car only has a thin metal sheet protecting the under body, leaving it vulnerable to destruction of the fuel supply lines or fuel tank, which causes a pool of gasoline to form and often burn the entire car to the ground. That is probably what happened to Paul's car.

I think the safety agencies are going to clear the car's design and maintain the 5 star crash rating it earned earlier this year. In fact, Germany recently did so. Further, as a precaution, Tesla recently sent an over-the-air software update to all the Model S cars to automatically raise the ground clearance. Talk about design! I think Tesla is going to be the Apple of Cars. None of the existing companies stand a chance. Buy the car. If the price is too high, buy the stock. And unlike me, if you did not miss making millions in bitcoins, you can buy Tesla using bitcoins too. Oh boy, the bitcoin story is for another post.

Disclaimer:- I don't own either and I am accepting gifts.