Tesla Motors shares continued to fall Thursday as the automaker confirmed a third fire in one of its high-end electric cars and a major auto reviewer pointed out problems with its Model S luxury hatchback.
The 9%, or $13.40, decline in mid-morning trading to $137.76 followed a 15% plunge in the shares Wednesday after the automaker said limited supplies of batteries were hampering sales and that it was spending heavily on research and development to design new models. Tesla shares have been on a run for most of the year, rising about 400% before this reversal.
Car shopping website Edmunds.com said its 2013 Model S was "making an ominous noise under acceleration and deceleration. It originates from the rear of the car and seems to be getting worse."
It is a complaint that's also starting to show up on Tesla's owners forum, an online discussion group hosted by the automaker for drivers of its cars.
"Mine had that and it got bad at 70 mph," said one owner, posting under the "mortgagebruce" moniker.
He said Tesla had to replace the drive unit twice to fix the problem.
Tesla also replaced the drive unit on the Edmunds car, but declined to tell the company what caused the problem. It also replaced the driver door mechanism because of another problem. The car has just less than 11,000 miles on the road.
"We're not sure what to think about the fact that both of these repairs were completed with just one overnight stay," said Mike Schmidt, Edmunds' vehicle testing manager. "Maybe the dealer is really on the ball. Maybe the supply chain is short. Or maybe the parts are readily available because they've seen these before."
Tesla spokeswoman Liz Jarvis Shean said she was not familiar with the Edmunds complaint.
Meanwhile, another Model S electric car caught fire Wednesday near Smyrna, Tenn., following a crash. This was the third Model S to have caught fire in the last five weeks. One burned near Seattle and another in Mexico. Both cars were in crashes and the fires injured no one.
Normally, car fires are not significant events that influence investors. There are about 150,000 annually, according to the National Fire Protection Assn. However, safety officials have been tracking fires in electric cars, as well as computers and other equipment, out of concern that the lithium-ion battery systems might be fire-prone.
Earlier this year, federal regulators grounded Boeing 787 planes for four months after batteries on two planes overheated, with one catching on fire. Boeing later ordered modifications to the jets to increase ventilation and insulation near the batteries, but the company and investigators never determined the root cause of the overheating.
The National Highway Traffic Safety Administration reviewed the Tesla fire in Seattle and concluded it was caused by the accident rather than a vehicle defect.
Tesla said it contacted the driver of the car in Tennessee and noted he was not injured and "believes the car saved his life. Our team is on its way to Tennessee to learn more about what happened in the accident."
"The problem is that we have three fires in six weeks," said Karl Brauer, senior analyst at Kelley Blue Book, the car information company. "For a company with a stock price based as much or more on image than financials, those recurring headlines are highly damaging."
The Palo Alto automaker said Tuesday it posted a loss of $38.5 million, or 32 cents per share, in the third quarter. That compares to a loss of $110.8 million, or $1.05 per share, in the same period a year earlier. Now that it is delivering cars, revenue grew to $431 million from just $50.1 million a year earlier.