Tesla's So Hot That It's Covering Car Fires Now

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It may have been just three isolated fires, but Tesla Motors isn't taking any chances. Facing an investigation that may tarnish its reputation more than its finances, the fast-growing maker of electric cars is moving to include coverage of fires in its warranty.

CEO Elon Musk -- one of the more colorful people to follow on Twitter -- tweeted about his company's new change this afternoon:

It's a smart move by Tesla. The company whose website was proudly proclaiming the Model S as the safest car in the country now has an image to spruce up.Even if it seems as if the three incidents had little to do with Tesla and could have been far worse for traditional cars packing fuel for their internal combustion engines, it's clear that one of this year's hottest stocks has cooled off dramatically in recent weeks. 

Tesla shares soared 471% through the first three quarters of 2013, but the chart now shows a 37% dive this quarter through yesterday's close. However, even after this quarter's sharp dive, Tesla still hasn't given up the gains posted during the third quarter alone. 

Tesla's most recent quarterly report didn't help. Delivering just 5,500 cars -- and 4,500 of those Model S sedans going to stateside drivers -- isn't very encouraging. Deliveries are not the same thing as orders, but it's not as if folks placing new orders these days are facing ridiculously long wait times compared to previous quarters. Tesla said that it had to hold back on domestic deliveries to satisfy demand that had been building overseas, but it doesn't feel that it has to amplify the demand for the annual target of 20,000 Model S cars for North America.

Things will get better. The Model X is expected to have a similar demand level, but the crossover won't hit meaningful production until the second quarter of 2015. The real winner here could be the more economical sedan that Tesla's hoping will hit the market in about three years. Tesla's still sticking to a more accessible price point of $35,000 for that vehicle, but a lot can change between now and then.

For now, Tesla has a fire to put out, in more ways than one. Expanding its warranty will help ease some concerns, but probably the last thing that someone wonders about when their car is engulfed in flames is if it will be covered by the manufacturer. On that front, Musk also had another comforting tweet earlier today:

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The article Tesla's So Hot That It's Covering Car Fires Now originally appeared on Fool.com.

Longtime Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends Tesla Motors. The Motley Fool owns shares of Tesla Motors. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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