Tesla Stock Drops After Car Splits in Accident

Fears about the electric car's lithium ion batteries have investors on edge.
5:04 | 07/07/14

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Transcript for Tesla Stock Drops After Car Splits in Accident
The death -- new York and as a financial markets close on Wall Street for this Monday July 7 this is story stock and one stock with a store today Tesla. Shares for the electric carmaker. Too hot to handle now 45. Time the lithium ion battery to the -- what catching fire after California man stole a Tesla dealership. And crashed it after a high speed pursuit injuring seven people in total car split into that burst into flames and now investigators investors. Are worried about the safety of the car so. Here to explain Tesla Motors and our story stock -- until it finance and Mike it is becoming a very familiar problem we've heard -- -- report Tesla batteries catching fire. In now clearly investors are. Sitting -- -- taking notice. Yeah I mean at least a little bit nervous on reflex right here today when hearing this news over the weekend. As you mentioned we've heard these before we know that the batteries themselves are prone to catching fire on -- impact. Course -- the company keeps pointing out that eight there's never been a fatality by driver and -- Tesla. And indeed -- kind of editing these protections so that it does not become you know an explosion it's not like even a fuel tank exploding but definitely the market is stepping back at least tentatively and waiting to see you know what comes of this I would I would -- by the way. The test the martyrs is they're very eager to study this car that -- split into just to see what they might be able to learn from -- Write the details of the case we need to definitely this -- -- -- seven people injured that is debt that is. Part of the case that that people look unanimous. A car was also going over a hundred miles an hour as well so something also take into consideration and there but -- but I want to take a look at -- to date chart. Of this stock this is Thursday and then today break it down force then -- -- me. Is not a precipitous drop but you can see it's certainly a decline on board -- A steady trading -- on Thursday was a half trading day and then today obviously it was under pressure all day not tremendous trading volume but it definitely was. Down a lot more. Then the broad indexes were which had marginal declines I will say you know just as as a note at some context that a lot of these kind of hyper growth kind of cult stock names like Tesla -- down a bit today people were taking some off the table it seems to me. -- hard to get away from the idea that some of the reaction today was all about this crash over the weekend. Is it fair to put any kind of comparison when you have recalls coming out in the millions by -- more traditional car companies GM Chrysler Ford. Woo -- when you see those kinds of safety concerns being raised in investors reacting to that is there any kind of compare sources just to novel of a car that you really don't have any comparisons. No you can't directly compare one for one did sort of safety experience of equality. Really experience of a Tesla -- -- other traditional gasoline cars obviously that's part of the reason I think people -- little bit skittish about this -- been widely remarked that GM's stock and in fact GM's sales have not suffered even though they've had all these millions of Bob recalls. So -- do think it's about -- being a relatively untested product. Entering new markets trying to persuade people that this is one way to go if you have the money to spend -- -- Tesla and also you know there's also some concerns beyond the safety stuff. About you know is demand in China going to be strong enough to offset weakness in Europe -- -- have. Sort of a general sense that nobody really knows how big this. Product is going to be how safe it is whether the the safety headlines of the accident headlines are going to be something that dampens sales for the long term it's just considered to be. You know kind of too much of an unknown quantity. And by the way Tesla Motors has a 27 billion dollar market value right now it's already a stupendous -- highly valued company. Given how relatively small businesses to that. So -- -- way to say whether it's going to be a knee jerk reaction or in fact some investors' concerns will be carried out that along all of these concerns about the safety of these cars. Yeah it really is difficult to know honestly I think that you know -- since we've seen this kind of wave of concern washed through the stock in the past. I do think it's something that's going to be probably set aside as a long term concern -- do you think it's a much more about you know can they really just place a lot of you know the higher and gasoline car brands can they really be you know -- fourth major US car manufacturer in terms of total volumes. Not so much are the battery powered cars safe right here -- do you think it's in everyone's interest there's most of all to make sure that is the case that they are safe. And as I mentioned again you know there's not been a fatality. And we also of course are aware that every single accident in in -- -- on the road. Gets reported. As opposed to every other kind of -- stolen from a dealer and somebody goes on -- crazy high speed chase in crashes and we don't hear about it. Well taken as well my essential if Yahoo! finance on this Monday -- thank you as always. You've been watching store stocks stay with abcnews.com for latest headlines -- down that's -- New York.

This transcript has been automatically generated and may not be 100% accurate.

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