Tesla Inc (NASDAQ:TSLA) shares crashed again on Thursday after the car maker’s flagship Model S failed to receive a top safety award from the Insurance Institute for Highway Safety (IIHS).
The news is a blow for Tesla which has often trumpeted the luxury sedan as the ‘safest car in history’.
The IIHS said the Model S didn’t qualify for any award because it was only given an “acceptable” rating in the small overlap front collision test, which is when the front driver’s side corner is slammed into a barrier at 40mph.
“The main problem with the performance of the Model S was that the safety belt let the dummy’s torso move too far forward, allowing the dummy’s head to strike the steering hard through the airbag,” the report concluded.
Although Tesla made changes and re-tested the car, the IIHS said the same problem occurred again.
The cars that did receive the ‘Top Safety Pick+’ award were Ford Motor Company’s (NYSE:F) Lincoln Continental, the Mercedes Benz E-Class and the Toyota Avalon.
Shares are breaking down
Tesla shares have been under pressure in recent weeks, predominantly due to mounting concerns around its sales, competition and, as we’ve seen today, the safety of its cars.
The stock has plunged by more than 15% since it posted a record close of US$383.45 on June 23.
Big name banks such as Goldman Sachs and Bernstein have voiced their disappointment over Tesla’s second quarter deliveries. Wall Street had expected deliveries of around 24,000, while the company, run by billionaire Elon Musk, could only muster 22,000.
France to ban sales of petrol and diesel cars by 2040
On top of that, competition is starting to intensify.
Volvo came out this week and said that by 2019 all of its cars will be either hybrid or electric, while there are rumours that BMW is planning to roll out an electric version of its popular 3-Series sedan later this year.
That competition is unlikely to go away anytime soon either. French automakers Peugeot, Citroen, Vauxhall and Renault will all be accelerating their electric plans after having been given a little a nudge by Emmanuel Macron and his government.
Newly-elected Macron has announced that France will end sales of petrol and diesel vehicles by 2040 as part of an ambitious plan to meet its targets under the Paris climate accord.
While that move might increase competition, Tesla can take some heart from the fact that it looks like the beginning of the end for the internal combustion engine’s dominance of the car industry.
Tesla shares dropped 4.7% lower this morning to US$311.
--Updates for share price and France diesel/ petrol ban--