Tesla Looks to Recover From Fiery YouTube Fallout (Video)

Tesla Motors has been firing on all cylinders. Its stock is up five-fold this year, the press fawns over the company’s electric, environmentally friendly cars, and celebrities like Jay Leno, Ben Affleck, Will Smith, Morgan Freeman and Jon Favreau supply a steady stream of free advertising just by tooling around town in their sleek cars.

If there’s a knock on Tesla, it’s usually that the company is fueled more by hype than substance — Wall Street values the company at $22 billion even though it is not yet profitable, for example. Nearly everything about the company is sexy, beginning with co-founder Elon Musk, a brilliant billionaire who also created orbital rocket-launch company SpaceX and co-founded PayPal.

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The positive hype, though, has suffered a mighty blow this week thanks to an amateur YouTube video of a $70,000 Tesla Model S in flames because it hit some debris near Seattle.

The video, embedded below, hit YouTube on Oct. 1 and it has been viewed nearly 2 million times so far. Tesla stock sunk 6 percent the next day and 4 percent the day after that. To be fair, the video coincided with an analyst downgrade of the stock — a very unusual occurrence in the life of Tesla, which went public three years ago and has been a Wall Street darling ever since.

The media, though, has mostly been running with the sexier angle that the YouTube video is at fault for sinking the stock and denting Tesla’s hard-fought reputation for quality and coolness.

“The Tesla Fire Is A Textbook PR Problem — And They Should Fix It,” scolds a Forbes headline. “Did Tesla Motors’ Reputation For Perfection Just Go Up In Smoke?” asks Seeking Alpha, an investment website. “Tesla Stock Falls on Video of Fiery Crash,” the Wall Street Journal proclaimed. “Car fire a test for high-flying Tesla,” says the New York Times.

So far, the public-relations tack Tesla is taking has been to simply explain why the car in the video is on fire.

“The fire was caused by the direct impact of a large metallic object to one of the 16 modules within the Model S battery pack,” reads a statement issued to the press. “Because each module within the battery pack is, by design, isolated by fire barriers to limit any potential damage, the fire in the battery pack was contained to a small section in the front of the vehicle.”

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While some PR experts think Tesla’s approach falls short — as indicated in the Forbes article, which recommends that Musk, himself, speak about the video — it appears to be working, at least in the short term. The stock was up 4 percent in midday trading on Friday, and auto enthusiasts who are delving deep into the video seem satisfied with Tesla’s explanation. Few, it seems, are predicting recalls or long-term fallout from the video.

Perhaps most notably, Jalopnik.com, a site credited for bringing widespread attention to the YouTube video, published on Thursday: “Your Guide To The Tesla Model S Fire (And Why It’s Not A Big Deal).”

Jalopnik makes the point that a Tesla catching fire on impact with debris is, indeed, dramatic and noteworthy, but that electric cars remain far less likely to burst into flames than cars that run on gasoline. Firefighters also initially did more harm than good by spraying the car with water instead if using a dry chemical or CO2 extinguisher, a method detailed in Tesla’s Emergency Response Guide.

While Tesla did not respond to The Hollywood Reporter‘s request for comment, a spokesperson acknowledged to Jalopnik that it is unclear whether there might be a recall or even a government investigation. The government shutdown could prevent or delay the latter, in fact.

Jalopnik also makes the point that the Tesla Model S, despite a fiery video, is “the safest car ever produced,” having scored a 5.4 on the National Highway Traffic Safety Administration’s scale of 1-5. “Yes. It broke the scale,” Jalopnik wrote.

E-mail: Paul.Bond@THR.com