Tesla's Stock Drops After Model S Fails To Qualify For Top Safety Award

Shares of Tesla Inc. dropped 2.5% in premarket trade Thursday, extending the previous session's sharp selloff, after the electric car maker's Model S failed to receive a top safety award from the Insurance Institute for Highway Safety (IIHS). After tumbling 7.2% on Wednesday, the stock was on track to open Thursday 17% below its June 23 record close of $383.45. The IIHS said the Model S didn't qualify for any award because it only earned an "acceptable" rating in the small overlap front test. "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 wheel hard through the airbag," IIHS's report said. Although Tesla made changes to the safety belt in vehicles built after January, when IIHS tested the modified Model S, the same problem occurred. The cars that did receive "Top Safety Pick+" awards were Ford Motor Co.'s Lincoln Continental, Daimler AG's Mercedes-Benz E-Class and Toyota Motor Corp.'s Avalon. Other cars that failed to receive any award were General Motors Co.'s Chevrolet Impala and the Ford Taurus. Tesla's stock has rallied 53% year to date through Wednesday, while the S&P 500 has gained 8.7%.