(Adds comments about gasoline and battery powered cars, updates
By Ben Klayman and Bernie Woodall
DETROIT Nov 7 Tesla Motors Inc
reported the third fire in its Model S luxury electric car in
six weeks, this time after a highway accident in Tennessee,
sending shares down 9 percent on Thursday.
The Tennessee Highway Patrol said the 2013 model sedan ran
over a tow hitch that hit the undercarriage of the vehicle,
causing an electrical fire on Interstate 24 on Wednesday. A
highway patrol dispatcher called the damage to the car
The Model S undercarriage has armor plating that protects a
battery pack of lithium-ion cells. Tesla said it did not yet
know whether the fire involved the car's battery.
The first Model S fire occurred on Oct. 1 near Seattle, when
the car collided with a large piece of metal debris in the road
that punched a hole through the protective armor plating.
After the first fire, officials at the National Highway
Traffic Safety Administration said they found no evidence to
indicate a vehicle defect.
The second fire took place later in the month in Merida,
Mexico, when, according to reports, a car drove through a
roundabout, crashed through a concrete wall and hit a tree.
The Tesla Motors Club website contains pictures of the
newest fire, and a company spokeswoman confirmed the accident,
which occurred in Smyrna, Tennessee, where Nissan Motor Co
makes the Leaf electric car.
While none of the drivers in any of the Tesla accidents were
injured, the glaring headlines about fires were unwelcome for a
company whose stock soared sixfold in the first nine months of
the year. Since the first fire, Tesla's shares have lost more
than 27 percent, and this week's declines are the worst one-week
drop since May 2012.
"For a company with a stock price based as much or more on
image than financials, those recurring headlines are highly
damaging," Kelley Blue Book senior analyst Karl Brauer said.
Morgan Stanley analyst Adam Jonas said the risk of a formal
investigation by U.S. safety regulators "could raise near-term
concerns to a higher level in terms of cost, image and
Tesla said it has been in touch with the driver of the
Wednesday incident, who was not injured. The vehicle was driven
by Juris Shibayama, 38, of Murfreesboro, Tennessee, according to
the highway patrol. Shibayama could not be reached for comment.
"Our team is on its way to Tennessee to learn more about
what happened in the accident," Tesla spokeswoman Elizabeth
Jarvis-Shean said in a statement. "We will provide more
information when we're able to do so."
Tesla's battery pack is made up of small lithium-ion battery
cells that are also used in laptop computers, an approach not
used by other automakers. The battery pack stretches across the
base of the vehicle. In comparison, General Motors Co
uses large-format battery cells in a T-shape in the center of
the Chevrolet Volt plug-in hybrid car.
Other automakers have dealt with battery fires in
electrified vehicles, including GM's Volt and Mitsubishi Motors
The highway patrol report did not say how fast the Tesla
Model S was traveling in Tennessee, but the driver was able to
pull off the roadway and get out of the car.
A woman who answered the phone at the lot where the car was
towed said Tesla officials had arrived Thursday morning and were
inspecting the vehicle.
On Tuesday, Tesla forecast a weaker-than-expected
fourth-quarter profit and posted third-quarter Model S
deliveries that disappointed some analysts.
Neither driver was injured in the earlier accidents, and in
all three cases the company said the owners have asked for
After the first fire, Tesla Chief Executive Elon Musk
defended the safety performance of electric cars.
"For consumers concerned about fire risk, there should be
absolutely zero doubt that it is safer to power a car with a
battery" than a conventional gas-powered vehicle, he said on a
Company executives called that first fire a "highly uncommon
occurrence," likely caused by a curved metal object falling off
a semi-trailer and striking up into the underside of the car in
a "pole-vault effect."
At the time, Musk did not say if Tesla would make any
changes to the Model S battery design as a result of the first
accident. Jarvis-Shean had no immediate comment when asked if
such changes were being considered.
Gasoline engines are dangerous, but Americans have learned
to live with them over the years, said Tom Gage, the former CEO
of AC Propulsion, which developed the drive train for Tesla's
first model, the Roadster.
"Obviously, gasoline can be lit more easily and can burn
with more ferocity than a battery can, but a gas tank in a car
now benefits from 120 years of fairly intensive development and
government regulation regarding how you make it safe," he said.
Gage, now CEO of EV Grid, a company working to integrate EV
batteries with the power grid system, said Tesla could consider
raising the battery higher in the car or further reinforcing it.
Tesla's shares fell as low as $137.62 on Nasdaq, and were
off $10.17, or 6.7 percent at $140.99 in afternoon trading.
(Additional reporting by Deepa Seetharaman; Editing by Gerald
E. McCormick, Maureen Bavdek and Jim Marshall)