(Adds details, updates share price, background)
March 28 U.S. safety regulators on Friday said
they had closed an investigation into several fires in Tesla
Model S electric sports cars after determining the incidents
were not likely to become a trend, which sent the company's
shares up as much as 4.5 percent.
The National Highway Traffic Safety Administration closed
the probe without asking Tesla for a recall after it the company
raised the sedan's ground clearance and added protective plates
for the lithium ion battery pack that powers the car.
NHTSA opened an investigation four months ago after two cars
in the United States and one in Mexico caught fire. NHTSA does
not have jurisdiction in Mexico.
The two U.S. fires started after drivers ran over debris in
the road, damaging the battery pack placed under the car between
the front and back seats.
In addition to raising ground clearance at highway speeds
and adding two protective plates, Tesla took steps to prevent
overheating of its charging systems, including giving customers
upgraded wall adapters and providing charging software upgrades.
"Tesla's revision of vehicle ride height and addition of
increased underbody protection should reduce both the frequency
of underbody strikes and the resultant fire risk," the NHTSA
said on its website. (r.reuters.com/tyn97v)
An analyst with industry research firm Kelley Blue Book
agreed with NHTSA's assessment.
"Given that no punctures have been reported over the past
four months, even without the added protection, this fix should
eliminate the potential of a battery pack fire under all but the
most extreme circumstances," said Karl Brauer of KBB.
NHTSA said that while it was closing the investigation, it
did not rule out the existence of a defect and "reserves the
right to take further action if warranted by new circumstances."
Tesla officials did not immediately return requests for
Tesla's shares were up 3.8 percent Friday at $215.18 in
trading on the Nasdaq. The company's shares have soared in the
past year. A year ago, it was trading at $37.75, and it tallied
a record high of $265 a share a month ago.
The Model S has received outstanding reviews from nearly all
third-party reviewers, including Consumer Reports.
The company's shares fell last fall when the two fires were
Tesla's shares during its initial public offering in June
2010 were priced at $17.
(Reporting by Bernie Wodall in Detroit and Sagarika Jaisinghani
in Bangalore; Editing by Kirti Pandey, Ted Kerr and Tom Brown)