November 19, 2013 / 12:10 PM / 4 years ago

Regulator launches investigation into Tesla Model S fires

A Telsa Model S automobile destroyed by a fire is seen in a handout picture from the Tennessee Highway Patrol taken in Smyrna, Tennessee November 6, 2013.Tennessee Highway Patrol/Handout via Reuters

DETROIT (Reuters) - U.S. auto safety regulators have launched an investigation into luxury electric sports car maker Tesla Motors Inc's (TSLA.O) Model S sedan after three car fires in six weeks.

The U.S. National Highway Traffic Safety Administration has opened a preliminary evaluation of the risks associated with highway debris striking the underbody of the 2013 Model S, the agency said on its website on Tuesday. (r.reuters.com/cys74v)

Late on Monday, Tesla said it would push out a software update to the Model S air suspension that will give the car more ground clearance at highway speeds, and will amend its warranty policy to cover fire damage even if it is due to driver error.

A preliminary evaluation by NHTSA can lead to a recall. The investigation, which the agency started on November 15, focuses on two Model S fires that happened after the vehicles ran over debris on U.S. highways.

The third Model S fire, which is not part of the NHTSA probe, occurred when a vehicle hit a concrete wall in Mexico.

In both U.S. incidents, the Model S battery monitoring system provided visual and audible warnings that allowed the driver to stop the car and leave the vehicle before the fire.

"The subject vehicles caught fire after an undercarriage strike with metallic roadway debris," NHTSA said. "The resulting impact damage to the propulsion battery tray (baseplate) initiated thermal runaway."

In a blog post late Monday, Tesla Chief Executive Elon Musk said the company asked the NHTSA to conduct a full investigation of the Model S fires to correct the "false impression" that electric cars are more dangerous than gas-powered vehicles.

He also disclosed the software update and amended warranty.

"If a false perception about the safety of electric cars is allowed to linger, it will delay the advent of sustainable transport and increase the risk of global climate change," Musk wrote.

After falling sharply in premarket trading, Tesla shares were up 4 percent at $126.61 in early Nasdaq dealings. Through Monday, the shares had fallen 37 since early October.

Tesla's decision to change the design of the Model S suspension to provide more clearance between the undercarriage and the road "is about reducing the chances of underbody impact damage, not improving safety," Musk said.

A software update in January, he added, would give drivers more control over suspension ride height.

There are 19,000 Model S sedans on the road, according to Musk. In the latest incident, a Model S caught fire after a highway accident in Tennessee on November 7.

The billionaire entrepreneur, who made his mark as a co-founder of Pay Pal, said last week that the Model S fires would "definitely" not lead to a recall.

Reporting by Sagarika Jaisinghani in Bangalore, and Paul Lienert and Deepa Seetharaman in Detroit; Editing by Joyjeet Das and John Wallace

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