Tesla Motors Inc (NASDAQ:TSLA)’s Model S has been involved in three fiery wrecks in the last several weeks. Some have pushed for an investigation, and there have been concerns about a recall, particularly after a tweet from one journalist. However, CNBC says Tesla won’t be doing a recall.
The tweet which sent Tesla shares falling
BGR editor-in-chief Jonathan S. Geller tweeted on Monday that Tesla was considering recalling the Model S to strengthen the undercarriage of the vehicle. Two of the three Model S fires happened after the vehicle went over a piece of metal which punctured the battery compartment, sparking a fire.
Today CNBC said Tesla Motors Inc (NASDAQ:TSLA) isn’t currently planning to recall the Model S after all. No further details on the subject were given by the news network.
What about the long-term effects on Tesla?
Shares of Tesla have struggled today, declining another 5% as investors continue to weigh just how much the automaker’s stock should be worth and what kind of long-term affects the three fires may have on the company. Forbes contributor Chuck Jones examined the potential long-term effects after reading a blog post on the topic by Martin Thermal Engineering’s Rick Martin.
He notes that the number of fires per collision could be a key metric in determining whether there should be an investigation into Tesla Motors Inc (NASDAQ:TSLA)’s Model S. Investigators will have to consider the number of fires in electric cars per mile driven. The question will then be whether the battery compartment in the Model S is strong enough.
Problems which Tesla could face
After the first fire, the National Highway Traffic Safety Administration said it would not investigate the Model S. There’s no word on whether the agency will investigate after this third fire. If regulators do become involved, this would certainly be a negative for Tesla Motors Inc (NASDAQ:TSLA), although it isn’t one the automaker couldn’t come back from. But don’t forget that the car received the agency’s top safety rating, so it would have to admit that it made some mistakes in its testing process if it decides that there’s a problem with the Model S.
If the NHTSA does end up requiring Tesla to redesign the Model S, there could be an added cost of installing a thicker metal plate to protect the battery compartment. Or what would be worse is if the agency wants Tesla to redesign the entire vehicle to change where the battery compartment is located.
Tesla faces a class action lawsuit
Jones sees little impact from a class action lawsuit against Tesla Motors Inc (NASDAQ:TSLA), which was filed on Friday. A law firm said it was suing Tesla for misleading investors about the risk of fires in the Model S. Personally, I don’t see how they would have a leg to stand on in arguing this case at this point in time.