Tesla Motors Inc (TSLA) Requests NHTSA Probe After Model S Fires

Tesla Motors Inc (TSLA) Requests NHTSA Probe After Model S Fires
Blomst / Pixabay

Tesla Motors Inc (NASDAQ:TSLA) shares continued to spiral downward in premarket trading on Tuesday after it was revealed that regulators opened an investigation into the Model S after three fires. Perhaps what’s most interesting about this investigation is that according to Tesla’s blog post, they are the ones who requested the investigation.

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Mainstream media burying one part of the Tesla investigation

Interestingly enough, it is this component of the story which is getting buried down deep in the story by the mainstream media.  Many mainstream media outlets have put this part lower in the story rather than using it as a headline. Tesla CEO Elon Musk blasted mainstream media for the headlines after the Model S fires because they focused on the fires rather than the fact that they were caused by accidents and no one in the Model S sedans was injured. Other media sites, including ValueWalk, have covered the other side of the Model S fires story, namely, the side which highlights the vehicle’s safety and how ridiculous it has been to blow these fires out of proportion as they have been. Having been a member of the mainstream media myself in the past, I can tell you how easy it is to wag the dog on any topic.

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Personally, I think the fact that Tesla requested the investigation, just like the fact that it issued its own voluntary recall for something relatively minor earlier this year, is a good thing. And yet, investors are reacting in the opposite direction. They sent shares up after Tesla Motors Inc (NASDAQ:TSLA) issued that voluntary recall earlier this year, but they pushed shares lower after this investigation was announced. Shares of Tesla declined more than 4% early on Tuesday after another losing day during the regular trading day on Monday.

Tesla’s battery probed by NHTSA

The National Highway Traffic Safety Administration (NHTSA)’s database of defect investigations results indicates that the agency opened the investigation into Tesla’s Model S on Friday. According to the NHTSA database, investigators are looking into a particular component of the Model S: “Electrical system: Battery: Propulsion system.”

The probe comes after three accidents in five weeks resulted in fires in Tesla Motors Inc (NASDAQ:TSLA)’s Model S sedan. In its announcement of the investigation, the NHTSA said both of the two incidents which happened in the U.S. caused something called “thermal runway.” The agency notes that the phenomenon occurred after the undercarriage of the vehicle was struck when it ran over something in the road.

It reports that currently this is a “preliminary evaluation to examine the potential risks associated with undercarriage strikes on model year 2013 Tesla Model S vehicles.” The NHTSA also gives Tesla credit for the visible and audible warnings provided by the Model S which told the drivers to pull over and exit their vehicle in plenty of time to do so safely before the fire broke out.

Comparisons drawn between Tesla and Dreamliner aircraft

According to Angela Greiling Keane and Tom Lavell of Bloomberg, this same phenomenon was noted in The Boeing Company (NYSE:BA)’s Dreamliner aircraft, which were grounded for months after investigators forced the aircraft maker to find a safer way to make its batteries. However, one thing they don’t mention is a big difference between what happened with the Dreamliner aircraft incidents and the Model S incidents. The Dreamliner batteries were spontaneously combusting while in flight, while it took a collision to cause the Model S to catch fire.

Even Tesla CEO Elon Musk said recently he wasn’t so sure about the technology in the Dreamliner aircraft because of this difference. However, he felt an investigation of the Model S was in order because of the bigger picture.

Tesla’s Musk blogs about the investigation

On Tesla Motors Inc (NASDAQ:TSLA)’s blog post, Musk emphasized again how much less likely drivers are to have a fire in their Model S than in gasoline vehicles. The NHTSA declined to investigate the first fire several weeks ago, saying there was no evidence that defects of safety standard violations caused the fire. Musk doesn’t think the agency will find anything, but if it does, he said they would quickly roll the change out to new vehicles and

Musk said the bigger concern is whether “false perception” of these fires will delay the adoption of sustainable transportation and thus “increase the risk of global climate change.” He also said they are amending their warranty policy to cover fire damage even if the damage is the result of driver error. He said they want to make sure the Model S has “the lowest insurance cost of any car” at their price point.

DISCLAIMER: I do not own any shares of Tesla Motors Inc (NASDAQ:TSLA).

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Michelle Jones is editor-in-chief for ValueWalk.com and has been with the site since 2012. Previously, she was a television news producer for eight years. She produced the morning news programs for the NBC affiliates in Evansville, Indiana and Huntsville, Alabama and spent a short time at the CBS affiliate in Huntsville. She has experience as a writer and public relations expert for a wide variety of businesses. Email her at Mjones@wordpress-785388-2679526.cloudwaysapps.com.
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