Tesla Motors Inc (TSLA) Gets Thumbs Up After German Fire Investigation

Tesla Motors Inc (TSLA) Gets Thumbs Up After German Fire Investigation
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Tesla Motors Inc (NASDAQ:TSLA) shares are rebounding in a big way today, surging more than 6% initially in premarket trading. This comes after the company announced that the German government has decided that no recall is necessary after the three recent Model S fires. U.S. regulators are currently still investigating.

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German government: no defects in Tesla’s Model S

CEO Elon Musk tweeted on Monday about the German government’s decision, and Tesla Motors Inc (NASDAQ:TSLA) posted a press release about that decision on its website. The German Federal Motors Transport Authority sent an inquiry to Tesla about the three fiery crashes in Mexico, Tennessee and Washington state recently. The agency handles regulation of vehicles in Germany and has the authority to investigate and issue involuntary recalls of vehicle.

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Tesla said it provided the agency with data and other information about the three fiery crashes. The German agency reviewed the automaker’s responses to its questions and other data provided by Tesla. The document filed by the agency revealed that it had found no “manufacturer-related defects.” As a result, it has decided that no recalls or other measures as part of the German Product Safety Act are necessary.

Tesla deals with reputation problems

The announcement was undoubtedly music to investors’ ears. Shares of Tesla Motors Inc (NASDAQ:TSLA) have struggled since late October and early November as investors became concerned about the new technology and the risk of having a fire in a Model S sedan.

Musk has said time and again that the odds of having a fire in the Model S are smaller than those of having a fire in a gasoline-powered car, but investors haven’t heeded his words much. This decision from German authorities is the first indication that concerns about the safety of the Model S in terms of fire risk could be overblown.

The next step will be a decision from the U.S. National Highway Traffic Safety Administration. Unfortunately Tesla Motors Inc (NASDAQ:TSLA) has angered the agency a couple of times recently. Let’s hope that doesn’t affect its decision. Musk doesn’t expect a recall, especially after they rolled out a software update which significantly raises the speed at which the Model S will lower itself for better aerodynamics.

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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@valuewalk.com.
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