Tesla reports third fire involving Model S electric car

Reuters Contributor
Font Size:

By Ben Klayman and Bernie Woodall

DETROIT (Reuters) – Tesla Motors Inc reported the third fire in its Model S luxury electric car in six weeks, this time after a highway accident in Tennessee, sending shares down 9 percent on Thursday.

The Tennessee Highway Patrol said the 2013 model sedan ran over a tow hitch that hit the undercarriage of the vehicle, causing an electrical fire on Interstate 24 on Wednesday. A highway patrol dispatcher called the damage to the car “extensive.”

The Model S undercarriage has armor plating that protects a battery pack of lithium-ion cells. Tesla said it did not yet know whether the fire involved the car’s battery.

The first Model S fire occurred on October 1 near Seattle, when the car collided with a large piece of metal debris in the road that punched a hole through the protective armor plating.

After the first fire, officials at the National Highway Traffic Safety Administration said they found no evidence to indicate a vehicle defect.

The second fire took place later in the month in Merida, Mexico, when, according to reports, a car drove through a roundabout, crashed through a concrete wall and hit a tree.

The Tesla Motors Club website contains pictures of the newest fire, and a company spokeswoman confirmed the accident, which occurred in Smyrna, Tennessee, where Nissan Motor Co makes the Leaf electric car.

While none of the drivers in any of the Tesla accidents were injured, the glaring headlines about fires were unwelcome for a company whose stock soared sixfold in the first nine months of the year. Since the first fire, Tesla’s shares have lost more than 27 percent, and this week’s declines are the worst one-week drop since May 2012.

“For a company with a stock price based as much or more on image than financials, those recurring headlines are highly damaging,” Kelley Blue Book senior analyst Karl Brauer said.

Morgan Stanley analyst Adam Jonas said the risk of a formal investigation by U.S. safety regulators “could raise near-term concerns to a higher level in terms of cost, image and production disruption.”

Tesla said it has been in touch with the driver of the Wednesday incident, who was not injured. The vehicle was driven by Juris Shibayama, 38, of Murfreesboro, Tennessee, according to the highway patrol. Shibayama could not be reached for comment.

“Our team is on its way to Tennessee to learn more about what happened in the accident,” Tesla spokeswoman Elizabeth Jarvis-Shean said in a statement. “We will provide more information when we’re able to do so.”

Tesla’s battery pack is made up of small lithium-ion battery cells that are also used in laptop computers, an approach not used by other automakers. The battery pack stretches across the base of the vehicle. In comparison, General Motors Co uses large-format battery cells in a T-shape in the center of the Chevrolet Volt plug-in hybrid car.

Other automakers have dealt with battery fires in electrified vehicles, including GM’s Volt and Mitsubishi Motors Corp’s i-MiEV.

The highway patrol report did not say how fast the Tesla Model S was traveling in Tennessee, but the driver was able to pull off the roadway and get out of the car.

A woman who answered the phone at the lot where the car was towed said Tesla officials had arrived Thursday morning and were inspecting the vehicle.

On Tuesday, Tesla forecast a weaker-than-expected fourth-quarter profit and posted third-quarter Model S deliveries that disappointed some analysts.

Neither driver was injured in the earlier accidents, and in all three cases the company said the owners have asked for replacement cars.

After the first fire, Tesla Chief Executive Elon Musk defended the safety performance of electric cars.

“For consumers concerned about fire risk, there should be absolutely zero doubt that it is safer to power a car with a battery” than a conventional gas-powered vehicle, he said on a blog post.

Company executives called that first fire a “highly uncommon occurrence,” likely caused by a curved metal object falling off a semi-trailer and striking up into the underside of the car in a “pole-vault effect.”

At the time, Musk did not say if Tesla would make any changes to the Model S battery design as a result of the first accident. Jarvis-Shean had no immediate comment when asked if such changes were being considered.

Gasoline engines are dangerous, but Americans have learned to live with them over the years, said Tom Gage, the former CEO of AC Propulsion, which developed the drive train for Tesla’s first model, the Roadster.

“Obviously, gasoline can be lit more easily and can burn with more ferocity than a battery can, but a gas tank in a car now benefits from 120 years of fairly intensive development and government regulation regarding how you make it safe,” he said.

Gage, now CEO of EV Grid, a company working to integrate EV batteries with the power grid system, said Tesla could consider raising the battery higher in the car or further reinforcing it.

Tesla’s shares fell as low as $137.62 on Nasdaq, and were off $10.17, or 6.7 percent at $140.99 in afternoon trading.

(Additional reporting by Deepa Seetharaman; Editing by Gerald E. McCormick, Maureen Bavdek and Jim Marshall)

Tags : tesla