Feds Say They Are Looking Into Third Tesla Car Fire


File phioto. Tesla(SMYRNA, Tenn.) — Just as Tesla Motors provided a weak earnings forecast but better-than-expected third-quarter income, federal regulators are looking into a third electric car fire, this time near Smyrna, Tenn.

Regarding an accident and subsequent fire that took place on Wednesday involving Tesla’s Model S car, the National Highway Traffic Safety Administration said in a statement that it “will contact the local authorities who are looking into the incident to determine if there are vehicle safety implications that merit agency action.”

After surging earlier this year, Tesla stock (NASDAQ: TSLA) fell 7.4 percent on Thursday, closing at $139.91. Just last month, the release of a YouTube video that showed a $70,000 Model S car on fire near Seattle contributed to a 10 percent drop in Tesla’s stock price. Later, a driver of a Tesla hit a wall in Mexico, leading to a crash fire. None of the drivers in the three incidents were hurt.

Robert W. Baird & Co. senior research analyst Ben Kallo, who previously downgraded Tesla in early October to “neutral” from “outperform,” said the information doesn’t indicate to him foul play in Tesla’s technology.

“They’ve received such high marks around safety, in each of these cases, the drivers walked out unscathed and were able to get help before the fire started,” Kallo said.

The fire that engulfed a Tesla Model S in Seattle was caused by impact to the electric car’s battery pack, says a spokeswoman for Tesla.

Tesla says this latest fire was the result of an accident and was not a spontaneous event. Last month, after the first incident, CEO Elon Musk said the fire would have been much worse if a gas-powered car had been in a similar accident.

Regarding the car fire in Tennessee, Elizabeth Jarvis-Shean, Tesla’s director of global communications, provided a statement to ABC News: “We have been in contact with the driver, who was not injured and believes the car saved his life. Our team is on its way to Tennessee to learn more about what happened in the accident. We will provide more information when we’re able to do so.”

Previously, the NHTSA cleared the Model S after the Seattle fire and found no evidence of defect or issues with safety standards. The administration said then, “After reviewing all available data, the NHTSA has not found evidence at this time that would indicate the recent battery fire involving a Tesla Model S was the result of a vehicle safety defect or non-compliance with federal safety standards.”

The National Fire Protection Association said U.S. fire departments responded to an average of 152,300 car fires per year between 2006 and 2010.

Kallo said it’s worth noting there are only thousands of Tesla cars on the road, and the occurrence of three car fires in a matter of about a month raises questions.

“I do agree there is probably a higher likelihood of gas catching on fire, but this does raise a little bit of a question mark around that,” Kallo said.

Jamie Albertine, analyst with Stifel Nicolaus, said any fire in isolation is “irrelevant” to the fundamentals of Tesla’s business.

“I think it’s fair to say that the sentiment [over the fires] is so exaggerated on this name that headlines like these tend to have a negative impact,” Albertine said. “This is a function of how exaggerated sentiment has become.”

Copyright 2013 ABC News Radio

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