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Is Tesla Model S not Safe to Drive? The Company's Shares Plummet

For the third time in six weeks, a Tesla Model S was destroyed by a fire after its battery was damaged, prompting new questions over the design of its high tech lithium-ion batteries.  The series of the unfortunate happenings drove the company's shares down 30% from its all time high.

A battery supply bottleneck, heavy research and development spending and declining sales of lucrative environmental credits also have created head winds for the Palo Alto automaker.

Related: Chevy Volt Sales Plummet 32%

The most recent accident occurred on Wednesday afternoon on a highway in Smyrna, Tenn., near Nashville, after the car struck a tow hitch lying in the roadway, sparking an electrical fire, according to the Tennessee Highway Patrol. The driver pulled the car over to the emergency lane and was unhurt, authorities said.

"There is no question that the National Highway Traffic Safety Administration should start looking at this," said Clarence Ditlow, executive director for the Center for Auto Safety.

The agency “will contact the local authorities who are looking into the incident to determine if there are vehicle safety implications that merit agency action,” it said in a statement on Thursday.

The accident was similar to a fire that broke out on Oct. 1 when a Model S struck debris on a highway in Kent, Wash., outside Seattle. The driver in that incident was also unhurt, and federal safety regulators determined, after a delay of more than two weeks because of the partial government shutdown, that the fire was not the result of a defect in the car’s design.

The second fire occurred in Mexico on Oct. 18 after the driver crashed into a wall and a tree; federal safety regulators did not investigate that fire because it took place outside the United States.

The safety administration has investigated battery fires in the past. Two years ago, when a Chevrolet Volt burst into flames three weeks after government crash test damaged its battery and cooling system, investigators found no design defects in the car.

Tesla said it would conduct its own inquiry into Wednesday’s fire. “Our team is on its way to Tennessee to learn more about what happened in the accident,” Tesla said in a statement.

Safety experts said that the Model S fires raised questions about its vulnerability to being punctured as it travels down a road. The battery in the low-slung Model S is protected by a reinforced metal plate.

Clarence Ditlow, executive director of the Washington-based Center for Auto Safety, said that Wednesday’s incident showed that the first fire was not a fluke.

“The initial failure mode is puncture of the battery pack from road debris,” Mr. Ditlow said. “The obvious engineering fix would be to add a safety shield. With Tesla, there is some protection there. They just need a better shield.”

Ralph J. Brodd, a battery consultant in Henderson, Nev., said after the Oct. 1 fire that the shielding might not have been strong enough to prevent the impact from causing a short in the battery.

A stronger metal plate would add weight to the car, reducing its efficiency and the long driving range that the Model S is known for.

Analysts said that the most recent fire, coming so soon after the first two, raised a perception issue for the Model S, which has earned high marks on safety from government regulators and independent automotive publications like Consumer Reports.

Analysts also said that accidents like the one Wednesday were bound to become more common as Tesla sells more cars. Last quarter, 5,500 Model S sedans were delivered to customers, and this week its chief executive, Elon Musk, said in a conference call with analysts that constraints on the supply of batteries was holding back production of the cars.

As the gasoline price continue to decline, the future of all-electric vehicles don't look too bright, at least in the near term.

Is Tesla Model S not Safe to Drive? The Company's Shares Plummet Reviewed by Blogs on 4:57 PM Rating: 5

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