Tesla reports third fire involving Model S electric car

DETROIT Thu Nov 7, 2013 10:58pm IST

A Tesla model S car is displayed during a media preview day at the Frankfurt Motor Show (IAA) September 10, 2013. REUTERS/Kai Pfaffenbach/Files

A Tesla model S car is displayed during a media preview day at the Frankfurt Motor Show (IAA) September 10, 2013.

Credit: Reuters/Kai Pfaffenbach/Files

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DETROIT (Reuters) - Tesla Motor Inc's(TSLA.O) Model S electric car has suffered its third fire in six weeks, sending its shares down nearly 9 percent in Thursday midday trading.

The Tesla Motors Club website contains pictures and a story about another fire involving a Model S that a company spokeswoman confirmed. The accident occurred on Wednesday in Smyrna, Tennessee, where Nissan Motor Co (7201.T) makes the Leaf electric car.

While none of the drivers in any of the accidents were injured, the glaring headlines about fires was not welcome for Tesla.

"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, who was not injured. The vehicle was driven by Juris Shibayama, 38, of Murfreesboro, Tennessee, according to the highway patrol.

"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."

The company said the fire was the result of an accident and was not a spontaneous event.

The Tennessee Highway Patrol said the afternoon incident occurred on Interstate 24 in Smyrna when the electric car "ran over a tow hitch" that "hit the undercarriage of the vehicle causing an electrical fire."

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

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 (GM.N) 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 (7211.T) i-MiEV.

The highway patrol report did not say how fast the 2013 model Tesla Model S was traveling in Tennessee, but the driver was able to pull off the roadway and get out of the car. The incident occurred four miles from the exit for the Nissan plant.

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.

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 armor plate protecting the battery pack. U.S. safety regulators at the National Highway Traffic Safety Administration later 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.

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.

Tesla's shares fell as low as $137.62 on Nasdaq.

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

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