News that federal regulators are looking into several recent fires in Tesla Motors’ (TSLA) pricey electric cars sent TSLA stock surging about 4% in Tuesday morning trading.
In a blog post, CEO Elon Musk said that TSLA had called for the investigation by the National Highway Traffic Safety Administration (NHTSA), but that it was “highly unlikely” that the fires resulted from any defect with TSLA vehicles. The federal probe would affect about 13,000 Tesla Model S cars, which are priced starting at $70,000, the Associated Press notes.
The first incident occurred last month outside of Seattle when a TSLA car caught fire after a piece road debris penetrated its battery compartment. Two subsequent fires in TSLA cars were reported in Tennessee and Mexico. TSLA has insisted that the electric cars have a lower risk of fire compared to traditional gasoline-powered vehicles.
Musk noted that TSLA had already issued a software update to increase the ground clearance in Model S cars while on the highway. He added that any changes recommended by regulators would be installed to existing vehicles free of charge. Last week, Musk said there would “definitely not going to be a recall,” but indicated that TSLA was communicating with regulators.
Reports of the most recent fires hammered TSLA stock, sending its Tesla shares sharply lower.
Tesla stock had soared earlier this year after TSLA posted its first-ever quarterly profit. But Tesla shares dropped earlier this month after the company disappointed Wall Street with lower-than-expected vehicle sales and and weaker outlook. Still, Tesla stock is up over 250% since Jan. 1.
A NHTSA investigation could potentially result in a recall of TSLA vehicles. However, no determination is expected for months.
No one was reported injured in the three incidents involving Tesla vehicles.