The National Highway Traffic Administration has
opened a probe in Tesla’s battery fires.
Specifically, the regulator wants to examine “the potential risks associated with undercarriage strikes on Model Year 2013 Tesla Model S vehicles.”
Deutsche Bank’s Dan Galves believes the NHTSA’s findings which should come in 60 days or less, will most likely be “benign.”
But what’s his take on the battery fires?
“Each of the 2 recent incidents that generated the investigation occurred when large metal objects struck at highway speeds caused significant damage to Model S batteries, resulting in fires,” writes Galves in a note.
“…We also believe that the location of the incidents outside California supports our view that these are rare occurrences and the timing was coincidental (i.e. if this was going to be a common issue, you would expect to have seen one in California, where the vast majority of Model S miles-driven have occurred to-date).”
He said the NHTSA’s comment after the first incident itself provides a clue.
Back in October, after a Tesla Model S was involved in a fiery crash in Washington State, Galves wrote that the fire hadn’t changed his “positive thesis on the company.” At the time, the regulator said they weren’t launching an investigation because the fire was expected to have been caused by the collision and wasn’t a design flaw.
Tesla has already offered to provide a software that “disables the functionality of the air suspension to lower the vehicle at highway speeds.” He expects that the NHTSA will accept this remedy and that it won’t really disrupt production or costs for Tesla. From Galves:
“The Model S has 3 ground clearance settings: low: 4.62 inches, standard: 5.0 inches, high: 5.75 inches. This compares to BMW 535i at 5.55 inches and Porsche 911 at 4.17 inches. So, if NHTSA deemed it necessary, the Model S could be raised to equivalent to 5-Series through a software update.”
Meanwhile, Tesla CEO Elon Musk again took to the Tesla blog to point out that electric cars are safer than gasoline fuelled cars.
Galves still has a $US200 price target for Tesla. The stock is up 4.5% today.