Is Tesla Motors (TSLA) building a tank?(Read article summary)
No, but Tesla Motors Model S gets new armor. The automaker passed a federal investigation into Model S battery fires that started when road debris struck the electric cars' underbodies. Plates will be added to further protect Tesla Motors Model S battery packs.
Tesla Motors (TSLA) has a three-layered, military-grade, aluminum-titanium solution for its battery-fire problem.
A federal investigation largely absolved Tesla Friday of any serious defects in the design of its Model S electric car batteries, three of which caught fire after hitting debris in the span of two months last year. But, just to be sure, the California-based electric carmaker has elevated the car's ground clearance and added a triple underbody shield to existing protection, which it hopes will bring the risk of another fire down to "virtually zero."
Electric carmakers have little margin for error with a technology that – fairly or not – has a reputation for flammability and limited mass-market appeal. Tesla has had enormous success in avoiding the pitfalls of other plug-in vehicles, building a car adored by most its drivers and many in the automotive industry. Even in the rare instances that it has hit snags – such as last year's battery fires – the Model S has protected its occupants from any serious injuries and shown little sign of long-term, systemic flaws.
"The word 'fluke' might not be out of place here," Karl Brauer, senior analyst at Kelley Blue Book, says in a telephone interview. "The proof is it’s been months since and we’ve had no incidents. That suggests it takes a unique situation to penetrate that battery pack and start a fire."
But perceptions tend to trump facts in the court of public opinion. That's why Tesla chief executive Elon Musk has been aggressive in getting way out in front of an issue with the potential to permanently tarnish the company's image.
Earlier this year, Tesla raised the clearance height of the car at highway speeds with an over-the-air software update, hoping to reduce the odds of an underbody impact. On Friday, Mr. Musk announced that all Model S cars manufactured on or after March 6 will carry three extra layers of underbody protection, and Tesla service centers will retrofit existing cars free of charge.
"As the empirical evidence suggests, the underbody shields are not needed for a high level of safety," Musk wrote on the Tesla blog, which included a series of animated gifs from the company's testing of the new plates to drive home the point. "However, there is significant value to minimizing owner inconvenience in the event of an impact and addressing any lingering public misperception about electric vehicle safety."
The National Highway Transportation Safety Administration (NHTSA) seemed satisfied with the solution, closing its investigation into the fires after finding no "defect trend," but reserving the right to take additional action should circumstances change. Tesla's adjustments, NHTSA added, "should reduce both the frequency of underbody strikes and the resultant fire risk."
Tesla's stock was up 3.7 percent to $214.74 in early trading after the announcement Friday.