Market Overview

Tesla Under Federal Probe Over Fatal Battery Design Flaw

Tesla Under Federal Probe Over Fatal Battery Design Flaw

The United States National Highway Traffic Safety Administration is investigating Tesla Inc. (NASDAQ: TSLA) for defective battery cooling systems in its early Model S vehicles, the Los Angeles Times reported Wednesday.

Tesla Faces NHTSA, NTSB Investigations

The NHTSA is "well aware of the reports regarding this issue and will take action if appropriate based upon the facts and data," the federal agency told the LA Times.

The cooling tubes installed in Model S vehicles between 2012 and 2016 were prone to leaks before the automaker cut off a supplier and began making the tubes in-house, leaked Tesla internal emails suggested, according to the LA Times.

The leaked internal documents were first reported by Business Insider last week.

Another federal investigation agency, The National Transportation Safety Board, also told the LA Times that it is "in the final stages of completing a Special Investigative Report based upon its investigations of several crashes involving electric vehicles and the resultant battery fires/thermal events."

Tesla Allegedly Sold Cars Despite Knowing About The Glitch

According to the Insider report last week, Tesla allegedly sold the cars, even after the executives were made aware of the faulty cooling system.

Third-party tests conducted by IMR Test Lab found the cooling tubes to be susceptible to cracks and pinholes, the Insider had reported.

The NHTSA told the LA Times now that the automakers are required "to notify the agency within five days of when the manufacturer becomes aware of a safety-related defect and conduct a recall."

Tesla didn't issue any such notice, the LA Times noted.

Price Action

Tesla shares closed 3.7% higher at $1,119.63 on Wednesday. The shares traded another 1.6% higher in the after-hours session at $1,137.99.



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