Tesla Sells Off Amid NHTSA Model S Review

Tesla Motors Inc TSLA sold off Thursday afternoon, apparently on the heels of a National Highway Traffic Safety Administration examination.

U.S. auto safety investigators are reviewing reports of suspension problems in Tesla Model S cars. Bryan Thomas, a spokesman for the NHTSA, said the agency is "examining the potential suspension issue on the Tesla Model S, and is seeking additional information from vehicle owners and the company."

Shares closed at $229.34, down 2.6 percent on the day.

The review is a step before the agency decides whether to open a formal investigation leading to a potential safety recall. This is in response to a Daily Kanban report that was posted on Wednesday.

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"For several months now, reports have circulated in comment sections and forum threads about a possible defect in Tesla’s vehicles that may cause suspension control arms to break," wrote Edward Niedermeyer. "Many of those reports appeared to come from a single, highly-motivated and potentially unreliable source, a fact which led many to dismiss them as crankery. But as more reports of suspension failure in Teslas have come in, Daily Kanban has investigated the matter and can now report on this deeply troubling issue."

The report continued, "Defects happen to every automaker, and the line between a safety-related and non-safety-related defect can be subtle. The aspect of this story that demands explanation is not the crime, but the cover-up: why did Tesla demand an NDA from an owner in exchange for repairs to a defective vehicle? Even if there is a legitimate reason for such an agreement, Tesla should have made it explicitly clear that the agreement in no way infringes on an owners right to report defects to NHTSA."

Daily Kanban found two other examples of Tesla demanding an NDA from owners in exchange for satisfaction regarding its vehicle defects. Read the full story here.