Feds review third Tesla fire as shares fall again

Fred Meier and Chris Woodyard | USA TODAY

UPDATED 4:30 p.m. ET with closing stock price

Federal investigators said today they are going to take a look at the latest fire involving a Tesla Model S as the electric car maker's stock shares continued to tumble.

Tesla shares fell the third consecutive day closing at $139.91. That was down $11.25, or 7.4%, for the previous day's close. Since Tesla announced its third-quarter earnings after trading hours Tuesday, the stock as dropped 20.9%

Some disappointments in the Q3 report started the stock-price tumble, and the fire report today kept the shares from rebounding.

Shares fell as low as $137.62 this morning after the fire report.

In light of the new Tesla fire in Smyrna, Tenn., investors might be taking a new look at the Fremont, Calif., maker of electric luxury cars. It's only model is the $73,000 Model S sedan, but a crossover SUV is planned late next year, then a $35,000 smaller car after that.

It doesn't help Tesla's standing among investors that the new fire has caught the attention of the National Highway Traffic Safety Administration, which issued this statement:

"NHTSA will contact the local authorities who are looking into the incident to determine if there are vehicle safety implications that merit agency action."

The third crash fire, near Smyrna -- ironically where Nissan makes its battery-electric Leaf -- resulted from an accident in which a Model S driver ran into road debris, according to the Associated Press report.

Previous reported crash fires came in Seattle, after the driver hit road debris that pierced the battery shield, and in Mexico, where the car hit a wall in a traffic circle. None of the drivers was hurt.

According to the AP, the latest blaze came Wednesday afternoon and, as in the first two, burned the front of the car according to photos posted on Jalopnik.com and Valuewalk.com. A spokeswoman for the Tennessee Highway Patrol told the AP that the Model S was headed east on Interstate 24 when it ran over a tow hitch. The hitch hit the undercarriage, causing an electrical fire. The driver escaped after pulling off the road.

Tesla spokeswoman Liz Jarvis Shean told the AP that the company has sent a team to Tennessee to investigate and that the driver told the company he believes the car saved his life.

"The problem here isn't that the cars lack effective safety technology, as all three Tesla accidents and fires have resulted in no injuries to the drivers. The problem is that we have three fires in six weeks," Karl Brauer, senior analyst at Kelley Blue Book, said.

"At some point the cause of the fire, the safety of the drivers and even the attitude of the owners (all three apparently want another car) stops mattering because you're left with recurring headlines featuring the words 'Tesla' and 'Fire.'

"For a company with a stock price based as much or more on image than financials, those recurring headlines are highly damaging," he said.

High-flying Tesla trades more like a speculative report tech stock than an automaker, and its high valuation is vulnerable to the slightest perception of a misstep. Shares rose this year by more than 400% before a correction last month, rebounded some and then fell again this week after the earnings report raised analysts concerns about costs, battery supplies and production estimates.