Tesla CEO expects feds to clear Model S in fires

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DETROIT (AP) - The leader of upstart automaker Tesla Motors says he is confident that its Model S electric car is safe and will be cleared by a federal investigation into two battery fires.

CEO Elon Musk said the fires, which occurred when metal road debris pierced the underbody of the cars at highway speeds, are extreme cases. He doesn't expect a recall and said his engineers are not working on any fixes for the battery-powered cars.

"In both cases it was a large piece of metal essentially braced against the tarmac," Musk said in an interview Friday with The Associated Press.

No one was hurt in the fires, which began in the batteries and happened along freeways near Seattle and Nashville, Tenn., starting Oct. 1. Another fire happened in Mexico after the driver ran through a concrete wall at more than 100 mph. In the Seattle case, the Model S hit a curved truck part. The car hit a trailer hitch in the Tennessee crash.

Musk said no one has ever been hurt in a Model S crash, which shows there's no safety problem for drivers or passengers. The only other reason to investigate is economic loss from the fires, but that's not an issue because Tesla amended its warranty to cover fire loss in crashes, Musk said.

"I'm not saying it can't happen again," he said. "I'm saying in any kind of low-speed impact, you're fine. Any car, Model S or not Model S, the underside is going to get significantly damaged if you drive over a large metal object."

Musk described the weeks since the fires as "torture." He said the crashes have received an unreasonable amount of media attention given that no one was injured and the passenger compartments remained intact. He understands that a new technology such as electric cars will get more scrutiny, "but not to the insane degree that we're receiving."

The National Highway Traffic Safety Administration, the U.S. government's auto safety watchdog, announced on Tuesday that it would investigate the U.S. fires to see if there's a safety problem in the Tesla design. NHTSA said it would "examine the potential risks associated with undercarriage strikes." The investigation could lead to a recall, but a decision likely is months away.

In the telephone interview, Musk also defended the battery placement in the Model S beneath the passenger compartment and about a half-foot above the road. That gives the car a low center of gravity and great handling, he said, while also protecting passengers from debris coming through the floorboards. The U.S. crashes occurred with so much force that, in a different car, the objects could have come through the floor and hurt people, he said.

Since the fires, Tesla has raised the speed at which the car automatically lowers itself by an inch for better aerodynamics. The speed went from 50 to 87 mph, so the Model S can still get lower on high-speed German autobahns which mainly are free of debris, Musk said. The higher ground clearance for U.S. freeways makes debris damage less likely, he said. The car's road clearance in normal driving is 6 inches, which is higher than many other automobiles.

Musk said there's no reason to bolster the quarter-inch-thick shield that now protects the battery from road debris. Tesla engineers, he said, are not working to strengthen the shield, which is made of heat-treated aluminum.

Tesla's stock price has dropped by 37 percent since the first fire. Some investors and analysts also were disappointed by the company's third-quarter results.

But Musk said the stock's value, which earlier in the year had risen 470 percent to $194.50, got too high and the market is correcting it. "I believe I said several times that the valuation was more than we had any right to deserve," said Musk, a billionaire who co-founded PayPal and started SpaceX. "I was not the one who thought the valuation should go up to such levels."

Tesla shares closed Friday down 72 cents, or 0.6 percent, at $121.38.

Musk also said that Model S sales are higher than expected so far in the fourth quarter. Earlier this week the car received the highest owner satisfaction score in a Consumer Reports survey.

But Barclays analyst Brian Johnson, in a note to investors Thursday, cut 10 percent from his 2014 Model S sales estimate, saying that historically other automakers have lost sales during highly publicized investigations.

Toyota and Audi, he wrote, saw sales drop 10 percent to 20 percent during past investigations for unintended acceleration. "Even though both vehicles were later largely exonerated, each of these cases led to significant demand destruction," Johnson wrote.

He reduced his Model S sales forecast for next year to 29,700, and lowered his one-year price target for Tesla stock from $141 to $120.

Tesla, which is based in Palo Alto, Calif., hasn't released a sales forecast for next year. But in early November, it predicted 21,500 deliveries worldwide this year.

(Copyright 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)

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