Battery fire takes $3bn toll on Tesla

"IT'S a Tesla, dude." With these four words – part of a shaky video caught on a mobile phone – the value of US electric car maker Tesla has plunged by almost $US3 billion ($A3.2 billion).

The video, released two days ago and showing a Tesla Model S parked on a Seattle road with flames licking around its bonnet, has spooked the company’s shareholders who are now not so sure that the battery-powered cars are completely safe – ironic given that the car was recently awarded the highest-ever US crash safety rating.

However, rather than blame the car for the fire, Tesla has attempted to pin the blame on the driver, who reportedly ran over a metallic object lying on the road shortly before the Model S caught alight.

In the two days since the fire – and as the video of the flaming Model S spreads like wildfire – Tesla’s shares have fallen from a high of $US194.50 earlier this week to $US173.31 as investors reassess the risk of their exposure to the electric car-maker.

According to reports, the fire sparked under the Model S’s bonnet, where the battery pack is housed. The Model S sells in the US with a choice of three battery types that affect the range and performance of the vehicle.

Tesla said it was the first reported fire in the car-maker’s mainstream model, which has also earned the title as the safest car ever tested by the US-based National Highway Traffic Safety Administration after it broke the test equipment.

A separate report issued by Seattle firefighters said they struggled to put out the blaze because the battery pack – the Telsa Model S’s battery is made up of 16 different cells and housed under the floor pan – was difficult to access.

As well, they said, spraying the fire with water only seemed to intensify it, so instead firefighters had to use dry chemical extinguishers.

The fire under the bonnet of the Tesla Model S – the first recorded incident of a Tesla to do so – comes hot on the heels of General Motors’ quick fix for its Volt petrol-electric hybrid. Federal US authorities launched an investigation into the car’s battery pack after one unexpectedly caught fire about a month after an official government crash test.

Another electric car-maker, Fisker, had also struggled with a fire sparked by electrical components.

Meanwhile, the west coast city of Palo Alto in California has changed its building code regulations to make it mandatory for new homes to include the wiring needed for an electric vehicle recharging station.

The city – which is also where Tesla is based – has the highest concentration of electric vehicles per head of population in the US.

According to the council, it is much more expensive for homeowners to retrofit wiring for a rapid recharging station than it is to install the wiring while a house is being built.