NHTSA to Evaluate Tesla Battery Flaw Cover-Up Claim

The National Highway Traffic Safety Administration says it’s received a petition calling for an investigation of certain Tesla Inc. electric cars and is evaluating the complaint, according to a notice posted on regulator’s website.

The petition, filed by a law firm representing Tesla drivers, alleges that Tesla updated battery management software in response to a potential defect that could lead to battery fires, according to the notice.

The law firm claimed that Tesla should have notified NHTSA of the potential defect and conducted a recall of an estimated 2,000 Model S and Model X vehicles, NHTSA said in its notice.

NHTSA hasn’t opened a defect investigation but is reviewing whether to do so. Tesla shares fell as much as 2.1% before paring losses to trade at $231.36 at 3:04 p.m. in New York on Friday.

Tesla representatives didn’t respond to an email seeking comment.

NHTSA said it would evaluate the allegations and decide whether to grant or deny the petition. If NHTSA grants it, the agency would launch a preliminary defect investigation.

The petition was filed by the Law Offices of Edward C. Chen, a California law firm representing a number of Tesla drivers in the U.S. who’ve experienced a significant amount of range loss after the software updates, including one driver who sued Tesla over the issue in August, according to the petition.

“Tesla is using over-the-air software updates to mask and cover up a potentially widespread and dangerous issue with the batteries in their vehicles,” Chen wrote.

The firm says drivers saw the range of their Teslas on a charge fall by 25 miles (40 kilometers) or more after Tesla released two battery software updates beginning in May.

Tesla released the software after a Model S caught fire in a Hong Kong parking lot in May, saying at the time that the update was a precautionary measure to protect vehicle battery packs.

The August lawsuit claims those software updates limited the battery’s capacity, decreasing the amount of energy it could store and how quickly it could be charged.

Separately, NHTSA and the National Transportation Safety Board are evaluating a number of battery fires in Tesla vehicles.