Did Tesla cover up a potentially dangerous battery defect?

Federal safety investigators are probing the reason for a number of software updates

Federal safety monitor officials have notified Tesla that they are probing battery software defects in certain models and whether that caused some cars to go up in flames.

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The National Highway Traffic Safety Administration announced late last month in a letter to Al Prescott, Tesla's deputy general counsel, it was launching the defect investigation in the wake of a number of battery software updates issued to Tesla Model S and X vehicles. The updates affected approximately 2,000 vehicles.

Tesla must respond to the NHTSA's letter by Nov. 29, 2019. A spokesperson for the Elon Musk-founded car company did not immediately answer FOX Business’ request for comment.

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David Whiston, an equity strategist for Morningstar covering U.S. autos told FOX Business on Monday he does not expect that the latest news of the probe will create an issue for Tesla at this point.

“The risk of this has been around for a long time, well before the announcement,” Whiston said. “Right now, I wouldn’t anticipate it being a major problem for the company.”

Whiston pointed to one instance from April, when a Model S seemingly randomly went up in flames while parked inside a Shanghai parking garage.

There was not a collapse in Tesla despite the media attention the car company received in the wake of the caught-on-video inferno, he said.

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“I don’t think we’re at the point of mass consumer panic or mass consumer avoidance,” he added. “I think a lot more would have to come out.”

NHTSA's probe was spurred by a petition submitted in September by an attorney whose client is pursuing a class-action lawsuit in connection to the software updates, “which have been alleged to be issued by Tesla in response to the alarming number of car fires that have occurred worldwide,” the Sept. 17 letter, which was obtained by CNBC, to the NHTSA states.

It "is believed that Tesla has throttled the performance and charging capabilities of these batteries in order to avoid potential battery fires from occurring and to skirt from having to replace said batteries under warranty,” the September letter further states.

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Once Tesla became aware of the potential defect, the car-maker issued the software updates starting in May 2019, rather than initiating a safety recall and notifying the NHTSA, according to the letter.

“Here, 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,” the missive states.

Following the conclusion of its probe, the NHTSA will publish its determination on its website, as well as in the Federal Register.

Tesla lauds its “fully electric sedan,” Model S, as “one of the safest cars on the road,” and boasts its 5-star safety rating, which, according to its site, was issued by the NHTSA and Euro NCAP.

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The Model X is Tesla’s sport utility vehicle. The SUV “received a 5-star safety rating in every category and sub-category by the National Highway Traffic Safety Administration (NHTSA), making it the first SUV ever to earn the 5-star rating across the board,” Tesla wrote on its site.