A Tesla Model S electric car is shown for sale at a Tesla store in a shopping mall in California

Tesla shares plummet after Model S fire

Shares in Tesla Motors plummeted yesterday after a driving blog posted pictures of a Model S electric sedan in flames.

The blog, called Jalopnik, posted pictures and a video of the fire, which apparently took place after an accident on Tuesday morning just south of Seattle, Washington, with Tesla confirming the authenticity of the images.

A Tesla spokesman said the car caught fire after the driver ran over a "large metallic object" causing extensive damage to the front end of the car, but the incident saw Tesla shares fell 6.2 per cent to on the Nasdaq, their biggest one-day decline since mid-July.

According to a report from the Seattle-area fire department that extinguished the blaze, said what they believe was a battery pack at the front of the car was burning and adding water made the flames worse and they eventually put out the blaze with dry chemical extinguisher.

The report says that when they took apart the front end of the car, they found a battery pack still burning and firefighters "had to puncture multiple holes in the pack to apply water to the burning material in the battery”.

The Model S, like many other "green cars," is powered by lithium-ion batteries, a relatively new technology to the auto industry that is much more powerful than the traditional lead-acid batteries, but also carries a larger safety risk, battery experts have said.

Investors are wary of lithium-ion battery fires because they could hurt consumer demand, at least in the short-term, analysts have said.

Tesla spokeswoman Liz Jarvis-Shean had no immediate comment on the trooper's description of the fire. She added that Tesla, which exclusively makes electric cars, is studying the incident now.

Tesla's only vehicle for sale now is the Model S, although the Model X crossover is on the horizon.

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