It was bound to happen. Following recent reports of two Tesla Model S electric cars bursting into flame after hitting road debris, the National Highway Traffic Safety Administration (NHTSA) said it will formally investigate the matter.

The "undercarriage strikes" reported in Washington and Tennessee pierced the battery compartment and caused the cars to burst into flame.

The NHTSA announcement made Tesla shares slip briefly during pre-market trading on Tuesday on the Nasdaq, to $116. However, the shares recovered smartly and closed at $126.09. During early morning trading on Wednesday, the shares were slightly down at $125.63. 

Tesla has welcomed NHTSA's probe and prior to the announcement of the pobe, Tesla CEO and founder Elon Musk said in a company blog post that the company will be taking three steps to ensure better safety. They are

- First, we have rolled out an over-the-air update to the air suspension that will result in greater ground clearance at highway speeds. To be clear, this is about reducing the chances of underbody impact damage, not improving safety. The theoretical probability of a fire injury is already vanishingly small and the actual number to date is zero. Another software update expected in January will give the driver direct control of the air suspension ride height transitions. 

- Second, we have requested that the National Highway Traffic Safety Administration conduct a full investigation as soon as possible into the fire incidents. While we think it is highly unlikely, if something is discovered that would result in a material improvement in occupant fire safety, we will immediately apply that change to new cars and offer it as a free retrofit to all existing cars. Given that the incidence of fires in the Model S is far lower than combustion cars and that there have been no resulting injuries, this did not at first seem like a good use of NHTSA's time compared to the hundreds of gasoline fire deaths per year that warrant their attention. However, there is a larger issue at stake: if a false perception about the safety of electric cars is allowed to linger, it will delay the advent of sustainable transport and increase the risk of global climate change, with potentially disastrous consequences worldwide. That cannot be allowed to happen. 

- Third, to reinforce how strongly we feel about the low risk of fire in our cars, we will be amending our warranty policy to cover damage due to a fire, even if due to driver error. Unless a Model S owner actively tries to destroy the car, they are covered. Our goal here is to eliminate any concern about the cost of such an event and ensure that over time the Model S has the lowest insurance cost of any car at our price point. Either our belief in the safety of our car is correct and this is a minor cost or we are wrong, in which case the right thing is for Tesla to bear the cost rather than the car buyer. 

Musk, who has been recognized as CEO of 2013 by MarketWatch, and the most influential man of the year by  said he believes that Tesla Model S still is one of the safest cars in the world and the company expects to produce at least 20,000 electric cars this year, which retail for $70,000 and above.

NHTSA has also observed that in both the incidents, the driver and passengers were able to escape unhurt. "In each incident, the vehicle's battery monitoring system provided escalating visible and audible warnings, allowing the driver to execute a controlled stop and exit the vehicle before the battery emitted smoke and fire," NHTSA said.

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