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NHTSA says finds no 'defect trend' in Tesla Model S sedans

People pass by the Tesla New York City store is seen in the Chelsea neighborhood of New York March 19, 2014. REUTERS/Brendan McDermid
People pass by the Tesla New York City store is seen in the Chelsea neighborhood of New York March 19, 2014. REUTERS/Brendan McDermid

(Reuters) - U.S. safety regulators said they closed an investigation into fires involving electric sports car maker Tesla Motors Inc's popular Model S sedans after finding no "defect trend", sending the company's shares up as much as 4 percent.

The U.S. National Highway Traffic Safety Administration (NHTSA) began its investigation after two cars in the United States and one in Mexico caught fire.

The two U.S. fires started after the driver ran over debris in the road, damaging the battery pack that runs along the base of the Model S.

Tesla responded by raising the ground clearance at highway speeds and taking steps to prevent overheating of its charging systems, including giving customers upgraded wall adapters and providing charging-software upgrades.

"Tesla's revision of vehicle ride height and addition of increased underbody protection should reduce both the frequency of underbody strikes and the resultant fire risk," the NHTSA said on its website. (http://r.reuters.com/tyn97v)

The regulator said that while a "defect trend" had not been identified, the closing of the investigation did not constitute a finding that a safety-related defect did not exist.

Tesla's shares were up 1.9 percent at $211.35 in early trading on the Nasdaq.

(Reporting by Sagarika Jaisinghani in Bangalore; Editing by Kirti Pandey and Ted Kerr)

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