Tesla Blames Battery-Module Fault for Causing Shanghai Auto Fire

(Bloomberg) -- Tesla Inc. said an isolated battery fault caused a Model S to catch fire in a Shanghai parking lot two months ago, as the U.S. electric-car maker tries to ease safety concerns in its second-largest market.

A joint investigation with experts and executives from China and the U.S. found no “systematic defect” with the car, Tesla said in a statement Friday. An initial finding shows a malfunction with a single battery module at the front of the vehicle caused the incident, the company said.

A safety system was working as expected, which helped keep the rest of the battery pack intact, Tesla said. “Anyone inside the cabin would have had time to exit safely,” it said.

Tesla's statement comes a day after Chinese competitor NIO recalled 4,800 cars because of battery-safety issues. While Chinese officials have thrown their weight behind electric systems to replace the combustion engine in a fight against air pollution, a string of car blazes involving the two manufacturers prompted authorities to order automakers this month to check their battery-powered fleets.

China is Tesla's No. 2 market, after the U.S. The Palo Alto, California-based company is constructing a gigafactory in Shanghai that will produce batteries as well as cars for the local market as soon as this year.

To contact Bloomberg News staff for this story: Yan Zhang in Beijing at yzhang1044@bloomberg.net

To contact the editors responsible for this story: Young-Sam Cho at ycho2@bloomberg.net, Tom Lavell, Christopher Jasper

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With assistance from Bloomberg