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Tesla Drops on Concerns Over Wall Charger Fires (Update 2)

Updated from 1:47 p.m.EST  to include press release statement from the company.

NEW YORK ( TheStreet) -- Shares of Tesla Motors (TSLA - Get Report) closed 1.2% lower to $145.72 on news that the company is experiencing more problems with its wares, as the company's wall chargers have overheated in some cases.

First reported by Bloomberg, CEO Elon Musk noted the company would be mailing out the updated charger connectors within the next two weeks.

Tesla has come under scrutiny in recent months over fires that have occurred from its Model S electric vehicle. The company has experienced three fires associated with its popular Model S, two domestically, and one in Mexico.

Palo Alto, Calif.-based Tesla provided a statement on the matter, noting that the updated adapter would have a thermal fuse. "In December 2013, Tesla provided an over-the-air software update that addressed potential overheating at the socket and would even protect a customer if there was bad wiring on the house side," the company said in an email. "We believe this fully addresses the problem. However, to provide additional protection for Model S customers, we have designed a new wall adapter with a thermal fuse. This upgraded adapter will be provided to all existing and new customers starting in a few weeks."

The National Highway Traffic Safety Administration (NHTSA) is probing the Model S for investigation over these fires. However, the government agency recently reaffirmed its 5-Star safety rating on the car, as Tesla awaits final word on the probe.

Following the close of trading, the company issued a press release on the matter. Full text is below:

PALO ALTO, Calif. - A variety of factors such as corrosion, physical damage to receptacles, or inappropriate wiring or installation of electrical outlets can cause higher than normal electrical resistance when using the Universal Mobile Connector ("UMC") NEMA 14-50 adapters to charge Tesla Model S vehicles. When charging, higher than normal electrical resistance connections to external energy sources may cause excessive heating of the adapter. In December 2013, Tesla released an over-the-air software update to address this issue, enabling the Model S onboard charging system to automatically reduce the charging current by 25 percent if it detects unexpected fluctuations in the input power to the vehicle. This fully addresses the issue by substantially reducing the heat generated in any high resistance connections outside the vehicle. This update increases robustness and safety considerably in the unlikely event that a home wiring system, receptacle, adapter or cord is unable to meet its rated current capacity.

Because this was an over-the-air update, customers can confirm receipt without having to bring their vehicles into a Tesla Service Center or other location by simply tapping on the 17" touchscreen and verifying that their Model S is running software version 5.8.4 or later. Any vehicle that is not within range of the wireless network or is not remotely accessible for any other reason can have the update installed through Tesla authorized Service Centers or Tesla Rangers.

Tesla believes that this software update fully addresses any potential risks. However, to provide another layer of assurance to Model S customers using the 14-50 socket, we have designed an improved wall adapter with a thermal fuse. Even if the circuit breakers on the house side and car side don't trip, the thermal fuse will prevent current from flowing if the wall socket region heats up for any reason. Although we do not believe the improved adapter is required to address the issue, we are taking this step as part of our commitment to full customer satisfaction. We will provide this upgraded adapter to existing and new customers free of charge starting in a few weeks.

In addition, Tesla has informed the National Highway Traffic Safety Administration of these proactive measures.

 -- Written by Chris Ciaccia in New York.

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