U.S. opens probe into fatal Tesla crash, fire in California

(Reuters) - A fatal crash and vehicle fire of a Tesla Inc (TSLA.O) Model X near Mountain View, California, last week has prompted a federal field investigation, the U.S. National Transportation Safety Board said on Tuesday, sparking a big selloff in Tesla stock.

Tesla tumbled 8.2 percent, or $25 a share, to close at $279.18, the lowest close in almost a year, after news of the investigation. Shares of chipmaker Nvidia Corp (NVDA.O) closed down 7.8 percent after it disclosed it suspended self-driving tests across the globe with partners including Tesla.

It was unclear if Tesla’s automated control system was driving the car at the time of the accident, which killed the 38-year-old Tesla driver and involved two other cars, the NTSB and police said. Tesla vehicles have a system called Autopilot that handles some driving tasks.

“We have been deeply saddened by this accident, and we have offered our full cooperation to the authorities as we work to establish the facts of the incident,” Tesla said in a statement.

Government scrutiny of the Palo Alto, California company is mounting. This is the second NTSB field investigation into a Tesla crash since January.

The California Highway Patrol said the electric-powered Tesla Model X crashed into a freeway divider on Friday and then was hit by a Mazda before colliding with an Audi. The Tesla’s lithium batteries caught fire and emergency officials consulted company engineers before determining how to extinguish the battery fire and move the vehicle safely. NTSB said the issues being examined include the post-crash fire and removing the vehicle from the scene.

In January, the NTSB and U.S. National Highway Traffic Safety Administration sent investigators to California to investigate the crash of a fire truck and a Tesla that apparently was traveling in semi-autonomous mode. The agencies have not disclosed any findings.

The NTSB can make safety recommendations but only NHTSA can order automakers to recall unsafe vehicles or fine automakers if they fail to remedy safety defects in a timely fashion. Before the agency can demand a recall, it must open a formal investigation, a step it has not yet taken.

Tesla’s Autopilot allows drivers under certain conditions to take their hands off the wheel for extended periods. Still, Tesla requires users to agree to keep their hands on the wheel “at all times” before they can use Autopilot.

The NTSB faulted Tesla in a prior fatal Autopilot crash.

In September, NTSB Chairman Robert Sumwalt said operational limitations in the Tesla Model S played a major role in a May 2016 crash in Florida that killed a driver using Autopilot. That crash raised questions about the safety of systems that can perform driving tasks for long stretches but cannot completely replace human drivers.

Tesla in September 2016 unveiled improvements to Autopilot, adding new limits on hands-off driving.