TSLA Tesla Inc

Tesla Motors Inc. is revising nondisclosure agreements to address concerns customers were discouraged from reporting possible safety problems with the Silicon Valley company's vehicles, said a person familiar with the matter.

The Palo Alto, Calif., electric car maker revised the agreements to make clear the contracts don't prohibit customers from reporting suspected safety problems to the U.S. National Highway Traffic Safety Administration, this person said.

The move comes after suggestions from an automotive blog and regulators that agreements Tesla asked customers to sign in exchange for covering some repair costs could prevent them from disclosing possible safety issues to U.S. regulators.

Regulators Thursday called the nondisclosure agreement "troublesome." Tesla earlier called "preposterous" suggestions it used contracts that attempted to prevent customers from alerting government officials to safety problems. The revision of the agreements was earlier reported by Automotive News.

At issue was a "goodwill agreement" that a Model S sedan owner in Pennsylvania signed after claiming in an online forum that he had a broken suspension. Faulty suspensions can cause motorists to lose control.

The automotive blog Daily Kanban subsequently reported on the alleged safety problem and suggested the agreement could prevent it from being reported to regulators. The blog also pointed to a possible defect in Tesla's Model X sport-utility vehicle.

The NHTSA on Thursday said it was examining the suspension problem. The inquiry was in the earliest stages and no formal investigation had been opened. Regulators typically screen myriad complaints and claims from consumers and safety advocates about potential problems across a variety of vehicle models without finding significant dangers exist.

Tesla in its own blog posted a lengthy response rebutting claims of safety defects or improper agreements with customers. Tesla added that it was cooperating with the NHTSA and that the agency has said it doesn't need any further information from the company.

Write to Mike Ramsey at michael.ramsey@wsj.com and Mike Spector at mike.spector@wsj.com

(END) Dow Jones Newswires

June 10, 2016 16:15 ET (20:15 GMT)

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