Tesla Recalls Over 475,000 Cars Over Safety Issues Increasing Crash Risk

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Topline

Tesla has voluntarily recalled more than 475,000 vehicles due to two separate safety issues, the National Highway Traffic Safety Administration disclosed on Thursday—marking the electric-carmaker’s biggest single-day recalls ever as the firm’s stock attempts to pare losses since an all-time high last month.

Shares of Tesla have plunged nearly 12% from their peak last month, but are still up about 48% this … [+] year.

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Key Facts

In one of two letters sent to Tesla on Wednesday, the NHTSA disclosed the car-maker helmed by billionaire Elon Musk was recalling all its Model 3 vehicles manufactured between 2017 and 2020, representing 356,309 total cars, because their rearview cameras may be damaged by opening and closing the trunk lid.

The company also recalled 119,009 Model S vehicles manufactured between 2014 and this year due to issues with the front trunk latch that could lead to the vehicle’s hood opening unexpectedly.

In both instances, Tesla said it would inspect and remedy the issues for owners “free of charge,” and added that it would notify all owners of the recalls via mail on February 18.

Shares of Tesla, which did not immediately respond to Forbes’ request for comment, fell as much as 2% Thursday morning after the recalls were disclosed, pushing the stock down about 6% this month.

The single-day recalls follow several others this year, including two in late June encompassing more than 285,000 cars sold in China, whose State Administration for Market Regulation said the cruise control in certain Model 3 and Model Y vehicles could be mistakenly switched on, potentially causing the cars to accelerate unexpectedly.

Key Background

Shares of Tesla have racked up big losses since Musk, the world’s richest person, suggested last month he would sell about 10% of his stake, sparking concerns among investors about how share prices would hold up amid the massive liquidation. Musk has since sold nearly $16 billion worth of stock, including a $1 billion batch on Tuesday and representing about 7% of the shares he owned. Shares are down nearly 12% from their peak in November but have still surged about 48% this year, compared to 30% for the S&P 500.

What To Watch For

The NHTSA has opened multiple investigations into Tesla over separate safety-related issues. Last week, the agency initiated a probe into 580,000 Tesla vehicles sold since 2017 over features allowing drivers to play games on the front-center touchscreen while a vehicle is running. And in August, the NHTSA launched an investigation into Tesla’s Autopilot system following nearly a dozen crashes that left at least 17 people injured and one dead since 2018.

Big Number

627,000. That’s roughly how many vehicles Tesla delivered in the first three quarters of the year, surpassing 2020’s full-year deliveries of just under 500,000.