Tesla shares fell 0.6% in premarket trading Friday after Chinese market regulator said the carmaker will recall 1.6M vehicles due to software issues.
China’s market regulator announced that Tesla (NASDAQ: TSLA) will begin recalling over 1.6 million cars in China on Friday, citing software issues related to assisted driving features and door-locking systems. The company’s shares slipped 0.6% in the premarket trading.
What Caused Tesla’s 1.6 Million Car Recall in China?
According to China’s top market regulator, Tesla is set to recall 1.6 million electric vehicles (EVs) in China, sending the company’s shares sliding in Friday’s premarket.
Starting today, the auto giant will recall around 1.61 million imported Model S, Model X, and Model 3, as well as domestic Model 3 and Model Y cars with production dates between Aug. 26, 2014, and Dec. 20, 2023. Additionally, the company will also recall 7,538 imported Model S and Model X units produced in the period from Oct. 26, 2022, to Nov. 16, 2023, due to an issue with the door latch controls, China’s State Administration for Market Regulation (SAMR) wrote in a statement.
The move comes after discovering problems with the vehicles’ assisted driving functions and door-locking systems. The regulator said the recall will be done through remote over-the-air (OTA) updates to the cars’ software.
“For vehicles within the scope of this recall, when the automatic assisted steering function is turned on, the driver may misuse the level two combined assisted driving function, increasing the risk of vehicle collision and posing a safety hazard.”– said the SAMR.
The recall represents the latest blow to the company’s attempts to increase its market share in China, the world’s biggest auto market. The country plays a vital role in Tesla’s global presence as a major consumer market and the host of one of the company’s giga factories in Shanghai.
Less than a month ago, the EV leader recalled almost 2 million of its cars in the US to restrict the use of its Autopilot feature. The move occurred after a two-year probe by safety regulators of around 1,000 crashes in which the feature was engaged.
Tesla May Lag Rest of Big Tech in 2024, Analysts Say
Tesla is one of the Magnificent Seven tech giants that drove the broader market’s rally last year, pushing the S&P 500 to a near-all-time high.
While most of this group’s companies look well-positioned to continue their uptrend in 2024, Wall Street is less bullish on Tesla’s prospects. The carmaker’s latest earnings report revealed a significant drop in its profit margins, and analysts think these challenges may persist.
“Tesla’s valuation has been supported by growth expectations, even as margins have eroded. We expect delivery and revenue estimates for 2024 and 2025 will come down materially.”– said Bernstein analyst Toni Sacconaghi in a recent note.
According to FactSet’s estimates, Tesla’s earnings are expected to rebound from a 25% decline in 2023 to $3.06 per share. Despite a projected 45% increase in revenue to $118.5 billion, Wall Street anticipates a 6% dip in earnings per share (EPS) for 2024 compared to the figures in 2022, settling at $3.83.
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Originally Posted January 5, 2024 – Tesla Slides Premarket as EV Maker Plans to Recall 1.6 Million Cars
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