CNN has just reported that Tesla continues to add to its list of recalled Model X, S, and 3 vehicles. A total of at least 80,000 cars have been taken off the road for inspection due to software and safety system errors, among other issues. This development raises red flags for investors who have already had a rather tense year.
The waves of recalls likely correspond to the high number of accidents caused by Tesla this year, and are related to the launch of its new automated driving program, which is still in the testing phase.
Tesla recalls more than 80,000 cars in China due to software and security issues
Tesla, the American company focused on optimizing the use of renewable energy, has shown impressive growth this decade and has become the flagship brand of electric vehicles. But despite its popularity, 2022 has not been the best year for the brand and its main spokesperson, Elon Musk; conflict after conflict has diminished both profits and the popularity of these cars.
Throughout this year, Tesla has been recalling vehicles for analysis of potential defects to prevent further accidents on its already long list. This month, they added another number of recalls, and investors are concerned about the consequences for the brand.
The Model X and Model S account for the majority of the recalled vehicles, nearing 70,000 units. The Tesla Model S has been on the market for a decade, and the recalled vehicles span this entire period, meaning they are not recent models; the defects were present from the beginning. It is also concerning that this was once one of the brand's best-selling designs.
The Tesla Model X, for its part, is based on the Model S, so it makes sense that they share similar flaws. Released in 2015, it has also been causing accidents for quite some time. Although it was intended to be an improvement over its predecessor, it seems to retain some software issues that have concerned Tesla enough to warrant their removal.
The remaining cars that have been taken out of service are Model 3s. In this case, the concern centers on seatbelt malfunctions. At the time of its launch in 2017, this model broke sales records, as it was a design aimed at families: high-performance electric cars at prices accessible to the upper middle class. Now, its safety system is being called into question.
“Recalls are always costly and often amplified in a way that can damage reputations, especially now that the market has become hyper-competitive and Tesla’s order backlog has shrunk… This recall primarily affects imported models (S and X), so it can be managed if brought forward.”
Bill Russo, CEO of Automobility, for CNBC.
Tesla has had complicated finances this year, closing the last quarter with numbers below market projections and its shares plummeting. Musk says this is related to the closure of some manufacturing and distribution centers. Influenced by this idea, there have been important applications and improvements at the factory located in Shanghai, which is now one of the main ones for the company.
As a result, the Shanghai factory increased its production and Tesla broke sales records in China this year, becoming one of the most popular brands in the country, which sparked the interest of potential competitors in the electric vehicle industry and now the Chinese market is becoming more competitive than ever in the area.
It's worth noting that this isn't the first time Tesla has issued a massive recall. It appears they've been aware of the issues for some time and are attempting to implement repairs gradually to avoid overwhelming the system and causing unnecessary disruption. In any case, May and April saw the company experience over 100,000 Model 3 recalls.
2022 has been the deadliest year for Tesla
In the middle of the year, the National Highway Traffic Safety Administration reported that Tesla had apparently caused at least 273 of the nearly 400 accidents reported by cars using Autopilot , and although these figures may be subject to further analysis to truly understand the implications, it cannot be denied that it is a rather high number on its own.
Just a few days ago, news outlets reported an accident that resulted in the deaths of two people when a Tesla in Autopilot went out of control on the streets of Guangdong, China. Videos recorded on November 14 show the car accelerating rapidly until it crashed, causing fatal injuries.
A few months earlier, in July, two similar accidents occurred, this time in Florida. In one, a pedestrian was struck, while in the second, the Tesla crashed into a parked truck. These accidents became part of the 16 investigations the FBI had opened in July of that year against Tesla for similar incidents.
Another common criticism of the vehicles, which has also caused damage, is "phantom braking." This occurs when the car is in autopilot mode and suddenly stops for no apparent reason. This phenomenon is also the subject of an internal investigation at Tesla and by the authorities.
All these events only add to the company's string of conflicts, as well as the lawsuit that Elon Musk is currently facing, in which he is accused of having misappropriated company funds during 2018.
Four years ago, Elon Musk received a €53,000 billion bonus, which he justified by citing achievements. However, the plaintiff claims that it was actually a way for him to siphon funds from Tesla for personal projects.
Musk is involved in many projects, including some not typically associated with him, and handles large sums of money. Therefore, it's not uncommon for him to shift his profits around in an attempt to maintain a balance. An example of this is his significant sale of Tesla stock a few weeks ago to finance the purchase of Twitter, which appears to be proving disastrous. This sale ultimately sent the stock plummeting to its lowest point in two years.
The billionaire continues to defend his positions and assure that he is taking the necessary steps to return Tesla's finances to normal, but we will have to wait for the 2023 numbers to verify this.
