The National Highway Traffic Safety Administration (NHTSA) announced a recall of about 120,000 Tesla (NASDAQ: TSLA) 2021-2023 Model S and X vehicles. The doors can open in an accident if unlocked. The news follows the disclosure of a much larger recall, at nearly 2 million vehicles. Tesla needs to worry about whether these could affect future sales.
The reason that the NHTSA made the recall is specifically that the trouble with the doors violates one of its safety metrics. “As such, these vehicles fail to comply with the requirements of Federal Motor Vehicle Safety Standard number 214, ‘Side Impact Protection’.” A free software fix remedies the problem. Six reasons to avoid a Tesla Y model, no matter what.
Last week, Tesla recalled about two million cars because of autopilot issues. A set of investigations that lasted over a year led to the decision. Autopilot-related flaws were tied to almost 1,000 accidents. CNN reported that the autopilot gave a “false sense of security” and the system could be “misused.”
Autonomous vehicles, or self-driving cars as they are known, are Tesla’s next frontier. Tesla has already reached a high EV market share in the US, and no other manufacturer can match it. Tesla produced over 400,000 vehicles last quarter, although not all were for US sales. Other prominent car companies, like Ford, will only sell tens of thousands of EVs this year.
With Tesla’s lead in EV sales, it will need something to hold its market share at current levels as competition from its largest rivals grows. No car company has built an entirely driverless car, but it would revolutionize the market as much or more than the EV. Tesla management believes it leads the sector in this technology.
However, as Tesla moves to dominate the driverless car market, it has to contend with mundane auto industry problems that have existed for decades. Broken doors and highly visible recalls make consumer confidence in a brand harder each time a recall is announced.
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