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Tesla (TSLA) Recalls Vehicles in China Over Defective Cruise Control
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Tesla (TSLA - Free Report) recently issued a recall for about 285,000 electric vehicles (EVs) in China over faulty cruise control system. The recall consists of 211,256 locally-produced Model 3 sedans and 35,665 imported ones, as well as 38,599 China-made Model Ys.
The cruise control function is a crucial part of Tesla’s Autopilot assisted driving function. Reportedly, the malfunction in the affected cars could cause the cruise control function to get activated accidentally, leading to sudden acceleration of the vehicle, creating potential safety hazards and also resulting in a crash in extreme cases.
This safety issue was identified by China’s State Administration for Market Regulation. Tesla will make a software upgrade free of cost to fix the identified issue.
The EV giant plans to upgrade the cruise-control software on the affected vehicles remotely, thus saving owners the time needed in bringing their cars to a company dealership. For those owners whose vehicles cannot be repaired remotely, they will be contacted by Tesla.
Tesla issued an official apology for the inconvenience caused by this recall to all car owners through its customer support account on Chinese social media platform Weibo. The EV behemoth also promised to continuously improve vehicle safety in strict accordance with the national requirements.
Reportedly, China is Tesla’s second largest market after the United States, accounting for about 30% of its top line. Tesla currently manufactures electric Model 3 sedans and Model Y sport-utility vehicles (SUVs) at its Shanghai plant in China. Tesla regained its Chinese market share once it started selling domestically-produced vehicles in China in late 2019 as those were 13% cheaper for Chinese consumers than the vehicles imported from the United States. The EV giant had also received strong backing from Shanghai when it built its first overseas factory there in 2019.
The China market is the key to Tesla’s global growth ambitions. In fact, Tesla’s Model 3 sedan is one of the best-selling EVs in the country. The company has a dominant market share in the mainland, with sale of 147,445 vehicles last year. The company’s flagship model in China — Model Y — also secured green signal for sale in the country last December.
The picture, nevertheless, seems to have changed recently for Tesla, which has come under growing regulatory scrutiny in China due to several accidents involving Tesla vehicles in the past few months. In fact, the automaker was called in by regulators in China over recalls, quality and safety concerns with its cars, including battery fires and abnormal acceleration. Tesla was also forced into issuing a public apology to China’s state grid in February after a video apparently showed a staff blaming an overload in the national electricity network for damage to a customer’s vehicle.
This April, a customer in China, in fact, blamed Tesla of faulty brakes in the car that caused an accident sending her parents to the hospital. This was followed by Tesla issuing a public apology to the unsatisfied customer.
Further, the latest recall, which is another hiccup for Tesla in China, might prove to be a headwind for the automaker in the near term.
Amid the recent backlash faced by Tesla in China, it projects material impact on its branding, orders and deliveries in the country for the upcoming months.
Moreover, despite its robust foothold in China, the California-based EV maker is battling stiff competition from Chinese electric vehicle firms, like the Shanghai-based electric startup NIO Inc. (NIO - Free Report) . Further, Chinese companies like XPeng Inc. (XPEV - Free Report) and Li Auto (LI - Free Report) , both of which debuted on U.S. exchanges last year, are capitalizing on the trending EV hype.
Notably, shares of the company have skyrocketed 232.8% in the past year compared with the industry’s rally of 149.3%.
Image Source: Zacks Investment Research
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Image: Bigstock
Tesla (TSLA) Recalls Vehicles in China Over Defective Cruise Control
Tesla (TSLA - Free Report) recently issued a recall for about 285,000 electric vehicles (EVs) in China over faulty cruise control system. The recall consists of 211,256 locally-produced Model 3 sedans and 35,665 imported ones, as well as 38,599 China-made Model Ys.
The cruise control function is a crucial part of Tesla’s Autopilot assisted driving function. Reportedly, the malfunction in the affected cars could cause the cruise control function to get activated accidentally, leading to sudden acceleration of the vehicle, creating potential safety hazards and also resulting in a crash in extreme cases.
This safety issue was identified by China’s State Administration for Market Regulation. Tesla will make a software upgrade free of cost to fix the identified issue.
The EV giant plans to upgrade the cruise-control software on the affected vehicles remotely, thus saving owners the time needed in bringing their cars to a company dealership. For those owners whose vehicles cannot be repaired remotely, they will be contacted by Tesla.
Tesla issued an official apology for the inconvenience caused by this recall to all car owners through its customer support account on Chinese social media platform Weibo. The EV behemoth also promised to continuously improve vehicle safety in strict accordance with the national requirements.
Reportedly, China is Tesla’s second largest market after the United States, accounting for about 30% of its top line. Tesla currently manufactures electric Model 3 sedans and Model Y sport-utility vehicles (SUVs) at its Shanghai plant in China. Tesla regained its Chinese market share once it started selling domestically-produced vehicles in China in late 2019 as those were 13% cheaper for Chinese consumers than the vehicles imported from the United States. The EV giant had also received strong backing from Shanghai when it built its first overseas factory there in 2019.
The China market is the key to Tesla’s global growth ambitions. In fact, Tesla’s Model 3 sedan is one of the best-selling EVs in the country. The company has a dominant market share in the mainland, with sale of 147,445 vehicles last year. The company’s flagship model in China — Model Y — also secured green signal for sale in the country last December.
The picture, nevertheless, seems to have changed recently for Tesla, which has come under growing regulatory scrutiny in China due to several accidents involving Tesla vehicles in the past few months. In fact, the automaker was called in by regulators in China over recalls, quality and safety concerns with its cars, including battery fires and abnormal acceleration. Tesla was also forced into issuing a public apology to China’s state grid in February after a video apparently showed a staff blaming an overload in the national electricity network for damage to a customer’s vehicle.
This April, a customer in China, in fact, blamed Tesla of faulty brakes in the car that caused an accident sending her parents to the hospital. This was followed by Tesla issuing a public apology to the unsatisfied customer.
Further, the latest recall, which is another hiccup for Tesla in China, might prove to be a headwind for the automaker in the near term.
Amid the recent backlash faced by Tesla in China, it projects material impact on its branding, orders and deliveries in the country for the upcoming months.
Moreover, despite its robust foothold in China, the California-based EV maker is battling stiff competition from Chinese electric vehicle firms, like the Shanghai-based electric startup NIO Inc. (NIO - Free Report) . Further, Chinese companies like XPeng Inc. (XPEV - Free Report) and Li Auto (LI - Free Report) , both of which debuted on U.S. exchanges last year, are capitalizing on the trending EV hype.
Tesla currently carries a Zacks Rank of 3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Notably, shares of the company have skyrocketed 232.8% in the past year compared with the industry’s rally of 149.3%.
Bitcoin, Like the Internet Itself, Could Change Everything
Blockchain and cryptocurrency has sparked one of the most exciting discussion topics of a generation. Some call it the “Internet of Money” and predict it could change the way money works forever. If true, it could do to banks what Netflix did to Blockbuster and Amazon did to Sears. Experts agree we’re still in the early stages of this technology, and as it grows, it will create several investing opportunities.
Zacks’ has just revealed 3 companies that can help investors capitalize on the explosive profit potential of Bitcoin and the other cryptocurrencies with significantly less volatility than buying them directly.
See 3 crypto-related stocks now >>