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Tesla (TSLA) to Recall Model X for Defective Third-Row Seats

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Tesla Motors, Inc. (TSLA - Free Report) has announced a voluntary recall of all Model X vehicles produced before Mar 26, 2016. The recall is being announced as internal testing by the electric carmaker revealed that the third-row seats can fold forward or unlatch during a crash due to a defective recliner hinge.

The company said that it has no reports of such incidents from customers. However, it has advised Model X owners to refrain from using the third-row seats until the repairs are made.

Per Tesla, the problem was discovered before the deliveries to Europe started. Safety tests for the European Union are more stringent than those for North America. Model X had cleared all 15 tests conducted by Tesla earlier.

This is the first recall of Model X. As Tesla started deliveries of the vehicle in Sep 2015 and has been struggling with the production volume due to parts shortage, only 2,700 vehicles need to be recalled.

According to Tesla, the repair will take merely 2 hours per vehicle. Thus, the company will be able to complete the repairs within 5 weeks.

Moreover, the supplier of the seats, Australia-based Futuris Automotive, will bear the cost of repairs as it is a manufacturing defect. Thus, Tesla’s financials will not be affected by this recall. The automaker also clarified that the production of Model X will not be impacted by the recall, alleviating fears of another quarter of lower-then-expected deliveries.

Tesla currently carries a Zacks Rank #3 (Hold). Some better-ranked automobile stocks include Federal-Mogul Holdings Corporation , Cooper Tire & Rubber Co. (CTB - Free Report) and Superior Industries International, Inc. (SUP - Free Report) . All the three stocks sport a Zacks Rank #1 (Strong Buy).

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