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Tesla stock hasn’t been dented so far by recalls announced this week.
Sam Yeh/AFP via Getty Images
Electric-vehicle pioneer Tesla is facing another recall. While investors typically don’t sell car stocks based on recalls, these notices can contain useful nuggets for shareholders.
On Thursday, the National Highway Traffic Safety Administration, or NHTSA, website indicated that Tesla (ticker: TSLA) will recall about 817,000 vehicles for a seat belt chime issue—the chime might not sound when the seat belt isn’t plugged in. The fix is a software update, according to the NHTSA notice, so owners don’t need to bring cars to a mechanic to correct the issue.
That’s the second Tesla recall that will be fixed by an over-the-air software update this week. On Tuesday, the NHTSA recall website indicated about 54,000 Tesla vehicles would be recalled to correct a rolling stop issue related to the company’s driver-assistance software. The latest version of Tesla’s so-called full self-driving, or FSD, software would, apparently, perform a rolling stop at a stop sign instead of coming to a complete halt.
The fix for Tesla was a software update simply disabling the “rolling stop” feature.
The recalls haven’t been an issue for the stock thus far. Tesla stock is up about 1.3% in midday trading Thursday. The
S&P 500
and
Nasdaq Composite
are down 1.3% and 2.1%, respectively.
Meta Platform
‘s (FB) latest earnings report has pushed the broader market down. Meta stock dived 24.1% Thursday after giving a disappointing outlook Wednesday evening.
The recalls do, however, offer some information investors should pay attention to. For starters, both notices are a sign that cars are rapidly changing: Vehicles are increasingly controlled more by software than hardware. That means issues such as a seat belt chime can fixed for much less money than in the past—no shop visits, no parts, and no mechanics.
One point of confusion is that Tesla recalled about 54,000 cars to fix the rolling stop issue, but roughly 60,000 cars were equipped with its latest FSD software, according to the company. It’s unclear why not all 60,000 were recalled. The NHTSA referred Barron’s to Tesla, which didn’t respond to a request for comment about the numbers.
The 6,000 figure could be a rounding error, but the penetration rate of FSD software into Tesla’s fleet of vehicles is an important issue that investors follow. Having the best self-driving features can drive market share and sales. FSD software can be purchased as a subscription, or for $12,000 in a lump-sum payment.
Write to Al Root at allen.root@dowjones.com