Tesla (TSLA) has issued a software update to address a safety problem linked to the cruise-control system in its vehicles in China, according to a Wall Street Journal report. The regulator in China calls it a product recall. An investigation found that the system could be activated accidentally and lead to the vehicle accelerating unexpectedly.
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The safety software update targets more than 285,000 Tesla Model 3 and Model Y vehicles produced between December 2019 and June 2021. More than 90% of those vehicles were manufactured at Tesla’s China plant in Shanghai. The update will fix the problem without requiring drivers to go to a dealer.
“Tesla will continue to improve safety in strict accordance with national requirements,” the report quoted Tesla as saying in a Weibo post.
A longtime darling brand in China, Tesla has recently run into product quality-related headaches in the country. In February, for instance, Chinese authorities summoned the company over complaints about safety issues. In April, a customer used the Auto Shanghai event to protest against an alleged braking problem on Tesla vehicles. (See Tesla stock chart on TipRanks).
Goldman Sachs analyst Mark Delaney recently reaffirmed a Buy rating and a price target of $860 on Tesla stock. Delaney’s price target implies 28% upside potential.
The analyst reiterated the bullish view after Tesla began delivering the Model S Plaid, an advanced version of the Model S that offers about a 400-mile driving range. Delaney noted that the car can achieve speeds of up to 200 MPH and accelerate from 0 to 60 MPH in under two seconds. Additionally, Tesla expects the Plaid to receive a leading NHTSA safety rating.
“While the market for the Plaid itself is relatively small, we believe it is an important product,” commented Delaney.
One of the reasons the analyst believes the Plaid is important is that it shows Tesla’s technology leadership.
Consensus among analysts is a Hold based on 10 Buys, 7 Holds, and 6 Sells. The average Tesla analyst price target of $632.10 implies 5.92% downside potential from current levels.
TSLA scores an 8 out of 10 on TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.
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