The world’s largest electric vehicle (EV) manufacturer Tesla Inc. (TSLA) has recalled 53,822 vehicles in the U.S. with rolling stop feature in its Full Self-Driving (FSD) mode.
Following the news, TSLA shares fell more than 3.3% and ended the day almost flat at $931.25 on February 1. Tesla shares have lost 22.4% year-to-date amid a broader market sell-off vis-à-vis a 27.6% gain over the past year.
Rolling Stop FSD Feature
The National Highway Traffic Safety Administration (NHTSA) has cited collision concerns on Tesla models, which are loaded with the rolling stop feature in the FSD mode. The rolling stop feature was introduced in the FSD Beta program in October 2021. This feature allows the vehicles to be in motion at a speed of 0.1-5.6 mph even at an all-way stop intersection.
Tesla and the NHTSA had met on January 19, to discuss the feature including its operating parameters, which the NHTSA considers as risky as it increases the chances of collisions. Although, no such incidents have been reported, Tesla has decided to recall the vehicles mentioned in the NHTSA report, and also release an over-the-air software update for vehicles that are not included in the recall.
As per the report, the recall includes Model S and Model X sold between 2016 and 2022, the Model 3s sold between 2017 and 2022, and the Model Ys sold between 2020 and 2022. Tesla’s FSD Beta fleet has increased to nearly 60,000 vehicles, giving the company valuable real-world data on the usage, convenience, and issues related to its advanced driver-assist systems such as Autopilot and FSD Beta.
The over-the-air firmware release 2021.44.30.15 would disable the rolling stop feature in the vehicles, which are not part of the recall.
Company Comments
Tesla put out a statement reading, “Firmware release 2021.44.30.15 is expected to begin deployment OTA to affected vehicles in early February 2022. The disablement will carry forward in firmware release 2021.44.30.15 and later releases. No further action is necessary from owners who install firmware release 2021.44.30.15 or a later release on their vehicles.”
“Tesla does not plan to include a statement in the Part 577 owner notification about pre-notice reimbursement to owners because there is no paid repair relating to this recall’s underlying condition and owners will receive the remedy free of charge through firmware release 2021.44.30.15 or a later release,” the company concluded.
Analysts’ View
Yesterday, Daiwa analyst Jairam Nathan lowered the price target on the stock to $980 (5.2% upside potential) from $1,150, while maintaining a Hold rating.
Nathan is concerned about Tesla’s decision to not introduce any new models in 2022, while competitors are rushing with new model introductions and advanced technology. The analyst notes that this could hurt Tesla’s leadership position and also cautions about margin pressures from slower production at factories.
Overall, the stock has a Moderate Buy consensus rating based on 17 Buys, 7 Holds, and 7 Sells. The average Tesla price target of $1,086.61 implies 16.7% upside potential to current levels.
Stock Investors
According to TipRanks’ Stock Investors tool, investor sentiment is currently Very Positive on Tesla, with 1% of portfolios tracked by TipRanks increasing their exposure to TSLA stock over the last 7 days.
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