With a market cap of around $1 trillion, the world’s largest electric vehicle (EV) maker Tesla, Inc. (NASDAQ: TSLA) seems to be in trouble again with the National Highway Traffic Safety Administration (NHTSA). This time, the company has been asked to recall 817,143 vehicles due to a seatbelt chime malfunction, which might lead to safety issues.
Shares of the company rose 1.9% in the extended trading session on Thursday after closing 1.6% lower on the day.
Seat Belt Reminder Alert
According to the NHTSA notice, the issue is related to a seat belt chime issue that fails to activate under certain conditions when the seat belt is not in use. But luckily, the issue can be fixed through a software update, costs related to which are likely to be minimal for Tesla.
As per the report, the recall includes Model S and Model X vehicles built in 2021-2022, and all Model 3 and Model Y vehicles in the U.S.
Explaining the risk, NHTSA said, “If the audible seat belt reminder chime does not activate at the start of a new drive cycle and the driver does not notice the accompanying visual seat belt telltale, the driver may not be reminded to buckle their seat belt and may begin operating the vehicle in an unbuckled state, which could increase the risk of injury. Tesla is not aware of any injuries or fatalities related to this condition.”
Last month, the issue was detected by people at the South Korea Automobile Testing & Research Institute (KATRI), and Tesla was notified. Consequently, the EV maker is already working on solving the software issue.
An over-the-air software update to correct the defect is expected to be issued soon, while owners will be notified on April 1.
Previous Issues
In the last few months, Tesla has addressed and made recalls for certain hardware and software issues in vehicles, the latest being the rolling stop feature in its Full Self-Driving (FSD) mode, leading to a recall of 53,822 vehicles in the U.S.
Official Comments
Acting executive director and chief counsel of the Center for Auto Safety, Michael Brooks, said in an emailed statement, “Tesla is clearly facing more stringent regulatory oversight in recent months than it has previously been subject to. NHTSA needs to go one step further and seek the maximum civil penalty available for Tesla’s continued delay and attempts to play fast-and-loose with regulations intended to protect Americans from unproven and potentially unsafe vehicle features.”
Analysts Recommendation
Recently, Credit Suisse analyst Dan Levy upgraded Tesla to a Buy from a Hold and maintained the price target of $1,025 (15.02% upside potential).
The analyst expects Tesla to recover from the recent pullback on the back of its strong fundamentals, which include volume strength and sustained margins.
The rest of the Street is cautiously optimistic about the stock, with a Moderate Buy consensus rating based on 17 Buys, 7 Holds, and 7 Sells. The average Tesla stock forecast of $1,086.61 implies upside potential of 21.93% from current levels. Shares have gained 21.2% over the past year.
Bloggers Weigh In
TipRanks data shows that financial blogger opinions are 74% Bullish on TSLA, compared to a sector average of 73%.
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