A Tesla Model X. Some 54,676 of the vehicles have been recalled.
Krisztian Bocsi/Bloomberg
Tesla
is recalling more vehicles. For investors, it doesn’t matter. In fact, the recent recall data for the electric-vehicle giant indicate something positive.
Recently, the National Highway Transportation Safety Administration posted a recall notice affecting 54,676
Tesla
(ticker: TSLA) Model X vehicles with model years in the 2021 to 2023 range. The recall notice is dated Oct. 11, but such documents typically show up on the NHTSA website a few days after the date.
The issue is a warning light detecting low brake fluid might not come on. This will be fixed with an over-the-air software update.
Most Tesla recalls are fixed with software updates. One implication of that is the cost to correct problems is low. Low cost isn’t the reason this recall isn’t a big deal for investors, though. Recalls happen.
Major U.S. auto makers have recalled more than 16 million vehicles in the U.S. so far in 2023. They recalled almost 19 million vehicles over the same span in 2022.
The current Tesla recall was generated by the company noticing several vehicles in production that weren’t showing a visual indicator of low brake fluid. That was mid-September, just a couple of weeks ago.
Most car owners, and investors, have plenty of experience with recalls. Notices are typically mailed. Oftentimes drivers don’t do anything with them until they take a vehicle in for regular service. Sometimes drivers don’t even realize there are recall notices outstanding until they take a car for service.
Recalls are part of the process for keeping vehicles safe. They typically don’t affect stocks unless there is a safety problem that sounds serious or the recall costs rise into the billions.
Tesla recalls are way down year over year. So far in 2023, Tesla has recalled some 439,000 vehicles, putting it on pace to recall about 550,000 units for the full year. In 2022, Tesla recalled 3.8 million vehicles.
Even the trend isn’t all that important. All recalls aren’t created equal. What’s more, the number of recalls is also related to the number of cars on the road and the age of cars on the road.
So why even bother writing about recalls? People, and Barron’s, write more about recalls these days because electric vehicles are relatively new and drivers need a little more background than they do for traditional vehicles they have been familiar with for generations. Tesla is also the world’s most valuable car company and its stock, oftentimes, is two or three times as volatile as the broader market—making almost everything newsworthy for investors.
The most recent recall isn’t having an impact on the stock. It shouldn’t. Tesla shares were down about 0.5% in premarket trading.
S&P 500
and
Nasdaq Composite
futures were down 0.1% and 0.2%, respectively. Investors shouldn’t expect the stock to do all that much, beyond floating up and down with the broader market, for a couple of days. They are waiting for third-quarter earnings, which are due Wednesday evening.
Coming into Tuesday trading, Tesla stock was up about 106% so far this year, but down about 13% over the past three months.
Write to Al Root at [email protected]
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