What Happened And What Will It Cost TSLA Stockholders?

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Key Takeaways

  • Tesla is set to recall over one million electric vehicles over worries about the automatic system for car windows that could pinch a driver or passenger and possibly cause injury.
  • Tesla’s stock price dropped as this news came out the day after the recent rate hikes impacted the overall stock market.
  • Tesla CEO Elon Musk has stated that he feels describing the situation as a recall is inaccurate.

A letter from the National Highway Traffic Safety Administration (NHTSA) to Tesla confirmed the company’s notice to recall 1,096,762 electric vehicles due to a defective window mechanism that will require a software update.

This announcement came around the same time as the most recent interest rate hike, so Tesla stock dropped from these two bits of negative news coming around September 21.

The recall came as all eyes were on the company preparing for its annual Tesla AI Day. What actually happened with the Tesla recall and what does this means for Tesla shareholders?

What happened with the Tesla recall?

Almost 1.1 million Tesla EVs require a correction to their automated window system, which the company feared would fail to properly detect obstructions, leading to potential injuries. According to Tesla, it’s a software issue causing the automatic window reversal systems to fail. If the obstruction recognition isn’t working, one could potentially get their finger pinched when the window is being rolled up.

The National Highway Traffic Safety Administration (NHTSA) reported the issue as a safety-standards violation in a public notice. According to a letter from the NHTSA to Tesla, the following electric vehicle models will be impacted by this recall:

  • TESLA/MODEL 3/2017-2022
  • TESLA/MODEL S/2021-2022
  • TESLA/MODEL X/2021-2022
  • TESLA/MODEL Y/2020-2022

According to Tesla’s recall notice, employees first noticed the issue in production in August. Tesla then analyzed the issue under various conditions before notifying the NHTSA. The NHTSA wrote a letter to Tesla about the recall and stated that the issue could “increase the risk of injury.” This is when things got slightly controversial.

Elon Musk has criticized the usage of the term “recall” for the situation. This particular recall isn’t requiring vehicle owners to visit service centers as one would with a traditional recall. Musk referred to the situation as “a tiny over-the-air software update” while arguing against the wording from the NHTSA. However, despite what Musk said on Twitter, both Tesla and the NHTSA used the term in documents.

In positive news, Tesla informed the Associated Press that it wasn’t aware of any warranty claims or injuries resulting from this issue as of September 16, 2022.

What’s next for the Tesla recall?

To fix this issue, Tesla will conduct an over-the-air (OTA) software update free of charge. Drivers don’t have to bring their vehicles into a dealership, station or anywhere else. Tesla also mentioned they would send out letters to owners on November 15, 2022, about the software update. No further action is required from Tesla owners at this point.

If any Tesla owners are confused about this recall, they can contact Tesla customer service at 1-877-798-3752. We will update this page if anything changes.

What Will This Recall Cost TSLA Stockholders?

When news of the recall hit the media, the Tesla stock dropped. The news came on September 22, and the stock was down the next few days.

While Tesla stock opened on September 22 at $299.88, it reached an opening price of $272.10 on September 26. However, the stock closed on September 27 at $282.94 and closed the week out at $265.25 on Friday September 30. The stock peaked for the month at $309.07 on Monday, September 19.

It’s also important that we mention this recall news hit the media just one day after the Fed raised interest rates again, leading to another stock market sell-off. This most recent stock market sell-off impacted the tech industry as investors were skeptical about the future earnings of companies in this sector. Tesla is expected to report earnings for the third quarter next month.

Tesla stock opened on the date of the rate hike announcements on September 21 at $308.26 and dropped after the interest rates went up, but it’s difficult to say with certainty how much of the drop was due to the negative media mentions.

We will be monitoring the Tesla stock and looking out for updates about this recall to see if the situation in the future could hurt the Tesla stock.

As for the money spent on the recall, no official numbers have been revealed regarding the software update cost.

What’s Next For Tesla?

A lot is happening for Tesla with Tesla AI Day coming up on September 30. An email obtained by Electrek on September 27 also stated that Tesla was expecting an increased delivery volume ahead of its third-quarter earnings report.

In other positive news, Hertz CEO Stephen Scherr announced in an interview with Yahoo Finance that the demand for Tesla rentals has been “very, very solid.”

During the annual Tesla AI Day on September 30, many groundbreaking announcements are excepted in the space of artificial intelligence. There have been rumors swirling about the possibility of a humanoid robot prototype being revealed.

How Should You Be Investing?

When looking for ways to invest your money, you will want to analyze a company’s financial reports. A recall due to safety issues is worth considering as an investor because these issues could hurt a share price.

We also must stress that the stock market has been extremely volatile in 2022 due to interest rate hikes, supply chain issues, and the ongoing war in Ukraine. Investing in Tesla or any individual stocks has proven challenging.

Another way to make money from Tesla and other players in the AI space, is invest in one of our Kits. AI-powered Investment Kits take the guesswork out of investing. Our artificial intelligence scours the markets for the best investments for all manner of risk tolerances and economic situations.

Bottom line

There always seems to be something happening in the world of Tesla, whether it be rumors of a human-robot or Elon Musk trying to buy Twitter. It looks like this recall will be a simple software update, and no injuries have been reported. We will pay attention to Tesla as the company continues to make waves in the AI space.

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