Market News

Tesla Recalls 475K EVs Over Safety Concerns; Shares Fall

Tesla, Inc. (TSLA) is recalling more than 475,000 of its Model 3 and Model S electric vehicles (EV) after the National Highway Traffic Safety Administration (NHTSA) discovered issues with the rearview camera cable, which could get damaged when the trunk is closed. Shares of the world’s largest EV maker fell 1.5% on the news to close at $1,070.34 on December 30.

Model 3 Recall

The company is recalling 356,309 Model 3 vehicles produced from July 15, 2017, to September 30, 2020.

The NHTSA discovered that the coaxial cable attached to the trunk harness could be destroyed due to the regular opening and closing of the trunk. This cable provides a feed to the rearview camera on the center display.

The NHTSA said, “Over time, repeated opening and closing of the trunk lid may cause excessive wear to the coaxial cable. If the wear causes the core of the coaxial cable to separate, the rearview camera feed is not visible on the center display… If there is a loss of rearview camera display, the driver can continue to operate the vehicle by performing a shoulder check and using their mirrors when backing.”

Tesla has previously recalled Model 3 sedans twice due to seatbelt and brake caliper bolt issues. Tesla will be repairing the vehicles free of charge.

Model S Recalls

The company is recalling 119,009 Model S vehicles produced between 2014 and 2021 due to a frunk (hood over the front trunk) latch problem. According to Tesla, the frunk latch is situated too far back, preventing the secondary latch from engaging the trunk striker. In such cases, the trunk may open and hamper the driver’s visibility.

This issue is not on the NHTSA’s list and is being looked into by Tesla voluntarily. The company has said that customers can use the smartphone app to fix an appointment for the recall repair.

Analysts’ View

Recently, Argus Research analyst Bill Selesky lifted the price target on the TSLA stock to $1,313 from $1,010 while maintaining a Buy rating.

Selesky is relieved by the completion of CEO Elon Musk’s stock sale. Moreover, the analyst is encouraged by the company’s decision to open its Supercharger Network to non-Tesla cars, which could become a growing revenue stream for the company going forward. The analyst believes that Tesla is one of the best EV car makers globally.

Overall, the stock has a Moderate Buy consensus rating based on 14 Buys, 8 Holds, and 5 Sells. The average Tesla price target of $1,016.68 implies 5% downside potential to current levels. Shares have gained 51.7% over the past year.

News Sentiment

TipRanks’ News Sentiment and Media Buzz Analysis shows the combined News Score based on TSLA’s News Sentiment and Media Buzz.

TipRanks data shows that the News Score for Tesla is currently Positive based on 730 articles published over the past seven days. 81% of the articles have a Bullish Sentiment compared to a sector average of 62%, while 19% of the articles have a Bearish Sentiment compared to a sector average of 38%.

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