Tesla Inc.
TSLA 1.70%
is recalling some 135,000 Model S luxury sedans and Model X sport utility vehicles due to touch screen failures, one of the biggest safety actions ever taken by the electric car maker.
The move comes after the National Highway Traffic Safety Administration requested a recall last month, saying that the touch screen on some models may fail when a memory chip runs out of storage capacity, affecting functions such as defrosting, a turn signal. and driver assistance.
The agency said the problem affected about 158,000 vehicles, including Model S sedans built between 2012 and early 2018 and Model X vehicles made from 2016 through early 2018. The recall does not cover vehicles in this group that have already been repaired with a larger chip memory or an updated touch screen, according to NHTSA.
Tesla said in a letter to federal regulators made public on Tuesday that, while it disagreed that the problem was a vehicle defect, it was moving ahead with a recall to complete the investigation and provide a better experience for customers.
“It is economically, if not technologically, unviable to expect that such components can or should be designed to last the entire life of the vehicle,” Tesla said in the letter.
Although the recall is modest compared to other automotive safety measures, which sometimes affect millions of vehicles, the action represents a relatively large number of Teslas. The company delivered about 500,000 vehicles globally last year, about 40% of them in the United States, according to market research firm Motor Intelligence. Tesla does not divide its sales by region.
Sam Abuelsamid, an analyst at Guidehouse Insights, estimated that the recall could cost about $ 200 million to $ 250 million. Tesla did not immediately respond to a request for comment. The company’s shares rose about 1% before the market.
The electric vehicle manufacturer recalled about 123,000 of its Model S cars in 2018 when it discovered that some bolts corroded in cold weather, which could lead to power steering failures.
Tesla is in a much better financial position than it was three years ago. The company reported six consecutive profitable quarters and its cash totaled about $ 19.4 billion at the end of last year. Its market valuation of about $ 796 billion on Monday was greater than that of the next nine largest automakers combined, according to an analysis of the Dow Jones Market Data from FactSet data.
Federal regulators said the problem with Tesla’s touch screens could take about five to six years to manifest. Tesla tried to use remote updates to remedy the problem, but those efforts were insufficient, regulators said.
Approximately 12,600 vehicles had already experienced these touchscreen problems last summer, when Tesla provided data to regulators. All touch screens on the approximately 158,000 affected vehicles would eventually fail, the regulator said he was informed by Tesla.
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The recall comes at a time when the auto industry is battling a shortage of computer chips that has halted production worldwide.
Tesla said it would replace the hardware for free as part of the recall, but would do so in phases due to parts restrictions.
Deliveries of Tesla’s Model S and Model X vehicles, cutting edge offers, have recently declined. The company said last week that it is renewing both models.
Write to Rebecca Elliott at [email protected]
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