Tesla Faces 20,000-Vehicle Recall Just Weeks After Regulatory Probe On Suspension Failure — Retail Flags Asymmetric Risk In Near Term

• The recall covers certain Model 3 and Model Y vehicles.
• The NHTSA has not yet notified a fix or whether the issue could be solved remotely or will require physical repairs.
• Last month, the NHTSA opened a preliminary investigation into around 1.2 million Tesla vehicles over possible suspension failures. 

Tesla (TSLA) is set to recall 20,349 vehicles in the U.S. due to an issue with their low-beam headlights, adding to the regulatory scrutiny surrounding the electric-vehicle maker.

The recall covers model year (MY) 2017 – 2023 Model 3 and MY 2020 – 2023 Model Y vehicles, the National Highway Traffic Safety Administration (NHTSA) said on Tuesday.

According to the regulator, the low-beam headlights could be excessively bright, which in turn could make it harder for oncoming motorists to see clearly, increasing the risk of a collision. However, a fix has not yet been finalized.

The EV company has often resolved recalls through over-the-air (OTA) software updates, although NHTSA has not said whether this issue can be addressed remotely or will require physical repairs.

TSLA shares were up 0.3% at the time of writing.

Tesla’s Suspension Failures Under NHTSA Investigation

The recall comes just weeks after the NHTSA opened a preliminary investigation into around 1.2 million Tesla vehicles over possible suspension failures. The agency received 156 complaints alleging that the front lower lateral link detached in certain MY 2018–2020 Model 3 and MY 2021–2023 Model Y vehicles.

Such a failure could cause a loss of steering control, leave the vehicle undrivable and require it to be towed, the agency added.

Most owners reported receiving no warning before the component failed, although some heard noises beforehand. NHTSA said it was not aware of any related crashes, injuries or deaths.

The investigation will examine the cause, scope and severity of the problem and could lead to another recall if regulators identify a safety defect. Tesla previously recalled smaller groups of Model 3 vehicles over similar lower-link detachments in 2021 and 2023.

Retail’s Take On TSLA’s Recall Update

Retail sentiment surrounding TSLA on Stocktwits trended in the ‘bearish’ zone over the past 24 hours, amid a 127% increase in message volumes.

One user said the “recall headline risk is asymmetric for near-term sentiment.”

TSLA shares are down 24% so far this year.

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