Tesla will issue a software updates to remedy the problem as it contends with its second recall in China in the last week.
Tesla (TSLA) – Get Free Report is recalling more than 435,000 cars in China to fix a rear light problem, according to news reports.
China’s State Administration for Market Regulation said that a total of 142,277 Model 3 sedans and 292,855 Model Y vehicles could be affected by the issue in which a software defect stops the rear lights on the car from illuminating, CNBC reported on Dec. 1.
Tesla will issue software updates remotely to fix the problem.
Some commenters on social media slammed CEO Elon Musk for spending too much time with Twitter (TWTR) – Get Free Report, the microblogging site he purchased for $44 billion, rather than on the electric vehicle company.
“If only Musk focused on Teslas as much as he focuses on trolling people on Twitter this could’ve been avoided,” one person tweeted.
Second Recall in China
Others complained about the use of the word “recall” when the issue is being resolved with a software update.
“One day you will learn the ancient phrase ‘over the air’ (OTA) update and stop acting like Tesla is dragging 500k cars back and forth from the dealership every two weeks,” one commenter said.
This is Tesla’s second major recall in China in the last week. On Nov. 25, the company said it was recalling more than 80,000 cars in China over seatbelt and software issues.
Tesla recalled a total of 67,698 imported Model S and Model X vehicles produced between Sept. 25, 2013, and Nov. 21, 2020.
The company also recalled 2,736 imported Model 3 vehicles produced between Jan. 12, 2019, and Nov. 22, 2019, as well as 10,127 of the China-made version of the car due to a potentially faulty seatbelt.
China is Tesla’s second-largest market. During the company’s third-quarter earnings call in October, Musk said that “China is experiencing a recession of sorts mostly in the property market.”
Tesla posted softer-than-expected third sales and said full-year deliveries may fall just shy of its 50% growth target.
Days after the earnings report, Tesla cut prices for its Chinese-made cars for the first time this year, suggesting softening demand in the world’s biggest market.
‘Unique Growth Profile’
Last month Tesla recalled more than 321,000 vehicles in the U.S. due to a taillight problem.
The recall was issued on Nov. 15, according to a filing with the National Highway Traffic Safety Administration, and covers certain 2023 Model 3 vehicles and 2020-2023 Model Y vehicles.
Tesla said it will deploy an over-the-air update to correct the problem at no charge to customers.
Earlier this week, Bernstein analyst Toni Sacconaghi said that despite falling 48% year-to-date, Tesla’s stock price “remains high on almost every valuation metric” compared with traditional automakers “due to its unique growth profile.”
That said, the stock trades at a lower multiple than Ferrari and its valuation looks attractive on a price/earnings to growth ratio versus high-growth tech stocks, Sacconaghi said in a research note.
However, Sacconaghi said that Tesla’s tech comparables have higher margins “and are arguably less cyclical than automotive companies.”
Sacconaghi has an underperform rating on the shares with a $150 price target. He said that he sees Tesla’s current risk/reward “as more balanced, though still modestly negative.”
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