Tesla recalls over a 150K luxury cars due to a manufacturing error in its touchscreen
Tesla is sending out emails to its customers asking for a voluntary recall of over 150,000 cars. The recall includes Model X and Model S cars due to technical errors in its touchscreen system. This by-far makes it the biggest recall of electric vehicles to date. The company decided to issue the warning after immense pressure by US regulators to withdraw the car from the streets. The US National Highway Traffic Safety Administration (NHTSA) posted on Tuesday that Model X and Model S luxury cars, manufactured between 2012 to 2018 pose a threat on street safety regulations.
According to the report, the issue with the touchscreen is embedded in its multimedia card memory (eMMC) in the media console unit (MCU), which integrates a flash memory device.
The defect rates in the cars go up to 30%. The major issue could be traced to the memory device slowly decaying every time the engine is started. This means that each MCU is bound to collapse at some point. The dangers of this defect are that it could cause the car to lose its rear-view camera footage and affect the car’s “defogging” and “defrosting” options embedded in the car.
However, the malfunction does not cause any complications on the “to vehicle drivability, including no effect on acceleration, braking or steering, and we are not aware of any accidents or injuries resulting from this condition”, as the company had stated. This means that this flaw could impair the vision of the driver, causing a safety hazard on the road.
Impacts on the company
Some customers were already aware of the malfunction in their cars and have paid, from their personal money, to replace the MCU; even though the company suggested that it might reimburse the customers.
However, Tesla stated that they “decided to voluntarily recall certain Model S and Model X vehicles built before March 2018”. Additionally, Tesla will upgrade, “free of charge, the eMMC on your vehicle with an enhanced 64GB eMMC”.
The news surfaced coincidentally with Musk’s announcement that he is taking a break from the social media platform twitter “for a while” without providing any context or excuse. Musk has always been a frequent user of the platform.
On the other hand, after Tesla announced the recall of the vehicles, the company’s stock prices went up by about 4% in Tuesday’s trading. This is the outcome of Tesla’s time horizon, which is the most important metric for the company.
A similar case in point was observed last year when Tesla had to shut down its factory in California due to the coronavirus pandemic for more than a month between late March and early May. Throughout this period, the company’s stocks almost doubled. While the investors regard the recall of vehicles as a temporary loss for a few hundred million dollars, they are mostly focused on the potential and future plans of Tesla.
In short, investors are not interested in the short-term outcome of Musk’s company but rather they are intended in the future impact of the company.
Furthermore, the automotive industry is a big one, with over 90 million cars sold per year. At the same time, the demand on electric cars has been on the rise exponentially. Several countries are adopting green policies in order to reduce carbon emissions by diesel fueled cars.
For instance, the United Kingdom is banning the sale of gasoline dependent automobiles by the year 2030, and instead it will start using electric vehicles. This shows a lot of potential for Tesla given that it is a major player in the electrical cars industry.
Therefore, Tesla investors view the current loss as merely a drop in the bucket compared to the company’s future potential.