Written by: Susannah Streeter | Hargreaves Lansdown
- Tesla is recalling just over two million vehicles in the US fitted with its Autopilot driver-assistance system.
- A safety regulator said the system was open to "foreseeable misuse."
- Tesla’s share price dropped back by around 1% in pre-market trading.
- The National Highway Traffic Safety Administration has been investigating the electric automaker over whether Tesla vehicles ensure that drivers adequately pay attention.
Tesla is still in pole position when it comes to interest among retail investors amid a congested lane full of EV makers. It’s in the top ten most popular buys on the HL platform this year, and this recall of 2 million cars on its own is not likely to seriously quash enthusiasm. The share price has dropped back slightly, but it doesn’t look like it’ll be hit by a bad bout of skidding. After all, recalls in the car industry are far from unusual and the group also has the financial ability to invest in fixes.
It’s understood that this software update relates to the important autopilot function which helps with steering and breaking, but it’s how the system can be used rather than a specific fault which appears to be at the crux of the issue. It follows a two-year investigation into crashes, and it will apply to most Teslas sold in the US since this feature was launched. This could potentially be a longer term worry as software has been seen as a potential outlet for extra growth for the company, with the possibility of subscription models mooted in the future to deliver the group’s self-driving technology. If this draws a line under the investigation, the way ahead on the EV highway should be much clearer, however if further problems arise, the confidence among investors could wane further. Past exuberance surrounding Tesla has already been ebbing due to concerns about profitability given the price cuts brought in to try and entice consumers amid a high interest rate environment. However, Tesla’s prowess in coming up with novel and industry-shaping products simply can’t be ignored.
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