Tesla Will Recall Nearly 135,000 US Vehicles After All

After resisting regulators’ request voluntarily to recall Model S and Model X vehicles manufactured between 2012 and 2018, Tesla Inc. (NASDAQ: TSLA) was ordered in late January to recall the cars to replace the control unit of its rear-facing camera. The original request on January 13 from the National Highway Transportation and Safety Administration (NHTSA) was upgraded to an order on January 27, following a reply from the automaker received on the same day.

In a Monday letter, the NHTSA confirmed that Tesla will recall 134,951 Model S sedans from model years 2012 and Model X crossovers built between 2016 and 2018 to replace an 8 GB media control unit (MCU) equipped with an Nvidia Tegra 3 processor and an integrated flash memory device made by SK Hynix. According to an NHTSA report from November, the MCU failed prematurely due to memory wear-out of the flash memory module. In March of 2018, Tesla discontinued using the Tegra/Hynix MCU and switched to an Intel processor with a 64 GB Micron flash memory device.

Failure of the MCU could “cause the loss of the rearview camera display, defrost/defog control settings, and exterior turn signal lighting, reducing visibility and increasing the risk of a crash.”

In its letter to Tesla, the NHTSA noted that the company’s January 27 reply stated that “Tesla believes that this matter does not have a safety risk.” NHTSA did not agree: “In our view, this statement has no force or effect in terms of Tesla’s obligation to undertake and complete the recall, and NHTSA does not agree with it.”

Owners of vehicles included in the recall will be notified by March 30, and the company already has begun this process, saying Tesla “has decided to voluntarily recall” the affected models. It appears that NHTSA actually did the volunteering on Tesla’s behalf.

Tesla’s stock gained more than 6% on Monday and traded up another 1% shortly after Tuesday’s opening bell at $848.40. The stock’s 52-week range is $70.10 to $900.40 and the consensus price target is $579.69.