Tesla stock falls even farther after recall of 123000 Model S cars

Tesla Inc. finished off its worth month in seven years with the news late Thursday that the electric-auto maker is recalling 123,000 Model S vehicles due to a potential flaw in a power steering component.

Investors continued to punish Tesla TSLA, +3.24% stock in after-hours trading, with the stock more than 3% in the red, giving back the day’s regular-session gains of 3.2%, when it closed at $257.50. Tesla stock is down 22.4% in the past month, as the S&P 500 index SPX, +1.38% has fallen 2.7%. Markets are closed Friday in observance of Good Friday.

The recall of the Model S vehicles is due to a bolt that could corrode, an issue that occurs in cars built before April 2016, and in winter conditions where roads are frequently salted, the company said. Just 0.02% of the cars ever experience the problem, Tesla said.

“In order to ensure your safety, Tesla will proactively retrofit a power steering component in all Model S vehicles built before April 2016,” the company wrote in an email to customers affected by the recall. “There have been no injuries or accidents due to this component, despite accumulating more than a billion miles of driving.”

Read: Tesla stock notches worst month in seven years

The Model S recall comes at the end of the company’s worst monthly stock performance in more than seven years, as Wall Street becomes increasingly concerned that Tesla will meet its Model 3 production goals.

The Silicon Valley-based car maker’s debt also has taken a hit, and its 5.3% 2025 bonds are trading around 88 cents on the dollar, according to the trading platform MarketAxess. Following what is likely the first ever human fatality from a driverless car last week in a collision involving an Uber Technologies Inc. vehicle, Nvidia Corp. NVDA, +4.63% has temporarily suspended its self-driving tests, which has further pressured Tesla stock.

Nvidia supplies Tesla with the supercomputers that power the company’s self-driving tech.

Additionally, according to a San Jose Mercury News report late Thursday, the family of a Tesla driver involved in a fatal crash last week said that the victim had complained to Tesla several times about the Autopilot technology. The National Transportation Safety Board is investigating the crash to determine if the Model X’s Autopilot feature was the cause of the crash.

Tesla’s Autopilot feature is a more advanced form of cruise control that is intended to keep cars in the correct lane on the freeway.

MarketWatch staff writer Claudia Assis contributed to this article.

Let's block ads! (Why?)