Tesla Inc. TSLA 5.83% is recalling roughly 135,000 Model S luxury sedans and Model X sport-utility vehicles over touch-screen failures, one of the electric-car maker’s largest-ever safety actions.
The move comes after the National Highway Traffic Safety Administration requested a recall last month, saying the touch screen in some models can fail when a memory chip runs out of storage capacity, affecting functions such as defrosting, turn-signal functionality and driver assistance.
The agency said the problem affected roughly 158,000 vehicles, including Model S sedans built between 2012 and early 2018 and Model X vehicles made from 2016 through early 2018. The recall doesn’t cover vehicles in that group that have already been repaired with a larger memory chip or an upgraded touch screen, according to NHTSA.
Tesla said in a letter to federal regulators made public Tuesday that while it disagreed that the issue constituted a defect in the vehicles, it was going ahead with a recall to conclude the investigation and provide a better experience for customers.
“It is economically, if not technologically, infeasible to expect that such components can or should be designed to last the vehicle’s entire useful life,” Tesla said in the letter.
While the recall will be modest compared with other car-safety measures, which sometimes affect millions of vehicles, the action represents a relatively large number of Teslas. The company delivered around 500,000 vehicles globally last year, roughly 40% of them in the U.S., according to market-research firm Motor Intelligence. Tesla doesn’t break out its sales by region.
Sam Abuelsamid, an analyst at Guidehouse Insights, estimated that the recall could cost around $200 million to $250 million. Tesla didn’t immediately respond to a request for comment. The company’s stock was up around 1% premarket.
The electric-vehicle maker recalled some 123,000 of its Model S cars in 2018 over a finding that some bolts corroded in cold weather, which could lead to power-steering failures.
Tesla is on much better financial footing than it was three years ago. The company has reported six profitable quarters in a row, and its cash holdings totaled around $19.4 billion at the end of last year. Its market valuation of around $796 billion as of Monday was larger than that of the next nine largest auto makers combined, according to a Dow Jones Market Data analysis of FactSet data.
Federal regulators have said that the problem with Tesla’s touch screens can take around five to six years to manifest. Tesla has tried to use over-the-air updates to remedy the problem, but those efforts have been insufficient, regulators said.
Roughly 12,600 vehicles had already experienced these touch-screen problems as of last summer, when Tesla provided data to regulators. All of the touch screens in the roughly 158,000 affected vehicles eventually would fail, the regulator has said it was told by Tesla.
The recall comes as the auto industry is struggling with a computer-chip shortage that has disrupted production world-wide.
Tesla said that it would replace hardware for free as part of the recall, but would do so in phases due to parts constraints.
Deliveries of Model S and Model X vehicles, Tesla’s higher-end offerings, have waned recently. The company said last week that it is refreshing both models.
Write to Rebecca Elliott at [email protected]
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