Tesla Inc. (NASDAQ: TSLA) faces another challenge as it initiates a recall of over 2 million vehicles in the U.S. TSLA stocks have already reacted to the news, with a meaningful price drop on December 13.
Notably, the electric vehicle manufacturer aims to fix a problem with its Autopilot system. This is a response to the National Highway Traffic Safety Administration’s (NHTSA) concerns about several crashes. According to a video report by Yahoo Finance, Tesla’s stock reacted with a pre-market drop of roughly 1%.
In particular, the nature of the recall brings attention to Tesla’s reliance on software solutions. With the possibility of addressing the recall through an over-the-air update, the requirement for physical servicing remains unclear.
Therefore, this situation underscores the significance of Tesla’s Full Self-Driving (FSD) feature as a core selling point — a feature now under scrutiny due to the recall.
Interestingly, the scrutiny intensifies as a Washington Post analysis links eight crashes, with serious or fatal outcomes, to the use of Tesla’s Autopilot in circumstances the company deemed unsuitable.
TSLA stocks analysis after Tesla’s recall announcement
In this context, analysts predict the recent events could shake consumer confidence in Tesla, posing a short-term risk. Price-wise, TSLA is trading at $231.31 per share on Nasdaq, already affected by the recall announcement. A 2.23% drop in the day, which has already recovered from its lowest value at $228.20.
Regarding sales, increasing regulatory demands for transparency could impact demand for Tesla vehicles. The company has cut prices in the U.S. and globally to bolster sales amidst cooling demand, which is also observed among other traditional automakers.
As Tesla grapples with this setback, the effectiveness of its resolution process and its capability to re-establish trust among consumers are under watch. Essentially, a swift and effective rollout of the software update could be pivotal in navigating through these issues.
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Source: https://finbold.com/tsla-price-prediction-as-tesla-recalls-millions-of-vehicles/