Why Tesla Is Recalling 11,700 Vehicles Across Its Model Lineup In The US

High-flying Tesla, Inc. TSLA shares are slipping back from their stratospheric levels.

What Happened: Tesla is recalling 11,704 vehicles due to a software communication error, a Friday filing with the National Highway Traffic Safety Administration shows. 

The error, under a certain sequence of events, may result in false forward-collision warnings and/or automatic emergency brake, or AEB, events. If the AEB system unexpectedly activates while driving, it may lead to increased safety risk of a rear-end collision from a following vehicle, the filing said.

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Over-the-air firmware 2021.36.5.2 update by Tesla on Oct. 22 introduced a software communication disconnect between the two on-board chips, especially when the vehicle is waking up from "Sentry Mode" or "Summon Standby Mode." This is the mode where one of the chips is in a low-power sleep state.

The communication disconnect can cause the video neural networks that operate on the chip to run less consistently than expected, producing negative object velocity detections when other vehicles are present. This in turn can lead to FCW or AEB events.

The vehicles earmarked for recall included 2017-2021 Model 3 vehicles, 2017-2021 Model X vehicles, 2017-2021 Model S vehicles and 2020-21 Model Y vehicles.

Why It's Important: Tesla is already being probed by the NHSTA over the safety of Autopilot, its semi-automated driving system. The company also faced customer backlash in China earlier this year for alleged brake failure.

On Monday, reports said Tesla is recalling 3,000 Model Y and Model 3 vehicles due to an issue with suspension that could misalign the wheel, potentially causing instability and increasing the risk of a crash.

Even as this semi-autonomous driving technology is fraught with issues, Tesla is now promoting its full self-driving as a subscription offering.

Given that Tesla is pushing ahead with its ambitious plans to preserve and grow its share of the global EV market, issues around safety could impede its progress.

Tesla shares were down 1.16% at $1,194 Tuesday morning. 

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