Why Tesla Is Recalling 199,741 Vehicles In China

Tesla, Inc. TSLA shares may have outperformed this year, but the company is continuing to face issues with respect to quality.

What Happened: Tesla has filed with China's State Administration regarding the recall of 199,741 vehicles comprised of its imported Model S and Model 3 vehicles as well as locally produced Model 3 EVs, the CnEVPost reported.

The recall is to rectify issues with the front and rear trunks.

Tesla said it is recalling 19,967 imported Model 3 vehicles with production dates from Jan. 21, 2015 to Nov. 18, 2020. These vehicles may have a condition where the front trunk latch and the buckle are not aligned properly, affecting the locking of the secondary latch, the SAMR reportedly said in an announcement on its website.

Accidental release of the primary latch when the secondary latch is not locked will result in the sudden opening of the front trunk lid even when the vehicle is in motion. This will likely affect the driver's line of sight and increase collision risk.

Tesla has agreed to inspect the secondary latch on the trunk lid for the recalled vehicles free of charge and reposition and reinstall the trunk latch if it is found to be faulty to ensure proper alignment.

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Additionally, the company is recalling 35,836 imported Model 3 vehicles with production dates between Oct. 24, 2018 and Nov. 20, 2019, and 144,208 locally produced Model 3 vehicles with production dates between Oct. 14, 2019 and Dec. 27, 2020.

The Model 3 vehicle recall is due to the trunk lid causing excessive wear on the trunk wiring harness on repeated opening and closing. This wear could lead to malfunctioning of the backup camera if the inner core of the coaxial cable separate, affecting the driver's view when backing up.

Why It's Important: The recall in China comes close on heels of a similar recall in the U.S. Filings with the U.S. federal transport regulator- the National Highway Traffic Safety Administration – showed that the company is recalling a total of 475,000 Model S and Model 3 cars in the U.S.

At the start of the year, Tesla suffered a backlash in China over issues with brakes, although later the EV maker came out clean following a probe. With competition in the local market intensifying, recalls such as these do not bode well for Tesla given that China is considered by analysts to be key to its growth story. 

Tesla shares were trading 0.4% higher to $1,074.67 off the open Friday. 

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