Tesla Stock Falls Over 5% During Pre-Market After Elon Musk-Led EV Giant Recalls Nearly 700,000 Vehicles

Tesla Inc. TSLA on Friday announced a recall affecting nearly 700,000 vehicles, leading to a notable drop in its stock price during the premarket.

What Happened: Tesla experienced a 5.04% drop in its stock price during Friday’s premarket, according to Benzinga Pro, after a recall of 694,304 vehicles in the U.S. due to a tire pressure monitoring system (TPMS) issue that could potentially increase the risk of accidents, as per NHTSA.

The TPMS warning light may fail to stay illuminated between drive cycles, potentially leaving drivers unaware of low tire pressure, as noted in the recall acknowledgment. This malfunction could lead to vehicles being operated with improperly inflated tires, heightening the risk of accidents.

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The recall affects certain Model 3, Model Y, and Cybertruck vehicles. Tesla plans to address the issue through an over-the-air software update, minimizing disruption for owners. The automaker’s vehicles comprised 21% of all U.S. recalls in the first three quarters of the year, as reported by recall management firm BizzyCar.

Meanwhile, Tesla has a consensus price target of $280.41 based on the ratings of 33 analysts, as per Benzinga Pro. As per the three most recent analyst ratings were released by Baird, Mizuho, and Goldman Sachs, respectively. The average price target has been set at $446.67 with an implied 7.26% upside for Tesla from these most recent analyst ratings.

Despite the high number of recalls, most problems with Tesla vehicles are typically resolved via software updates. In the September quarter alone, the company recalled 1,858,774 vehicles, the most in the U.S. In November, Tesla recalled 2,400 Cybertruck units due to a faulty part that could cause power loss, marking the sixth recall for the model this year.

Why It Matters: The latest recall highlights ongoing challenges for Tesla in maintaining vehicle safety standards. The company has been proactive in addressing issues, often through software updates, but the frequency of recalls remains a concern. Notably, Tesla recently recalled over 2,400 Cybertrucks due to a drive inverter fault that could lead to power loss, as reported by the National Highway Traffic Safety Administration (NHTSA). This issue was identified after a customer complaint in July, prompting an investigation and subsequent recall.

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Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.

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