In two major distinct recalls, EV kingpin
Tesla Inc.
TSLA
is recalling more than 80,000 EVs in China.
The automaker decided to recall a total of 67,698 imported Model S and Model X vehicles produced between Sep 25, 2013 and Nov 21, 2020, according to China’s State Administration for Market Regulation. The recall is due to a software issue that hinders the battery management system of the cars. The software on these vehicles will be upgraded free of cost.
In the second recall, Tesla is recalling 2,736 imported Model 3 vehicles produced between Jan 12, 2019, and Nov 22, 2019, and 10,127 of the China-produced version of the car. The decision was arrived at due to malfunctioning seatbelts.
Even though Tesla is still the undisputed leader in the EV space, recalls have been quite frequent. A few days ago, Tesla announced two recall plans. In the first incident, it recalled nearly 30,000 Model X cars in the United States over an issue of the faulty deployment of airbags. Tesla announced its decision to recall another 321,628 vehicles over a software issue that caused the tail lights on some cars to malfunction. The glitch may affect one or both taillights on certain Model 3 and Model Y vehicles. Earlier in the month, the company recalled more than 40,000 Model S and Model X vehicles that ran the risk of experiencing a loss of power steering assist when driving on rough roads or after hitting a pothole. Recalls continue to hurt this auto giant amid its constant push for high-efficiency technology.
In other news, it has been reported that Tesla is working on a new version of its Model 3 sedan that was originally launched in 2017. The Model 3, with a starting price under $47,000 in the United States, has been Tesla’s smallest and most affordable vehicle and has remained a popular choice among buyers. The model has not received much of an overhaul, unlike Model S, TSLA’s premium EV sedan that was launched last year. The EV magnate has recently come up with a redesign project codenamed Highland. Allegedly, the project has been planned to reduce cost as Tesla is contesting itself with other Model 3 contenders and legacy automakers amid an intensively competitive environment. In light of the situation, Tesla plans to do away with redundancies in the vehicle design and streamline the production process to not limit margins.
To cut down production costs, under the project, the manufacturer will make the vehicle shell out of large cast pieces, reducing the number of components. The new model will have fewer interior components and a slightly redesigned exterior.
The redesign for the Model 3 is based on the revamp of the Model S that added an airplane-style yoke instead of the conventional steering wheel and removed buttons and traditional air vents to have a minimalist interior. On similar lines, physical buttons will be eliminated as much as possible and there is a chance that the new model will have a yoke. The redesigned Model 3 may also have some powertrain performance adjustments.
Per sources, production of the new model will begin at Tesla’s Shanghai Gigafactory in the third quarter of 2023 and is planned for Tesla’s Fremont, CA, plant as well, although no definite date has been provided.
From the beginning, the Model 3 had a radically simplified interior compared to other vehicles in its class. Tesla’s approach has always been to avoid complexity in production. The recent development will ensure that EV owners keep Tesla in mind despite the tough competition.
Shares of TSLA have lost 50.4% over a year compared with the
industry
’s 51.8% decline.
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Zacks Rank & Key Picks
TSLA currently carries a Zacks Rank #3 (Hold).
Here are some better-ranked players in the auto space –
CarParts.com
PRTS
, sporting a Zacks Rank #1 (Strong Buy), and
Allison Transmission Holdings
ALSN
and
Genuine Parts Company
GPC
, each carrying a Zacks Rank #2 (Buy). You can see
the complete list of today’s Zacks Rank #1 stocks here
.
CarParts has an expected earnings growth rate of 85% for the current year. The Zacks Consensus Estimate for current-year earnings has been revised 72.7% upward over the past 30 days.
Allison has an expected earnings growth rate of 26.1% for the current year. The Zacks Consensus Estimate for ALSN’s current-year earnings has been revised 0.6% upward in the past 30 days.
Genuine Parts has an expected earnings growth rate of 18.1% for the current year. The Zacks Consensus Estimate for current-year earnings has been revised 0.2% downward in the past 30 days.
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