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Tesla Stock Price Drops 2%, Investors Wary Over More Vehicle Callbacks

Ollie Martin - AskTraders News writer
Ollie Martin trader
Updated 1 Feb 2022

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Key points:

  • Tesla recalls around 54,000 FSD beta vehicles due to ‘rolling stop' safety issues
  • The news builds on nearly half a million EV recalls last year
  • Tesla stock dropped 2% in early Tuesday trading

Tesla (NASDAQ: TSLA) investors will be aware that there is more to the company than its electric backbone. Not only is Tesla a clear market leader in EVs, but Musk’s autonomous vision also plays a key part in the future of the company and the wider evolution of the automobile industry. Looking beyond Tesla’s impressive delivery numbers; there is an alarming trend underlying the company’s shining image. Vehicle recalls. 

Before Tesla’s lukewarm reception to its Q1 earnings, the company posted blockbuster Q4 earnings which outlined efficient, on-time vehicle delivery. However, a lot of investors seem to glaze over the elephant in the room – more than half a million Tesla models were recalled due to safety issues. Alarming? A little, but not as alarming as safety issues in a self-driving vehicle; which is the latest plague to hit Tesla manufacturers.

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The company announced today it will be recalling more than 50,000 U.S vehicles that use the company’s Full Self-Driving software, due to cars conducting unsafe ‘rolling stops’, meaning the car might not fully stop when required, at a busy intersection for example.

This is slightly alarming bearing in mind the speed at which Tesla has been ramping up its self-driving endeavor. This year, the number of FSD beta vehicles has risen to nearly 60,000 from just a few thousand in September 2021. 

As Tesla has such a firm grip on the market, it tends to get away with such exemplified slip-ups on the basis that recovery and further growth are just around the corner. TSLA stock did slip around 2% this morning, but it’s difficult to say whether the move is in lineation with today’s news or just part of wider market sentiment.

Ollie Martin - AskTraders News writer
Oliver is a financial writer and analyst specialising in the US stock market, with years of personal experience in understanding micro/macroeconomic structures, market trends and fundamental analysis.