Tesla’s Latest Recall Hits China: 1.6 Million Vehicles Affected by Hood Opening Defect

Tesla is conducting a large-scale recall in China following a similar recall in the United States last month. The issue involves the vehicle hood opening unexpectedly. A large-scale recall in Europe is also anticipated, raising concerns about brand reliability and potential stock decline.

According to China’s State Administration for Market Regulation (SAMR), Tesla recalled 1,683,627 vehicles sold in China today. The recall is due to a potential issue where the software may fail to detect whether the vehicle’s hood is open. The recall affects Model 3, Model Y, Model S, and Model X vehicles produced between October 15, 2020, and July 17, 2023. SAMR stated, “If the hood suddenly opens while driving, it could lead to a serious accident.”

Tesla plans to resolve the issue through an over-the-air (OTA) software update. If there is a defect in the latch itself, they will provide repairs free of charge.

However, conducting OTA software updates in China is complex. According to the “Measures for the Implementation of the Regulation on the Administration of the Recall of Defective Auto Products (缺陷汽车产品召回管理条例实施办法),” local authorities’ approval is required. This regulation aims to prevent manufacturers from concealing vehicle defects or evading responsibility through OTA updates. Consequently, Tesla must notify authorities of all changes to technical parameters to ensure product consistency.

The ongoing recall saga is significantly eroding Tesla’s brand trust. Over the past week, Tesla has recalled 3.53 million vehicles worldwide due to the same issue. Before this massive recall in China, Tesla had already announced a recall of 1.85 million vehicles in the U.S. on July 31. This recall also targeted the problem of detecting whether a vehicle’s hood is open. It affected Model 3, S, and X vehicles from 2021 to 2024 and Model Y vehicles from 2020 to 2024.

Large-scale recalls are also likely in Europe and other countries, potentially leading to a significant increase in recall numbers. Tesla is already aware of the same issue occurring in Europe. According to Tesla’s recall report, the company began investigating the issue in March and found that the problem occurred more frequently in China than in the European and North American markets.

Given these circumstances, concerns about Tesla’s stock price decline are growing. When the large-scale recall in the U.S. was announced, Tesla’s stock on the New York Stock Exchange dropped by 4.34% to $222.03 as of 12:30 PM. If large-scale recalls also proceed in Europe following the issues in China, there are projections that the stock price could be significantly affected.