Tesla issued a recall Tuesday for 11,704 vehicles sold in the U.S. since 2017. The recall covers Model S, X, 3 and Y vehicles and came about as a result of an over-the-air firmware update of the automaker’s “Full Self-Driving Beta,” its advanced driver assistance system.
The company identified a software communication error that could cause the forward-collision warning or automatic emergency brake system to falsely activate, possibly leading to a rear-end collision.
The recall states the disconnect occurs between two on-board chips when the vehicle is waking up from “Sentry Mode” or “Summon Standby Mode,” a mode where one of the chips is in a low-power “sleep’ state, leading the chip and its network to run inconsistently. This can lead to the forward collision warning and automatic emergency braking systems to activate without cause.
Tesla stated it was unaware of any crashes or injuries as due to the software error.
Regulators have questions
The move is unusual, given that on Oct. 12, NHTSA questioned the company’s use of non-disclosure agreements for owners who gain early access to its “full self-driving” software beta.
Regulators also wanted to know why an over-the-air update wasn’t issued as a recall, since it was issued to fix a problem. Yet for the latest Autopilot fix, a recall was issued.
Tesla’s driver-assistance system, known as Autopilot, can be upgraded to “full self-driving,” or FSD, for an additional $10,000. While the name may suggest the vehicle can drive itself, it is still a Level 2 system that requires drivers to pay attention.
Market takes a breath
None of this has bothered investors, however.
While the stock slumped 4% in early trading on Tuesday, it has rebounded, up nearly 11% in the past five days alone, and given Tesla a $1.17 trillion dollar market cap. The valuation stems from indications that demand continues to outstrip supply, as well as the possibility of the automaker’s deal with Hertz for 100,000 cars, its largest order ever.
The deal was announced by the rental car company on Oct. 25. Two days later, Hertz announced that it would be collaborating with ride-share company Uber, to rent 50,000 Teslas to its drivers.
Yet Musk tweeted late on Monday the company had not signed a contract with Hertz and went on to say, “we will only sell cars to Hertz for the same margin as to consumers,” and “(the) Hertz deal has zero effect on our economics.”
The hesitation on the part of investors quickly vanished shortly thereafter.