Tesla recalls 362,758 vehicles over self-driving safety concerns, stock falls

·Senior Reporter

February 16, 2023 at 4:14 PM·3 min read

The National Highway Traffic Safety Administration (NHTSA) on Thursday announced Tesla (TSLA) would recall 362,758 vehicles due to safety issues with its Full Self-Driving (FSD) beta software.

Tesla stock lost ground after the announcement, finishing down more than 5.5% on the day amid a broader market downtrend.

NHTSA's recall notice said that Tesla's experimental FSD beta software "may allow the vehicle to act unsafe around intersections," such as driving straight through an intersection in a turn only lane, or through a stop-sign controlled intersection.

The notice also states the FSD beta system may not respond to changes in posted speed limits, or "not adequately account for the driver's adjustment of the vehicle's speed to exceed posted speed limits."

If not corrected, NHTSA says these defects in Tesla’s FSD beta may result in a crash. "As required by law and after discussions with NHTSA, Tesla launched a recall to repair those defects," NHTSA said in a statement.

Joe Young, media relations associate for the Insurance Institute for Highway Safety (IIHS), demonstrates a front crash prevention test on a 2018 Tesla Model 3 at the IIHS-HLDI Vehicle Research Center in Ruckersville, Virginia, U.S., July 22, 2019. Picture taken July 22, 2019. REUTERS/Amanda Voisard (Amanda Voisard / reuters)

NHTSA says the recall will affect certain 2016-2023 Model S, Model X, 2017-2023 Model 3, and 2020-2023 Model Y vehicles equipped with Full Self-Driving Beta software or pending installation.

Tesla will release an over-the-air software update to address the safety concerns highlighted by NHTSA. No other information was given as to how the OTA recall would address features of FSD beta causing the unsafe vehicle behavior.

Tesla CEO Elon Musk complained via Twitter, the social-media platform where he is also CEO, over the use of the term "recall," which is an official term used by NHTSA to repair defects in vehicles, even when the remedying action is an OTA update.

Definitely. The word “recall” for an over-the-air software update is anachronistic and just flat wrong!
— Elon Musk (@elonmusk) February 16, 2023

Nonetheless, Tesla is required by law to officially issue a recall.

"Every motor vehicle manufacturer in the United States has the same responsibility to identify and immediately repair, for free, such safety defects in their vehicles," NHTSA said in its official statement on FSD recall. "Manufacturers must initiate a recall for any repair, including a software update, that remedies an unreasonable risk to safety."

Tesla's FSD software is a $15,000 feature that owners can add to their cars if they have the necessary hardware. In order to be included in the FSD beta program, owners must have a high-driver safety score that Tesla itself tabulates through its driver-monitoring system.

Tesla is currently under investigation by NHTSA concerning Tesla crashes occurring at accident scenes with emergency vehicles while operating under FSD. The Department of Justice is also reportedly investigating Tesla over claims of FSD’s ability.

—

Pras Subramanian is a reporter for Yahoo Finance. You can follow him on Twitter and on Instagram.

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