Tesla, Inc. (TSLA) is recalling more than 475,000 of its Model 3 and Model S electric vehicles (EV) after the National Highway Traffic Safety Administration (NHTSA) discovered issues with the rearview camera cable, which could get damaged when the trunk is closed. Shares of the world's largest EV maker fell 1.5% on the news to close at $1,070.34 on December 30.
Model 3 RecallThe company is recalling 356,309 Model 3 vehicles produced from July 15, 2017, to September 30, 2020.
The NHTSA discovered that the coaxial cable attached to the trunk harness could be destroyed due to the regular opening and closing of the trunk. This cable provides a feed to the rearview camera on the center display.
The NHTSA said, “Over time, repeated opening and closing of the trunk lid may cause excessive wear to the coaxial cable. If the wear causes the core of the coaxial cable to separate, the rearview camera feed is not visible on the center display… If there is a loss of rearview camera display, the driver can continue to operate the vehicle by performing a shoulder check and using their mirrors when backing.”
Tesla has previously recalled Model 3 sedans twice due to seatbelt and brake caliper bolt issues. Tesla will be repairing the vehicles free of charge.
Model S RecallsThe company is recalling 119,009 Model S vehicles produced between 2014 and 2021 due to a frunk (hood over the front trunk) latch problem. According to Tesla, the frunk latch is situated too far back, preventing the secondary latch from engaging the trunk striker. In such cases, the trunk may open and hamper the driver’s visibility.
This issue is not on the NHTSA’s list and is being looked into by Tesla voluntarily. The company has said that customers can use the smartphone app to fix an appointment for the recall repair.
Analysts’ ViewRecently, Argus Research analyst Bill Selesky lifted the price target on the TSLA stock to $1,313 from $1,010 while maintaining a Buy rating.
Selesky is relieved by the completion of CEO Elon Musk’s stock sale. Moreover, the analyst is encouraged by the company’s decision to open its Supercharger Network to non-Tesla cars, which could become a growing revenue stream for the company going forward. The analyst believes that Tesla is one of the best EV car makers globally.
Overall, the stock has a Moderate Buy consensus rating based on 14 Buys, 8 Holds, and 5 Sells. The average Tesla price target of $1,016.68 implies 5% downside potential to current levels. Shares have gained 51.7% over the past year.
News SentimentTipRanks’ News Sentiment and Media Buzz Analysis shows the combined News Score based on TSLA’s News Sentiment and Media Buzz.
TipRanks data shows that the News Score for Tesla is currently Positive based on 730 articles published over the past seven days. 81% of the articles have a Bullish Sentiment compared to a sector average of 62%, while 19% of the articles have a Bearish Sentiment compared to a sector average of 38%.
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One of the biggest factors hurting EV maker Tesla (NASDAQ: TSLA) in the last few weeks has been its own CEO.
Rather, it's been the massive stock sale staged by said CEO. Now, Elon Musk's tax bill seems to be taken care of, and the Great Tesla Sell-Off is coming to an end.
However, the sell-off's shutdown may not have the impact Tesla shareholders hope for, as new potentially bad news emerges. I'm still bearish on Tesla, because the growth of new competitors has long been a problem for Tesla. Now, it's about to get even worse.
Tesla's year in share prices so far is a familiar one. The company made a decent gain in January and held on to it for a while. February started a substantial downturn that took just over a third out of Tesla's share price.
However, March saw a quick recovery that lasted into May. Another slump hit in the early days of May, as the second half began a slow rise for Tesla that lasted all the way to October. That's when Tesla's biggest rise hit, and by Halloween, Tesla was over $1,200 per share. Tesla stock then endured a series of erratic ups and downs. With the year on its way out, Tesla is about to clear $1,100 per share once more.
The latest news has benefits and potential troubles for shareholders. First came the utter relief that Musk's goal of selling 10% of his holdings in Tesla is coming to a close.
He was “almost done” just before Christmas. Reports note that he has sold just over $15 billion worth of shares to date, and the sale has been driving a downward cant for the last several weeks. Reports also suggest that options trading may be giving the stock a little upward potential now as well. This is likely the case since the large selling pattern is coming to a close.
A new potential problem emerged for the company, however. The problem in this case comes from Northvolt, a Swedish battery maker that recently established its own “gigafactory” operations.
The company had a deadline to produce the first lithium-ion battery cell by the end of 2021, and indeed, with just days to spare, it has met that deadline. Back in June, investors valued Northvolt at $12 billion. The company just proved at least some of that value.
Northvolt's battery is said to be a first in the market, with the entire process — from design to manufacture — done wholly in-house in Europe.
Wall Street's TakeTurning to Wall Street, Tesla has a Moderate Buy consensus rating. That's based on 14 Buys, eight Holds, and five Sells assigned in the past three months. The average Tesla price target of $1,016.68 implies 6.8% downside potential.
Analyst price targets range from a low of $215 per share to a high of $1,580 per share.
Competition Getting ThickerIt's not the first time we've pointed out problems for Tesla coming from competitors. However, usually, when we point out the competitors, we start looking at EV makers.
Battery technology, though, was a whole different matter. For a while, many analysts thought that Tesla would be able to maintain a competitive advantage for years on its battery technology alone.
Now, that competitive advantage is eroding before our very eyes. It's just starting to erode, but today's erosion is tomorrow's landslide. One competitor on the battery front may not mean much to Tesla's future, but this could just be the start. Increasing competition will force Tesla to dig harder to find a competitive advantage, one that it may not have any more.
Tesla's technological edge was always its biggest selling point. It was the big name in EVs before all the other firms got into the market. It was also the big name in batteries; there were municipalities using Tesla batteries to power backup electrical grids.
Houston inked a deal with Gambit Energy Storage (a Tesla subsidiary) back in March to provide an extra 100 megawatts of storage. If such a deal catches on, Tesla might be able to supply backup grid power to municipalities all over the world.
Rather, all over the country now; Europe is likely to back its own hometown boy, so to speak, and go with Northvolt.
Concluding ViewsI'm bearish on Tesla for a few good reasons. It's facing some potential regulatory problems, especially in China, where the regulators seem especially aggressive.
China recently expressed problems over Tesla subsidiary SpaceX's satellite launches. That may leave Tesla at a disadvantage in a major market. Tesla is also facing growing competition. With reports that Tesla can't keep up with demand coming out, competitors will want to push harder on their own attempts. Nothing draws out competitors like an unsatisfied market demand.
Throw in Tesla's dividend history — or utter lack thereof — and a stock that's trading over its average price target, and it's bad news for investors.
Musk's sell-off is starting to look less like portfolio rebalancing and more like a play to abandon ship. That image won't help endear investors either.
Tesla needs to recover its perception as the technological front-runner or risk losing further ground.
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Disclosure: At the time of publication, Steve Anderson did not have a position in any of the securities mentioned in this article.
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