Following the surprising Tesla (NASDAQ: TSLA) recall for their full self-driving (FSD) vehicles, it appears the electric vehicle giant did not disclose the National Highway Traffic Safety Administration (NHTSA) requests for a recall in its most recent earnings. Instead, the firm announced some more than $1 billion in deferred revenue from FSD in its last earnings call.
The NHTSA on Thursday filed a notice, stating that just under 363,000 vehicles equipped with the feature are being recalled. Affected models are said to include the 2016-2023 Model S and X, the 2017-2023 Model 3, and the 2020-2023 Model Y that are equipped with or are pending the installation of FSD Beta.
The agency added that the self-driving system, which is being tested on public roads by up to 400,000 Tesla owners, performs unsafe actions such as driving straight through an intersection while in a turn-only lane, failing to come to a complete stop at stop signs, or driving through an intersection during a yellow traffic light without proper caution.
Furthermore, the system may not appropriately adapt to changes in stated speed restrictions, or it may fail to account for the driver’s speed adjustments, according to the documents.
“FSD [full self-driving] beta software that allows a vehicle to exceed speed limits or travel through intersections in an unlawful or unpredictable manner increases the risk of a crash,” the NHTSA said.
While being classified as a “recall,” Tesla will reportedly correct the software via an over-the-air, or OTA, update. Certain supporters of the brand have taken issue with the fact that it is being called as such, given that the automaker can theoretically address the issue via a “software update”.
On top of the nearly 363,000 vehicles Tesla is recalling, it is also recalling some more of its FSD-equipped models in Canada. According to Transport Canada, the American carmaker has filed a notice of defect affecting 20,667 vehicles in Canada, owners of whom will be notified by email and will be supplied “an over-the-air firmware update.”
Failed to disclose
Francine McKenna’s substack The Dig highlighted that Tesla disclosed it had received information requests from the NHTSA, the National Transportation Safety Board, the Securities and Exchange Commission, the Department of Justice, and various state, federal, and international agencies about a variety of issues, including the DOJ’s request for documents about its Autopilot and FSD features – however it did not identify that potential concerns had been raised by the NHTSA.
“No one but Tesla knew that the US National Highway Traffic Safety Administration had notified Tesla on Jan. 25, according to Bloomberg, that it had identified ‘potential concerns related to certain operational characteristics of FSD Beta in four specific roadway environments’ and requested that Tesla file a recall,” McKenna wrote.
The author added that despite this, Tesla filed its earnings release that included “revenue recognition of $472 million as of December 31, 2022, primarily related to the general FSD feature release in North America.”
Tesla then met with the NHTSA several times over the next few days, and the company reportedly disagreed with the agency’s analysis, but decided to proceed with the recall on February 7 ‘out of an abundance of caution.’
“As required by law and after discussions with NHTSA, Tesla launched a recall to repair those defects,” the agency reiterated.
Tesla last traded at $200.63 on the Nasdaq.
Information for this briefing was found via CBC, The Dig, and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.