Tesla recalls more than 80,000 cars in China. Investors will be watching for damage to the American giant’s reputation.
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Tesla China’s market regulator is recalling more than 80,000 cars in China over software and seatbelt problems.
The American electric car giant is recalling a total of 67,698 imported Model S and Model X vehicles manufactured between September 25, 2013 and November 21, 2020, China’s State Market Regulation Authority said.
The recall of these models is due to a software issue affecting the cars’ battery management system. Tesla will upgrade the software on these vehicles for free.
Elon Musk’s automaker is also recalling 2,736 imported Model 3 vehicles built between January 12, 2019 and November 22, 2019, as well as 10,127 Chinese versions of the car due to a potentially defective seat belt.
Tesla will check the seat belts on affected cars, the regulator said.
Tesla was not immediately available for comment when contacted by CNBC.
Investors will be watching for any impact on Tesla in China from the recall. The market is increasingly competitive with domestic challengers backed by Warren Buffett DWELLING for beginners like Nope and Xpeng.
“Recalls are always costly and often escalate in ways that can damage reputations — especially now that the market has become hyper-competitive and Tesla’s backlog is dwindling,” Bill Russo, CEO of Shanghai-based Automobility, told CNBC.
“This recall is mostly for import models (S and X) so it can be handled if they get ahead of it.”
China is one of Tesla’s most important markets. The company has its main manufacturing facility in Shanghai and sells a a record number of Chinese cars in recent months.
But Tesla also faces growing competition in China from companies like Xpeng, Nio and Li Car start new versions of cars for 2023 in an effort to challenge the dominance of the American electric automaker.
Tesla last month knocked down the price of Model 3 and Model Y vehicles in China after raising them earlier this year due to higher material costs.
It’s not the first time Tesla has had to recall cars in China. In May, the American firm recalled more than 100,000 cars due to an overheating problem.
— CNBC’s Sam Vadas contributed to this report.