Tesla Inc (NASDAQ:TSLA) Investors Remain Subdued Over Recall And Lawsuit Issues

Tesla Inc (NASDAQ:TSLA) Investors Remain Subdued Over Recall And Lawsuit Issues

0
260
Tesla (NASDAQ:TSLA) Not Relenting on Innovation: Why this can be either Good or Bad

Tesla Inc (NASDAQ:TSLA) investors getting both favorable and unfavorable information in the last few days. The negative news is in respect of lawsuits alleging dangerously defective autopilot software and the recall of 53,000 cars whereas the positive is that the company mint money from trucks once it enters the segment. Though investors reacted negative to the recall and lawsuit issue, they have settled down to see the stock reversing the trend on Friday’s pre-market trading.

The events unfold could raise some doubts on Tesla. For instance, the company has issued a recall notice voluntarily after a lawsuit was filed. Though both are different in nature and the complaints are not the same, the timing of the recall cannot be ignored totally. The recall is related to parking brake issue whereas the lawsuit referred to defective software. However, in both the cases safety is the main concern.

Incidentally, the recall is in respect of both Model S and Model X. The electric vehicle maker produced about 83,992 vehicles in 2016. The company believes that the electric parking brakes installed on both the models manufactured during the period February to October could have contained a small gear, which could have been made improperly by Tesla’s third-party supplier, according to a Reuters report.

In the law suit being filed by a consumer, it was alleged that the electric vehicle makers sold vehicles that has faulty functions of semi-autonomous driving system. That only lifted safety issues for the commuters though the company termed the suit as ‘disingenuous.’ In any case, both the news came at an improper time for the company that is getting ready for the mass market vehicle, Model 3.

In both the cases, the saving grace is that there were no incidents of injury or anything else. That meant that there is minimum risk of checking the recalled vehicles only and that there will not be any big compensation.

As far as other news, CNBC reported that Morgan Stanley believes that Tesla could make billions of money if it enters the semitruck segment by getting a small fraction of the trucking market share. However, it is only a hypothetical scenario and that the company has not announced any such plan.

Though Tesla stock shed 0.99 percent on Thursday, the stock traded volatile on Friday’s pre-market trading. Initially, it traded in the green and fell to the negative territory at time of writing this.