Shares of electric vehicle maker Tesla fell over 3% on Friday morning after the company announced its largest-ever vehicle recall to address an issue with the font size on instrument panel warning lights.
The National Highway Traffic Safety Administration said Tesla is recalling nearly 2.2 million cars in the United States, including the Model S, Model X, Model 3, Model Y, and Cybertruck, to fix the font size for brake, park, and antilock brake system warning lights which is too small and “could reduce the driver’s detection of it when illuminated.”
This poses an increased risk of collisions, according to the regulatory agency. Tesla will release an over-the-air software update free of charge to enlarge the font size and address the safety hazard.
The massive recall covers almost all of the company’s vehicles sold in the U.S. and owner notification letters are expected to go out on March 30, 2024.
Tesla shares fell 3.1% to $183.08 in early trading on Friday, adding to the stock’s 26% decline so far in 2024. Investors are concerned about softening demand and increased competition in the EV space.
Just last month, Tesla initiated another large recall of over 2 million vehicles in the U.S. to upgrade its controversial Autopilot driver assistance software after concerns were raised by regulators. Between the two actions, Tesla is recalling nearly 4.2 million vehicles in the first two months of the year.
The recent spate of recalls comes as Tesla aims to increase production and deliver over 1.8 million vehicles globally in 2024. However, analysts warn execution risks are mounting.
“Tesla’s recall issues continue to be an overhang on the stock and speak to the risks around scaled EV manufacturing as complexity climbs,” said CFRA analyst Garrett Nelson.
With increasing regulatory scrutiny and vehicle quality concerns weighing on sentiment, Tesla stock could remain under pressure in the near-term. Investors are hoping the company can smoothly ramp production and avoid further defects as it rolls out new factories and models.