Al Root

Tesla is recalling 46,096 Cybertrucks to fix a stainless steel side panel.

Investors can follow recall data, just so long as they don't overreact.

Recalls, in almost every instance, are just part of the automotive business. They come after investigations. Tens of millions of cars are recalled each year. The National Highway Traffic Safety Administration, which manages the process, counted 1,073 safety recalls affecting more than 35 million vehicles in 2024.

They also don't impact margins. Car companies, including Tesla, recognize expenses for planned warranty repairs. Problems would only arise if warranty and recall activity rose substantially beyond what was expected.

Tesla recalls a lot of vehicles, mainly because its software controls more functions than the average car maker's. Most of Tesla's recalls are fixed with over-the-air updates. Software fixes have become such a feature of modern recalls that NHTSA now indicates "software update repairs recall" in its notices.

The current Cybertruck recall isn't a software fix. The panel will be fixed at a dealership free of charge.

Since its introduction in late 2023, Cybertruck has had eight recalls. That seems like a lot, although investors typically don't track recalls by model type or vehicle introduction.

The 2022 Rivian R1T also has eight recalls outstanding. Still, Tesla recalls get scrutinized because Tesla is the most valuable car company on the planet and led by the world's richest human.

Eight recalls probably does indicate that Tesla has had some trouble perfecting production. That, of course, investors already know from analyst reports, conference calls, and production data. The stainless-steel, bulletproof, avant-garde truck has been difficult to manufacture.

Tesla stock was down 0.9% in early trading Thursday, while the S&P 500 and Dow Jones Industrial Average were down 0.2%.

Tariffs, Elon Musk's political activities, early-year sales data, Wall Street estimate revisions, and target price movements are all more important than typical recall activity.

Write to Al Root at allen.root@dowjones.com

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March 20, 2025 10:06 ET (14:06 GMT)

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