Shares of electric vehicle maker Tesla Inc. (TSLA) are down about 2.5% in pre-market trading Friday the day after Elon Musk's automaker said it is voluntarily recalling 123,000 of its luxury vehicles worldwide due to the discovery of faulty steering components. (See also: Tesla's Stock Enters Crossroads as Financial Crunch Looms.)
Palo Alto, California-based Tesla emailed customers explaining that it has seen "excessive corrosion" in the power steering bolts of the recalled vehicles. If the bolts were to fail, drivers would not lose complete control over their vehicle, but would have to use "increased force," according to Tesla.
"There have been no injuries or accidents due to this component, despite accumulating more than a billion miles of driving," said Tesla.
Biggest Recall Yet
The Silicon Valley firm's announcement is believed to be its biggest recall ever, and applies only to Model S sedans built before April 2016. The company indicated that the cost of the recall should be minimal, as the supplier is incurring the full cost of the new part.
Tesla, which sold about 280,000 total vehicles through the end of last year, also manufactures a Model X and Model 3 sedan. The firm has faced increased pressure in the recent period as it has continually delayed production targets for its newest Model 3, its first mass-market vehicle. The Street sees the production of the Model 3 as vital for Tesla's continue leadership in the space as it heads off against new rivals including traditional aut makers Toyota Motor Co. (TM), General Motors Co. (GM) and Ford Motor Co. (F), as well as new niche EV startups.
Concerns over Tesla's inability to meet its targets, as it blows through billions of cash and continues to raise money to meet Musk's lofty goals, have sent shares down 14.5% year-to-date (YTD). The S&P 500 has declined 1.2% in 2018.
Ahead of next week's make-or-break first quarter results, including expected production numbers, the firm was slapped with a downgrade by Moody's. The credit rating agency sees further delays for Tesla as it shoots for 2,500 Model 3s per week. Bears are also alert over a federal investigation into a recent fatal crash of a Tesla car. (See also: Tesla 'On The Verge' of Bankruptcy: Vilas Capital.)