Tesla Motors Inc. said it’s conducting its
largest-ever recall of all 90,000 Model S cars because of a single report of a
front seat belt not being properly connected. The shares fell.
“Tesla recently found a Model S in Europe
with a front seat belt that was not properly connected to the outboard lap
pretensioner,” the company said in an e-mail to customers Friday. “This vehicle
was not involved in a crash and there were no injuries. However, in the event
of a crash, a seat belt in this condition would not provide full protection.”
Tesla began delivering the Model S to
customers in June 2012. The company doesn’t have model years but all variants
of the vehicle, including the P85D, are affected by the voluntary recall. Tesla
shares slid 1.9% to $217.59 at 2:38pm New York time.
The recall will raise questions for those
who are bearish about the stock, “but we estimate the cost is not material and
shows Tesla’s heightened focus on safety,” said Ben Kallo, a Robert W. Baird
& Co. analyst who rates the shares neutral. “Tesla has made safety a focus
in the design and development of both the Model S and Model X” sport utility
vehicle.
Tesla was alerted to the seat belt issue by
a customer in Europe two weeks ago and moved to inspect 3,000 vehicles and its
assembly process. The Palo Alto, California-based company said it has found no
other issues, but wants owners to bring their cars in to make sure the seat
belts are properly connected. They are being advised to book an appointment for
the inspections.
“In early November, a customer sitting in
the front passenger seat turned to speak with occupants in the rear and the
seat belt became disconnected,” a Tesla representative said. “The seat belt is
anchored to the outboard lap pretensioner through two anchor plates that are
bolted together. The bolt that was supposed to tie the two anchors together
wasn’t properly assembled.”
With just the one confirmed incident, Tesla
may not have been required to do a recall, but that isn’t what drives the
company’s decision-making, said Diarmuid O’Connell, the company’s vice
president for business development.
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