Tesla Recalls 53,000 Cars to Replace Faulty Parking Brakes

(Bloomberg) -- Tesla Inc. recalled nearly two-thirds of the vehicles it made last year to replace faulty electronic parking brakes that may not release properly, marking its second-largest recall to date.

About 53,000 Model S and Model X vehicles assembled between February and October last year contain a small gear that could have been manufactured improperly by a Tesla supplier, according to a statement on the electric-car maker’s website. If that gear were to break, the parking brake could become stuck in place, the automaker said.

“While less than 5% of the vehicles being recalled may be affected by this issue, we are recalling 53,000 vehicles total out of an abundance of caution,” Tesla said. “Because of the design of the gear, it is difficult to tell exactly which vehicles are affected.”

The recall covers about 63 percent of the roughly 84,000 vehicles Tesla manufactured in 2016. Automakers recalled more than 53 million vehicles in the U.S. last year, the third-straight year of record vehicle callbacks.

The recall comes at a time when Tesla is under scrutiny like never before as Chief Executive Officer Elon Musk prepares for a dramatic expansion in manufacturing scale to support the Model 3, its most affordable car yet. The highly-anticipated vehicle is set to begin rolling off Tesla’s Fremont, California, assembly lines in July and has helped fuel a surge in the company’s valuation to rival the likes of Ford Motor Co. and General Motors Co. The company plans to make half a million vehicles in 2018 and then 1 million in 2020.

Part Supplier

The faulty part was supplied by a unit of Italy’s Brembo SpA, a spokeswoman for Brembo North America Inc. confirmed in an emailed statement.

“We are working with Tesla to ensure the issue is resolved quickly,” she said.

Tesla said it hasn’t seen “a single accident or injury” relating to the brake issue, and there have been no reports of the system failing to hold a parked vehicle or stop a vehicle in an emergency. Only a “very small percentage” of gears were manufactured improperly, the company said.

Tesla said repairs can begin immediately and it will have enough parts for all affected vehicles by October. It estimates the repair can be completed in 45 minutes.

Tesla shares fell 1 percent to settle at $302.51 in New York following the recall disclosure.

‘Overdone’ Sell-Off

“Our initial take on Tesla’s announcement today is that the sell-off in shares may be overdone and would generally view this as a relative ‘non-event,’” James Albertine, senior analyst at Consumer Edge Research, wrote in a note to clients.

In November 2015, Tesla recalled 90,000 Model S cars because of a single report of a seat belt not being properly connected.

Tesla lacks a traditional network of franchised dealerships that handle both sales and service, including recall repairs. The company services customer vehicles instead through a network of around 135 service centers and with mobile technicians who repair customer cars at their homes or workplaces.

“Service capacity will not be an issue,” a Tesla spokeswoman said in an email, noting that the mobile technicians will be able to handle the repair.

In a Feb. 22 letter to shareholders, Tesla said it was expanding its mobile repair operation as part of an effort to prepare for higher service demand from the Model 3.

To contact the reporters on this story: Ryan Beene in Washington at rbeene@bloomberg.net, Dana Hull in San Francisco at dhull12@bloomberg.net.

To contact the editors responsible for this story: Jon Morgan at jmorgan97@bloomberg.net, Craig Trudell at ctrudell1@bloomberg.net, Anne Riley Moffat