Tesla Inc (NASDAQ:TSLA) investor and Future Fund Managing Partner, Gary Black, dismissed the company’s latest massive recall as inconsequential for the EV giant’s valuation.
What Happened: Early on Wednesday, Tesla issued a recall for over 2 million vehicles equipped with all versions of Autosteer, citing insufficient controls to prevent misuse, and offered a free software update.
The recall followed a U.S. auto safety regulator National Highway Traffic Safety Administration investigation initiated in 2021, involving 11 incidents with stationary first-responder vehicles and Tesla cars using Autosteer.
See Also: Everything You Need to Know About Tesla Stock
Analyst’s Take: Black, however, believes it won’t affect Tesla’s valuation. “In my history of owning $TSLA, OTA updates and NHTSA ‘recalls’ have never impacted TSLA’s valuation or TSLA’s stock price for longer than a day,” he said, adding that the cost of a software update is “close to zero.”
In my history of owning $TSLA, OTA updates and NHTSA “recalls” have never impacted TSLA’s valuation, or TSLA’s stock price for longer than a day. The cost of an OTH update is close to zero.
— Gary Black (@garyblack00) December 13, 2023
Despite Tesla’s brand equity being higher than other automakers, Black noted a hit this year. While the new Cybertrucks might enhance brand equity, he suggested Tesla needs more advertising instead of price cuts, which harm margins.
“Cybertruck innovation and quality will help boost overall TSLA brand equity but absent strong advertising to convey TSLA benefits vs ICE and EV peers, one can’t ignore the numbers,” he said.
While OTA updates and NHTSA recalls have never impacted $TSLA valuation, changes in TSLA brand equity matter. On brand equity, I am aligned with @TSLAFanMtl. While still very high relative to other automotive brands, there’s no question $TSLA brand equity has taken a hit this… https://t.co/yw4JTtei3I pic.twitter.com/hFwpnHKuKL
— Gary Black (@garyblack00) December 13, 2023
What’s In A Term? Many have questioned the use of the word “recall” when only a software update is required.
Tesla investor Ross Gerber said, “When a Tesla gets ‘recalled,’ that means it must go to the nearest wifi for an update… Maybe the terminology should be…
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