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Tesla Faces China Recall Over Software Glitch

Some 285,000 vehicles will need a programming fix.
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Tesla  (TSLA) - Get Free Report is hitting reverse on nearly 285,000 of its Model 3 and Model Y cars that were built in China because of a software glitch.

That number translates to "most of the vehicles it has delivered the country over recent years," wrote Wedbush analyst Daniel Ives in a note on Sunday. 

The recall is to fix autopilot safety problems that were spotted by Chinese regulators. Vehicles within the scope of the recall may cause the driver to incorrectly activate the active cruise function in some situations, according to the State Administration for Market Regulation in China, potentially posing a danger to drivers.

Ives called the news a clear "black eye moment" for CEO Elon Musk as the electric vehicle maker beefs up its presence in Asia.

Around 211,000 locally built Model 3 cars will be pulled and around 36,000 imported ones will, too. Some 38,000 Model Y cars will also be affected, according to Wedbush, but the vast majority of fixes are likely able to be completed remotely.

Tesla did not immediately respond to a request for comment. 

"Let's be clear this is not the news bulls want to see as it adds to the negative PR issues in China, which is poised to represent 40% of global deliveries for Tesla by next year. That said, now it's about Musk & Co. making sure these issues are in the rear view mirror, correcting software/autopilot problems, and moving forward to make sure this situation is not a defining negative chapter in the Tesla China story."

The company had closed down on Nasdaq to $671.87 on Friday and dipped further in the after-hours.

This story has been updated.