While recalls are a fact of life in the auto industry, it is unusual for the the National Highway Traffic Safety Administration to formally demand a recall.
That's likely what gave Tesla (TSLA) - Get Report investors pause on Thursday after the NHTSA asked the maker of electric vehicles to recall 158,000 of its battery powered Model S sedans and Model X SUVs over media control unit failures.
The auto safety agency made the unusual request in a formal letter to Tesla after upgrading a safety probe in November, saying it had tentatively concluded the 2012-2018 Model S and 2016-2018 Model X vehicles “contain a defect related to motor vehicle safety.”
The recall follows a seemingly do-no-wrong year for Tesla, whose stock rose more than 730% last year on stronger-than-expected sales of its Model Y sedan in both the U.S. and China, despite the hit of the pandemic which shuttered its Fremont, Calif. factory for a time. Tesla was named the No. 1 stock of 2020 by TheStreet.