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TSLA Stock Up 3%, 115,000 Tesla Vehicles Face US Scrutiny over Suspension Issues

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by Steve Muchoki · 3 min read
TSLA Stock Up 3%, 115,000 Tesla Vehicles Face US Scrutiny over Suspension Issues
Photo: Depositphotos

The US National Highway Traffic Safety Administration (NHTSA) opened an investigation of 115,000 Tesla vehicles over front suspension safety issues.

Tesla Inc (NASDAQ: TSLA) stocks were up approximately 1.71% to trade around $583.88 during Friday’s pre-market. TSLA stock closed yesterday trading at $574, up 3.35% during the day. Today as the market opened, the stock is up 3.03%, trading at $591.39. Despite the strong bulls, the giant electric car maker is facing an investigation for purportedly having sold some of its vehicles with front suspension defaults. According to news outlet Reuters, the US National Highway Traffic Safety Administration (NHTSA) on Friday opened an investigation of 115,000 Tesla vehicles over front suspension safety issues.

Tesla Vehicles Complaints

Particularly, the government agency cited that it was opening a preliminary evaluation into 2015-2017 Model S and 2016-2017 Model X vehicles. This was advised by over 43 complaints filed by different Tesla users on the same issue.

The company has been in discussions with the regulator on safety measures in most of the Tesla vehicles. Notably, the National Highway Traffic Safety Administration (NHTSA) said that in February 2017, the company highlighted a manufacturing condition that may result in front suspension fore link failures.

“Some vehicles have front fore links that may not meet Tesla strength specifications. In the event of link failure, the driver can still maintain control of the vehicle but the tire may contact the wheel arch liner.” The 2017 bulletin noted.

Apparently, the government agency said that it has noted an increase in the trend of reported failure by different drivers in recent months. “The complaints appear to indicate an increasing trend, with… three of the incidents at highway speeds reported within the last three months.” The agency noted.

On the Flipside

Led by the ambitious CEO Elon Musk, the company has seen the demand for its product rise as it ventures into new global markets including Europe and India.

With the increased competition from other electric vehicle companies both locally and overseas, Tesla can not afford to see its products tarnished or banished from the market due to technical problems. Otherwise, it will be risking seeing its stocks plummets considerably in the near future.

Notably, Tesla stocks have rallied significantly during the height of the pandemic despite market closure in most countries that it operates. According to the metrics provided by MarketWatch, Tesla stocks are up over 586% year to date. In addition, the TSLA stocks have managed to climb approximately 28.20%, 39.72%, and 14.97% in the past three months, one month, and five days respectively.

The company has a market valuation of approximately $544.1 billion with 947.9 million outstanding shares. The rich cash reserves put the company ahead of most competitors and capable of delivering quality products in large quantities.

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