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The proposed refund and the potential costs for Tesla seem to be weighing down on the performance of TSLA stock.
Tesla Inc (NASDAQ: TSLA) is expanding its warranty for some of its Model S and X cars that suffered defects as reported by users. According to a CNBC report on the matter, the warranty expansion involves the refund associated with the repairs of the car models manufactured between late 2012 and early 2018, with reported cases of blackout touchscreens.
Per the report, some of the Tesla cars manufactured and delivered within this period had at a time faced this touchscreen blackout which is caused as a result of a memory device failure in the computer that controls the car’s data. While other glitches were also noted, the screen blackout gives the biggest concerns as some of the primary functionalities of the cars are affected. These functions include but not limited to the heat control mechanism for cold weathers, backup cam for safety driving amongst others.
The news to refund customers who have either replaced the malfunctioning memory component came as an email sent by Tesla to customers who might have been affected. Part of the email which was shared with CNBC reads:
“Tesla is providing eligible owners who experience a malfunction no-cost repairs to this part at any Tesla Service Center for 8 years/100k miles from initial delivery date. If you do not experience a malfunction, there’s no need to take action.”
The proposed refund and the potential cost on the firm seem to be weighing down on the performance of the stock as it closed at a loss of 2.02% to close at $421.26 on Monday. The dump off has cascaded down into the pre-market where the stock has shed off an additional 1.74%. Now as the market opened, TSLA stock is 1.8% down, trading at $413.68.
Refund for Tesla Cars Repairs Could Wade off Class Action Lawsuit
The move to refund the customers for the repairs of defective Tesla cars might be a strategic attempt to wade off a class-action lawsuit that has been filed against the company. The class-action lawsuit seeks to challenge Tesla’s claims that its vehicles particularly the Model S and Model X are the best in their class and also the safest, a claim the lawsuit says is false.
Besides the class-action lawsuit the company is facing, Reuters also reported that the National Highway Traffic Safety Administration is investigating issues with the MCU in some of Tesla’s older Model S and Model X vehicles. With lawsuits and probes weighing on the company, the settlement or refund deal for the repairs of the defective car’s components may spur some of the customers seeking legal redress to back down.