Analysis
What the Cybertruck’s many failures mean for
Tesla
Kari Paul
Recall represents another ‘black eye’ for the company,
which saw its share prices fall this week, wiping away all its gains this year
Sat 20 Apr
2024 14.00 BST
Tesla
recalled all Cybertrucks Friday after federal safety regulators contacted the
company over malfunctions with the vehicle’s accelerator pedal. New Cybertruck
orders have been reportedly cancelled or stalled. The news follows numerous
reports of embarrassing Cybertruck failures.
The recall
represents a major blow to Tesla, which has weathered a difficult year, seeing
poor earnings reports in recent quarters as competing Chinese electric vehicle
manufacturers encroach on the electric vehicle market.
“This is
another black eye for Tesla, which has added to the chaos going on for Musk,”
said Dan Ives, senior equity analyst at Wedbush Securities. “Cybertruck is the
pedestal moment and a recall out of the gates is a bad look.”
Cybertruck
owners reported that their vehicles were at risk of getting stuck driving at
full speed due to a loose accelerator pedal. Video showed the pedal itself
falling off and the piece beneath wedging itself into the car’s interior, which
would force the vehicle into maximum acceleration. One driver was able to save
himself from a crash by holding down the brake pedal. As of Monday, the US
National Highway Traffic Safety Administration (NHTSA) had contacted Tesla
regarding the issue, and the company announced the recall Friday. Tesla first
became aware of this issue on 31 March, according to the filing. After
assessing the problem, Tesla on 12 April decided to issue a voluntary recall of
the Cybertrucks, the filing says.
The
Cybertruck, which has long been a pet project for Elon Musk, the Tesla CEO,
began deliveries in late 2023 after years of delay due to production problems
and battery-supply constraints. Since then, numerous failures in the vehicle’s
design and function have ranged from embarrassing to outright dangerous.
The trucks
– which Musk once claimed would be the “best off-road vehicle” – have been
shown getting stuck in sand, snow and dirt, with one towed away by a Ford
truck. Some owners have reported their new Cybertrucks have simply stopped
running completely. Many have complained the truck’s stainless steel exterior
rusts easily, and one owner said the windshield broke quickly in a hail storm.
Musk himself claimed the car was bulletproof at its unveiling before cracking
its window with a steel ball thrown by hand.
In response
to the reports of rust, Tesla says in its Cybertruck Do It Yourself guide:
“Your Cybertruck is not rusting. These spots are surface contamination caused
by iron-containing debris that is picked up by your vehicle as you drive.”
Owners can remove them with isopropyl alcohol, according to the guide.
Tesla did
not respond to requests for comment regarding these reports, or the recall. In
response to request for comment, the US NHTSA shared Tesla’s recall filing.
Recalls are
not uncommon in the auto industry and it is unclear how severe the accelerator
pedal issue is, said Thomas Monteiro, senior analyst at Investing.com. But amid
the ongoing uncertainty at Tesla, the company had no choice but to take action,
he said.
“At this
point, the company simply cannot risk the potential liability or bad
publicity,” Monteiro said.
Tesla
shares fell below $150 this week, wiping away all gains the company made in the
past year. The vehicle manufacturer said Monday that it was cutting 10% of its
staff globally, about 14,000 jobs. Musk has also faced criticisms from
investors who say he is stretched too thin after his purchase of social media
platform Twitter, which he renamed X, in 2022. Meanwhile, Tesla has asked its
shareholders to vote in favor of Musk’s $56bn pay package that was rejected by
a judge earlier this year who called it an “unfathomable sum”.
“Against
this backdrop, Musk needs to keep investors convinced that the company’s
projects are pursuing the right path and that these will lead to margin
appreciation over time,” he said. “An epic failure on the Cybertruck could very
well jeopardize that perception, especially given that the company hasn’t
really launched any groundbreaking innovations in years now.”
The speed
with which Tesla recalled the vehicles after reports of the faulty pedal may be
influenced by its continuing legal battles over injuries caused by its
semi-autonomous driving software. The company is facing a number of individual
and class-action lawsuits over allegations the technology caused fatal
accidents.
Brett
Schreiber, an attorney who has represented clients affected by the faulty
software, said he anticipates another potential wave of litigation from
Cybertruck owners.
“What we
have seen perpetually with Tesla is the ethos of a tech company, wanting to
push out product as quickly as possible, wrapped up in an automotive
manufacturer, which should be far more intentional and thoughtful in producing
vehicles,” he said. “This is not an app, this is a multithousand-pound vehicle
hurtling down our roadways at high speeds.”
Tesla is
set to report its first-quarter earnings on 23 April, just a few days away,
when investors will likely be keen to hear updates on the recall.
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