Recalls have become a watch item for
investors and there is another for them to consider on Monday.
Tesla is recalling some 125,000 vehicles to fix a seat-belt warning notification. The chime might not activate as intended. Tesla will fix the issue with an over-the-air software update.
Millions of vehicles are recalled annually and it doesn’t tend to be an issue for the stock market. Along with a recall for Tesla, the National Highway Traffic Safety Administration posted notices for
and others.
Ford is recalling about 109,000 cars to correct a rear camera issue. Mercedes-Benz is recalling about 15,000 vehicles to correct an EV battery issue.
Tesla stock was up 0.3% in premarket trading Monday at $178.59, while
and
futures were up 0.2% and 0.5%, respectively. Ford stock was up 0.7%. Mercedes shares gained 0.6% in overseas trading.
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The overall market move deserves most of the credit for the change in Tesla stock. Investors, however, were weighing an additional piece of good news and a piece of bad news.
The bad news is proxy advisor Institutional Shareholder Services recommended investors vote against reinstating Musk’s 2018 pay package worth some $56 billion when it was awarded more than six years ago.
The pay package was voided by a Delaware judge in January.
The ‘no’ recommendation makes it more likely the vote won’t pass, but ISS recommended voting against the package in 2018 and shareholders approved it anyway with more than 70% support.
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The good news for Tesla is that it’s still a very popular place to work. In the company’s recently published annual Impact Report, Tesla said it received 5.9 million job applications in 2023. That’s up from 3.6 million in 2022, and 3 million in 2021.
Tesla ended 2023 with about 140,000 employees, up from 128,000 at the end of 2022. Its current workforce is probably now back under 130,000 after the company announced large layoffs in April.
“We’ve had a long period of prosperity from 2019 to now,” said CEO Elon Musk on his company’s first-quarter earnings conference call. If the company “is 5% wrong per year, that accumulates to 25%, 30% of inefficiency. We’ve made some corrections along the way, but it is time to reorganize the company for the next phase of growth.”
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Currently, Tesla describes itself as between two growth waves. The first was the introduction of the Model 3 and Y vehicles, which helped sales expand to more than 1.8 million cars in 2023 from fewer than 100,000 in 2016. Tesla’s next wave of growth will be driven by lower-priced EVs and self-driving technology, according to the company.
Tesla delivered about 387,000 vehicles in the first quarter of 2024, down almost 9% year over year. For the second quarter, Wall Street projects sales of 452,000 vehicles, down from 466,000 delivered a year ago. Analysts don’t project year-over-year growth until the third quarter.
Slowing growth has weighed on investor sentiment. Coming into Monday trading, shares were down about 28% so far this year.
Write to Al Root at allen.root@dowjones.com
