Tesla (NASDAQ: TSLA) stock fell about 5% on Friday after the electric vehicle giant announced a recall of 376,000 cars in the U.S., due to a glitch in the power steering assist feature that could make steering harder, particularly at low speeds, raising crash risks.
The recall follows a National Highway Traffic Safety Administration (NHTSA) investigation that’s stretched over a year. It started after Tesla owners reported steering issues—some couldn’t turn the wheel, while others needed extra muscle to steer. Last year, NHTSA flagged over 50 cases where vehicles allegedly needed towing due to the issue.
This isn’t the first time Tesla’s steering woes have made headlines. In late 2023, Reuters reported that tens of thousands of owners faced premature failures in suspension or steering parts since 2016, based on Tesla documents and interviews with customers and ex-employees.
In a filing with NHTSA, Tesla (NASDAQ: TSLA) traced the issue to certain 2023 Model 3 sedans and Model Y crossovers running older software. The company said an overvoltage breakdown could overstress motor drive components on the printed circuit board. If this happens while driving, steering stays normal, and a visual alert pops up. But once the vehicle stops, the steering assist might fail—and it could remain disabled when it starts moving again.
As of January 10, Tesla has identified 3,012 warranty claims and 570 field reports that might connect to this issue. The company said it hasn’t received any reports of crashes tied to the condition. The EV giant also clarified that this recall isn’t a response to NHTSA’s separate, ongoing investigation into allegations of steering control loss.
The automaker rolled out a fix—an over-the-air software update—in October but held off filing the recall report until this week. By January 23, Tesla said 99% of affected U.S. vehicles had the update installed.
On January 16, Tesla (NASDAQ: TSLA) said it decided to issue a global steering recall after an unnamed foreign regulator opened an investigation and raised concerns about the issue.
This recall marks the automaker’s second major recall of 2025. In January, Tesla recalled about 239,000 vehicles over faulty rear-view cameras.
