Tesla (NASDAQ:TLSA) issued a recall of more than 2 million vehicles as part of a software update that will fix a problem with all vehicles equipped with Autosteer.

What Happened: The recall affects nearly every Tesla on U.S. roads.

Shares in the electric vehicle maker fell just 2.9% in morning trade on Wall Street. Shares, at the time of writing, are down 1.15%.

It’s a reasonably mild drop considering the stock’s 71% gain for 2023.

Also, auto recalls are nothing new. In 1981, Ford Motor Company (NYSE:F) issued a recall on 21 million vehicles. It also holds second place on the league table of biggest recalls of all time, with 9 million vehicles in 2004.

When Toyota (NYSE:TM) recalled 9 million vehicles (third on the league table) in early 2010, the share price fell more than 17% during the next few days.

Lucky for Tesla, it’s only a digital recall. That means no Tesla vehicles will have to go back to the factory or showroom. Tesla owners may install the software update overnight while the vehicle recharges.

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Why It Matters: On Wednesday, the National Highway Traffic Safety Administration (NHTSA) issued the recall due to safety flaws on the Autopilot system, the “driver-assistance feature.”

In 2021, NHTSA investigated 322 crashes involving Tesla's Autopilot. Out of 35 Tesla crashes, 17 people were reportedly killed.

The Autopilot was designed as a hands-on system intended only for use while operators maintained constant attention on the road, the NHTSA said.

However, when Autosteer is engaged, “the prominence and scope of the feature's controls may not be sufficient to prevent driver misuse,” the agency stated.

What Are The Twitterati Saying About Tesla?

Not surprisingly, much was being discussed on social media about the world’s most talked-about carmaker.

“In my history of owning TSLA, OTA updates and NHTSA ‘recalls’ have never impacted TSLA's valuation, or TSLA's stock price for longer than a day. The cost of an OTH update is close to zero,” tweeted Gary Black, managing partner at The Future Fund.

“Over the air updates only ruffle the feathers of the haters. The owners understand that it is one click of a button for the recall,” said Twitterer Doctor Gonzo.

Another observer was furious with the media calling it a “recall.”

“It's an OTA software update,” he insisted. “Your headline implies it's an actual recall. So thirsty for clicks and retweets.”

Tesla CEO Elon Musk was uncharacteristically absent from his own social media website on Wednesday.

“In our opinion [full self-driving] represents the holy grail for Musk & Co. over the coming years,” Wedbush analyst Dan Ives said in a research note. “We believe after some successful new releases of this software that Tesla is heading down the right path to where [full self-driving] will start to become a reality over the next few years and will be a major valuation addition to the sum-of-the-parts thesis for Tesla.”

Wedbush maintains an Outperform rating of Tesla with a 12-month price target of $310.

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Image: Tesla