Tesla Inc. on Thursday launched a recall of 362,758 vehicles in connection with the EV maker’s self-driving software, saying it can increase the risk of crashes.
Tesla TSLA, -5.69% stock turned lower on the news, trading as low as $205.57, and at last check was down more than 3%.
In a recall notice, federal regulators said Tesla’s Full Self-Driving Beta software, meant for urban driving, may increase the risk of crashes by allowing vehicles to “exceed speed limits or travel through intersections in an unlawful or unpredictable manner.”
The National Highway Traffic Safety Administration said that 362,758 Tesla vehicles were affected, and that Tesla will release an over-the-air software update to remedy the issue.
Tesla said in late January it had pushed FSD Beta to “nearly all customers in the U.S. and Canada who bought FSD,” or about 400,000, saying they would “start experiencing the evolution of AI powered autonomy.”
The company also called it “an important milestone.” Tesla last year raised the FSD package’s price to $15,000.
According to NHTSA, analysis and testing performed as part of the final stages of an ongoing investigation revealed that in certain situations FSD Beta “led to an unreasonable risk to motor vehicle safety based on insufficient adherence to traffic safety laws.”
Tesla then launched a recall as required after discussions with the regulator, NHTSA said. Tesla, which has disbanded its public relations team, did not immediately return an email seeking comment.
“NHTSA will continue to monitor the recall remedies for effectiveness,” the regulator said. “This recall seeks to address a specific set of concerns identified by the agency” and does not address “the full scope” of the current investigation.
NHTSA said it still has an “open and active” investigation into Tesla’s Autopilot, the company’s suite of advanced driver-assistance systems meant for highway driving, as well as “associated vehicle systems.”
In a filing earlier this month, the EV maker disclosed a Justice Department subpoena over Autopilot and self-driving technology, one of many ongoing investigations.
Tesla long has been criticized for overpromising on its vehicles’ self-driving capabilities.
Tesla stock had shaken off weakness earlier in the week, gaining for two straight sessions and initially rising on Thursday.
“The problem can be fixed with a simple over-the-air software update at no cost, which is much different than a physical vehicle recall,” CFRA analyst Garrett Nelson told MarketWatch.
The stock earlier this month notched an 8-day winning streak, leading one analyst to say it was “overextended.”
Tesla stock is down about 30% in the past 12 months, compared with losses of around 8% for the S&P 500 index. SPX, -1.38%
Tesla investors are waiting to hear more details about the company’s “Master Plan 3” to be unveiled on a March 1 investor day.