Tesla recalls vehicles for self-drive software update

Tesla will recall more than 362,000 U.S. vehicles to update its Full Self-Driving (FSD) Beta software after U.S. regulators said on Thursday the driver assistance system did not adequately adhere to traffic safety laws and could cause crashes.

The National Highway Traffic Safety Administration (NHTSA) said the Tesla software allows a vehicle to "exceed speed limits or travel through intersections in an unlawful or unpredictable manner increases the risk of a crash."

Tesla said it disagreed with NHTSA's analysis but ultimately complied to the safety agency's January request. The electric vehicle manufacturer has previously clashed with NHTSA, which has a number of pending Tesla probes, over other safety issues and recall demands.

Tesla, whose shares closed down 5.7 per cent at $202.04, will release an over-the-air (OTA) software update free of charge. The EV maker said it is not aware of any injuries or deaths that may be related to the recall issue. The automaker said it had 18 warranty claims.

The recall covers 2016-2023 Model S and Model X vehicles, 2017-2023 Model 3, and 2020-2023 Model Y vehicles equipped with FSD Beta software or pending installation.

U.S. senators Ed Markey and Richard Blumenthal, both Democrats, said the recall was "long overdue", adding, "Tesla must finally stop overstating the real capabilities of its vehicles."

This is a fresh setback for Tesla's driver assistance system. Chief Executive Elon Musk has repeatedly missed his own targets to achieve self-driving capability, which he has touted as a potential cash cow.

The move is a rare intervention by federal regulators in a real-world testing program that the company sees as crucial to the development of cars that can drive themselves.

The recall comes less than two weeks before the company's March 1 investor day, during which Musk is expected to promote the EV maker's artificial intelligence capability and plans to expand its vehicle lineup.

While Tesla's Autopilot feature assists with steering, accelerating and braking for other vehicles and pedestrians within its lane, the company says FSD is a more advanced system “designed to provide more active guidance and assisted driving” under active supervision of the driver.

Musk tweeted on Thursday that the word "recall" for an over-the-air software update is "anachronistic and just flat wrong!"

Tesla released FSD Beta to nearly all of its 400,000 FSD customers in the United States and Canada in the fourth quarter, when it recognised FSD revenue of $324 million. It said it expects to recognise nearly $1 billion of deferred revenue that remains over time as software updates are delivered.