Tesla has announced an official recall of approximately 1.6 million vehicles in China due to concerns regarding their steering software. While the focus will be on the electric-vehicle manufacturer's self-driving technology, the financial impact is expected to be limited as the issue will be resolved through a software update.

The China State Administration for Market Regulation revealed that the recall is related to Tesla's assisted steering function, as stated in a translated statement seen by our team. In a similar move to Tesla's recent recall of two million cars in the U.S., the Chinese regulator expressed concerns over potential misuse of driving assistance features by Tesla drivers, which could increase the risk of collisions and pose safety hazards. However, this issue will be addressed and resolved through a software upgrade.

The regulator stated, "This recall will be implemented in stages, and users can complete the software upgrade without going to the store."

It should be noted that while this update complies with Chinese recall regulations, Tesla has a track record of handling most of its recalls through over-the-air software updates, eliminating the need for customers to visit a dealer.

The recall applies to imported and domestic models, specifically the Model S, Model X, Model 3, and Model Y electric vehicles produced between August 2014 and December 2023.

On Friday, Tesla shares experienced a slight decline of 0.3% in premarket trading.

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