Why Tesla's "Recall" Isn't Actually a Recall At All

Tesla issued a recall this week that could affect as many as 29,000 power adapters for its Model S. Here's what investors need to know.

Jan 15, 2014 at 5:41PM

News spread quickly on Tuesday that Tesla Motors (NASDAQ:TSLA) had issued a recall on a charging adapter for its all-electric Model S sedan. However, the action in question isn't, in fact, a recall. In a letter to the National Highway Traffic Safety Administration over the weekend, Tesla said it would issue a "voluntary recall" of its NEMA 14-50 power adapters because of a possible defect that may cause excessive heating and in some cases electrical fires.

Here's where things get interesting: Tesla says it can fix the problem with an over-the-air software update. Specifically, the update would enable the car's onboard charging system to monitor the input power and detect problematic fluctuations. If detected, the system would then automatically lower the charging current by 25%, according to the EV maker.

Screen Shot

Therefore, as Tesla CEO Elon Musk was quick to point out today on his Twitter account, this isn't a "recall" in the traditional sense. Similar to a laptop computer, the Model S can receive software updates over a WiFi connection that improve the car's performance or, in this case, fix problems. By running an over-the-air update for the charging system, Model S drivers are able to remedy the issue without the added inconvenience of bringing their cars into a Tesla service center.

A blessing in disguise?
While no automaker wants to issue a recall, this situation could actually work to Tesla's benefit -- at least in the sense that it brings public attention to the sheer convenience of owning a Tesla. Looking ahead, more car manufacturers will likely follow Tesla's lead in offering remote servicing capabilities in future models.

In fact, Daimler is already heavily investing in a platform that would allow Mercedes drivers to "add new functions such as predictive cruise control, which lets the car drive itself in some situations-by updating the car's operating system when the technology becomes available, according to Reuters.

Not only are these remote updates convenient for drivers, but they also save automakers such as Tesla a significant amount of time and money. Following three Model S battery fires that resulted after high-speed collisions, for example, Tesla was able to issue an "over-the-air update" that increased the suspension of the car at highway speeds. Moreover, Tesla accomplished this important firmware upgrade simultaneously on thousands of Model S vehicles all over the country without ever physically recalling any cars.

This is the future. And Tesla's technological lead today gives the EV maker a valuable edge over competitors. What's more, having the ability to fix system glitches in real-time should help Tesla maintain its reputation for quality performance, despite the occasional setback.

Crush the market with these growth stocks
They said it couldn’t be done. But David Gardner has proved them wrong time, and time, and time again with stock returns like 926%, 2,239%, and 4,371%. In fact, just recently one of his favorite stocks became a 100-bagger. And he’s ready to do it again. You can uncover his scientific approach to crushing the market and his carefully chosen 6 picks for ultimate growth instantly, because he’s making this premium report free for you today. Click here now for access.

Fool contributor Tamara Rutter owns shares of Tesla Motors. The Motley Fool recommends Tesla Motors. The Motley Fool owns shares of Tesla Motors. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information