Tesla To Recall Charging Adapters On Overheating Issues

Tesla Motors, Inc. (NASDAQ:TSLA) has decided to recall three types of charging adaptors after it received reports of overheating issues. Apparently, two customers reported incidents of overheating of the NEMA 14-30 adapter last month. Following this, Tesla decided to recall that model as well as the NEMA 10-30 and 6-50 adapters which are also made by the same supplier and have similar elements.

These chargers are limited in number as they are sold separately as an accessory for using the company's car chargers into different types of outlets. However, the standard accessories that come with a Tesla vehicle, namely Tesla Wall Connector, Universal Mobile Connector, NEMA 14-50 adapter, and NEMA 5-15 adapter, are not affected by the overheating problem.

While no injury or damage has been reported due to the issue, Tesla decided to announce a voluntary recall. Per Bloomberg, around 7,000 adapters are being recalled.

Price Movement

Tesla has been underperforming the industry for most of the year. Year to date, the share price of Tesla has fallen 22.6% while the Zacks categorized Auto Manufacturers-Domestic industry witnessed a 0.1% decrease.

Tesla has been facing production-related issues since a long time, as a result of which it failed to meet delivery targets in the first two quarters of 2016. This, along with the losses incurred by the company, pulled down its share price. Tesla’s stock was also affected by the announcement of the SolarCity acquisition due to concerns related to the latter’s losses, debts and cash outflow. However, now that the acquisition is completed, investors are expected to shift their focus to Tesla’s growth plans.

Zacks Rank & Key Picks

Tesla currently carries a Zacks Rank #3 (Hold). Some better-ranked auto stocks include Allison Transmission Holdings, Inc. (NYSE:ALSN) , America's Car-Mart Inc. (NASDAQ:CRMT) and Rush Enterprises, Inc. (NASDAQ:RUSHA) .

Allison Transmission, sporting a Zacks Rank #1 (Strong Buy), has a long-term growth rate projection of 11%.

America's Car-Mart has a long-term expected growth rate of 45.5%. The company carries a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Rush Enterprises, carrying a Zacks Rank #2 (Buy), has a long-term expected growth rate of 15%.

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