Tesla Recalls Thousands of Vehicles Over Power Steering Issue

Tesla Issues Recall for Model X Steering Issue

At Tuesday's closing price of $767.29 per share, the offering is valued at $2.03 billion. In fact, in mid-afternoon trading the stock is up 5%, or $38.75 to $806.04.

Musk presented the first batch of made-in-China cars to consumers last month in a milestone for the company's new Shanghai "giga-factory" but which came as sales decelerated in the world's largest electric-vehicle market.

Tesla's share price hit the brakes Thursday after the electric auto maker said it plans to sell about $2 billion in additional stock.

Tesla will be launching plenty of new products, including the Model Y SUV, its big Semi, and the Cybertruck shown here, all of which cost money.

As part of a pay package approved by shareholders in 2018, the Tesla CEO stands to get options to buy 1.7 million shares of Tesla shares once the company has achieved a $100 billion market value over a period of six months, as well as hitting certain financial performance targets it has already achieved. The Shanghai factory started delivering cars last month. Additionally, the company is in the process of building a new Gigafactory in Germany, outside of Berlin.

Increasing battery production tops Musk's "must-do" list, he mentioned during the aforementioned call.

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"Despite this comment, we believe this is the correct thing for TSLA to do taking advantage of the recent surge in the stock price".

The electric vehicle maker said it plans to use the proceeds from the offering to strengthen its balance sheet and for general corporate purposes. The stock had more than tripled since the company released the first of two straight positive earnings reports in October.

Specifically, the agency says aluminum bolts that attach the electric power steering gear assist motor to the gear housing may corrode and break causing a reduction or complete loss of power steering assist and affects some models built in 2016. The current iteration can travel about 250 miles on a single charge.

While there are no known crashes or injuries directly linked to the issues NHTSA said there are no known crashes or injuries associated with the issue, Tesla will arrange for the replacement of the mounting bolts and will also replace the steering gear if needed, according to Transport Canada - a Canadian regulatory agency responsible for monitoring road safety.

CFRA analyst Garrett Nelson said coronavirus-related delays in China vehicle deliveries and a Model X recall likely played a role in Tesla's decision to raise capital.

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