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Tesla recalls more than 80,000 cars in China due to software and seat belt problems

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Tesla is recalling more than 80,000 cars in China. Investors will be watching to see if the American giant’s reputation will be damaged.

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Tesla is recalling more than 80,000 vehicles in China due to software and seat belt problems, China’s market regulator said on Friday.

The American electric car giant is recalling a total of 67,698 imported Model S and Model X vehicles manufactured between September 25, 2013 and November 21, 2020, China’s State Administration of Market Regulation said.

The recall of these models is due to a software issue affecting the vehicles’ battery management system. Tesla will update the software on these cars for free.

Elon Musk’s automaker is also recalling 2,736 imported Model 3 vehicles built between January 12, 2019 and November 22, 2019, as well as 10,127 of the Chinese version of the vehicle due to a potentially faulty seat belt.

Tesla will test the seat belts on the affected vehicles, the regulator said.

Tesla was not available for comment when contacted by CNBC.

Investors will be watching for any implications for Tesla in China as a result of the recall. The market is becoming increasingly competitive with internal challengers from Warren Buffett BYD upstarts like it Nio and Xpeng.

“Recalls are always expensive and often escalate in ways that can damage reputations — especially now that the market is hyper-competitive and Tesla’s backlog is shrinking,” Bill Russo, CEO of Shanghai-based Automobility, told CNBC.

“This recall mainly affects the import models (S and X), so it can be managed if they come out before it.”

China is one of the most important markets for Tesla. The company has a large manufacturing plant in Shanghai and sells a a record number of Chinese cars in recent months.

But Tesla also faces growing competition in China, as companies like Xpeng, Nio and Li Auto to increase the production of new cars by 2023 in an attempt to challenge the dominance of the American electric car maker.

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Last month Tesla cut the price of Model 3 and Model Y vehicles in China after raising them earlier this year due to higher material costs.

This is not the first time that Tesla has had to recall cars in China. In May, the American firm recalled more than 100,000 vehicles due to an overheating problem.

— CNBC’s Sam Vadas contributed to this report.

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