Long-time Tesla bear says market is underrating recall risks
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GLJ Research founder and CEO Gordon Johnson advised clients that Teslaâs (NASDAQ:TSLA) recent recall of over 360K vehicles due to full self-driving (FSD) issues is a bigger deal than the market realizes.

The Austin-based automaker was forced to recall 362,758 vehicles due to the risk that its full self-driving beta software could cause a crash around intersections and disobey speed limits. While the EV leader announced an over the air (OTA) fix to the issue, analysts have warned that further regulatory action over the product could be on the way, with Johnson firmly in that camp.

âWhile TSLA will likely be able to fix the things FSD beta does to break the law at present (i.e., slow rolling through some stop signs; driving the wrong way down one-way streets; going above the speed limit), there are fundamental issues it will never be able to solve with a camera-only system,â he warned. âAnd while TSLA is talking about new hardware that will include radar, it will still lack lidar, which means many of the same problems will exist.â

Johnson expressed surprise at the marketâs muted reaction to the news as he expects further recalls to come. Indeed, he wrote on Friday that it is âlikely class action lawsuits will followâ the recall.

âIn our view, this is much bigger than VWâs Dieselgate fraud/scandal as (a) no one died, and (b) lives were not put at immediate risk,â Johnson concluded. âShould TSLA not be able to solve its FSD problem (which this recall suggests it canât), TSLAâs equity value is, in our view, âworthlessâ.â

He added that Elon Musk himself said as much in a mid-2022 interview. Musk said that autonomous driving tech is the key factor in Tesla being "worth a lot of money or worth basically zero.â

Johnson reiterated a Sell rating on the stock and a $24.33 price target. Shares of Tesla (TSLA) marked a small decline on Friday, extending losses from Thursdayâs post-recall tumble.

Concerns over the recall was echoed by Wells Fargo analyst Colin Langan, though in less incendiary terms. Langan noted that the latest recall âdoes not address the full scope of the investigationâ into FSD and warned that more regulatory action could be on the horizon. 

âThis recall has little financial impact; however, risks clearly remain as NHTSA's other investigations are ongoing,â he wrote on Friday. âThe largest risk from regulatory actions would be to TSLA's credibility, as Autopilot is a key selling point.â
Read more on Cathie Woodâs continued bullishness on Tesla, taking the polar opposite view of Johnson.