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Tesla (TSLA) is no stranger to vehicle recalls and the company is now facing another one, but this time the recall impacts its recently launched Cybertruck, adding to a string of disappointments for the futuristic-looking EV. According to Reuters, TSLA is recalling 11,688 Cybertrucks due to faulty windshield wipers that could reduce visibility, and it's also recalling 11,383 Cybertrucks because a trim in the trunk bed may have been improperly secured, increasing the risk that it may detach, creating a road hazard.

• To say it's been a bumpy ride for Cybertruck since its highly publicized (and oft-delayed) launch on December 1, 2023, would be a major understatement. For starters, during the launch event, TSLA announced that only its most expensive version -- which costs about $80,000 -- would be available in 2024.
• Despite that high price tag, there has been no shortage of issues with the vehicle. On April 19, the U.S. National Highway Traffic Safety Administration (NHTSA) ordered TSLA to recall every Cybertruck it had made, about 3,900 units, in order to fix an accelerator pedal that can get stuck.
• More broadly, the vehicle's expensive and rigid stainless-steel body comes with its own set of problems. For instance, some Cybertruck owners have complained about possible rusting on the panels, while others have expressed safety concerns due to the lack of shock absorption from the metal.
• Furthermore, unlike the massive recall related to TSLA's Autopilot system, which impacted more than 2 mln vehicles last December, the Cybertruck recalls will require owners to bring their vehicles into the shop for costly physical repairs. In contrast, the Autopilot system recall was more like a software update that could be done at home.

While the developments surrounding Cybertruck continue to disappoint, the news isn't all negative for TSLA today.

• Rising competition and macroeconomic headwinds have weighed on TSLA's business in China, but demand has received a jolt recently. In April, China shipments decreased by 18%, prompting TSLA to reduce its headcount by 10% at its Shanghai factory. However, in May, China deliveries jumped by nearly 17% versus April, helping to push total Q2 delivery expectations higher.
  • On July 2, TSLA is expected to release Q2 deliveries with estimates calling for a qtr/qtr increase of around 15%.

The main takeaway is that the recalls add another dent to the Cybertruck story, but the financial impact should be limited given the relatively small number of Cybertrucks currently on the road. Therefore, the more upbeat sales trends in China are likely having more of an impact on the stock today.