Recalling the Word Recall Shows Stocks Became (Some) Automaker's Main Products

Rivian "whompy wheels" were caused by loose bolts and got a recall, which some people are questioning as such 7 photos
Photo: F the Pump/Twitter/edited by autoevolution
Rivian R1T gets a whompy wheel, probably due to bolt-tightening issuesRivian R1T gets a whompy wheel, probably due to bolt-tightening issuesRivian R1T gets a whompy wheel, probably due to bolt-tightening issuesRivian R1T accelerator pedal breaks and we need to understand whyRivian R1T accelerator pedal breaks and we need to understand whyRivian R1T accelerator pedal breaks and we need to understand why
In January 2014, Elon Musk tweeted this: “The word recall must be recalled.” At the time, the Tesla CEO was trying to deny that an over-the-air (OTA) upgrade was a recall because nobody had to visit a Tesla Service Center to get the repair. More recently, Rivian made a suspension recall that involved tightening a suspension bolt. Some people minimized the repair as something so trivial it should not be called a recall. In both cases, the aversion to the word shows a worrying distortion: people are more worried about the stocks of a car company than about its cars.
Regardless of what the semantics of the word recall suggests, there is a clear legal definition for it. The National Highway Traffic Safety Administration (NHTSA) states that it will be issued when the traffic safety regulator or the manufacturer “determines that a vehicle, equipment, car seat, or tire creates an unreasonable safety risk or fails to meet minimum safety standards.” In other words, it is a correction to prevent people from dying while driving. It should be simple, clear, and crucial, but it isn’t.

The public perception of a recall is often very negative. People tend to think these actions are an open admission that automakers have screwed up. Although that may sometimes be the case – such as in Dieselgate – it often relates to issues with the suppliers. The Takata airbags recall is still the largest one ever made (67 million components), and its name shows what it was about: the largest airbag supplier in the world had delivered defective goods. It affected almost all car companies worldwide.

If you do not remember what this problem involved, Takata airbags had ammonium nitrate explosive propellants that were improperly stored. That led moisture to collect inside the inflators, which rusted the metal components inside the airbag and destabilized the ammonium nitrate propellant. Whenever a defective airbag deployed, it would send shrapnel flying inside the car. That killed 19 people in the U.S. alone and many more abroad.

Should Takata have had the same investors that are currently putting all their money in new car companies, we would probably have heard that shrapnels were not that dangerous, that metal components rusting were nothing to worry about, or that they were “within specs.” Signs of dangerous defects would be downplayed to prevent the stock prices from falling.

In Rivian’s case, it did not work: its shares fell 7.3% soon after it announced it would recall 12,212 vehicles – almost everything it has built so far. There are reports that no accidents were registered, but I wrote on August 22 about one situation in which the front wheel of a Rivian R1T fell off. At the time, the bolt-tightening issue was already known.

In Rivian’s chronology about the problem in its Part 573 Safety Recall Report 22V-744, it said it “identified a vehicle where the upper control arm had separated from the steering knuckle” on August 13. The EV maker later identified eight more vehicles with the same problem. Although it is very positive that it took action to prevent more serious events, the suspension with insufficiently fastened bolts raised concerns about Rivian’s quality control and manufacturing procedures. Being a young company, which still has to prove itself in the market, also did not help.

Apart from downplaying recalls, we also see cases in which the first repairs are not sufficient to solve the problem. The Chevy Bolt EV is a good example. GM first tackled it with a temporary software fix that limited charging to 90% of the original capacity. On April 29, 2021, GM told the NHTSA that it would “perform diagnostic procedures” and replace only the “battery module assemblies that fail the diagnostics.” That was the final recall until “fixed” cars kept on catching fire. On August 20, 2021, another Part 573 Safety Recall Report (21V-650) described the true correction for the problem: replacing all affected battery modules, regardless of diagnostics.

Tesla also has a similar situation with the heat pump in its vehicles. Numerous owners said they were in life-threatening episodes when the component decided to stop working at freezing temperatures. Despite evidence that the problem may have mechanical causes, Tesla issued a recall in February 2022 that consisted solely of an OTA update. Affected customers will only know if it worked or not in the next winter.

The lesson is probably that more extensive testing has to be performed by new carmakers. It is not clear how much Rivian has tested the R1T, but a bolt-tightening issue would have probably shown in these tests. Lucid also presents multiple problems with the Air, as I reported on October 7. Tesla is known for its policy of “deliver now, fix later,” which is already costing it dearly. By ignoring preventable problems in its vehicles, Tesla now has crowded service centers, most of which are busy repairing vehicles delivered full of problems. The cost of other issues that only appear with time will eventually emerge.

If the investors and executives that now want to change the meaning of the word recall cared more for the product than they care for stocks, shares would appreciate naturally, based on a real value proposition instead of on promises or future developments. Customers would also get cars that would not need repairs almost immediately after they were delivered, even if the repairs were quick, trivial, or made through an OTA update. Above all, there would be no question about what is truly important in all this discussion: that all vehicles are safe enough to be driven. If they are not, the remedy is a recall, whether investors like the term or not.
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About the author: Gustavo Henrique Ruffo
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Motoring writer since 1998, Gustavo wants to write relevant stories about cars and their shift to a sustainable future.
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