Shares of Tesla edged lower on Tuesday, falling 1.2% to $374.54, even as US regulators closed a safety investigation into the company’s vehicles without requiring a recall.
The decline came alongside broader market weakness, with the S&P 500 down 0.7%, while the Dow Jones Industrial Average was largely unchanged.
NHTSA closes probe without recall
The National Highway Traffic Safety Administration said it had concluded its investigation into 120,089 2023 Tesla Model Y vehicles without taking further action.
The probe, launched in early 2023, followed two reports that steering wheels could detach from the steering column due to a missing retaining bolt.
Tesla confirmed that both affected vehicles had been delivered without the bolt and were repaired under warranty.
The regulator noted that the vehicles were produced in early January 2023 at Tesla’s Austin, Texas, and Fremont, California, facilities and had undergone end-of-line repairs that involved removing and reinstalling the steering wheel.
According to the agency, both incidents occurred within the first 400 miles of use, suggesting that any similarly affected vehicles would likely have already experienced the issue.
While the NHTSA found no additional cases, it said that closing the investigation does not constitute a definitive finding that no safety-related defect exists, and it may take further action if new information emerges.
Limited market impact from safety actions
Vehicle safety investigations are closely monitored by investors, but they do not always result in recalls.
Recalls, when they occur, typically follow a more extensive review process and are part of routine industry oversight.
Historically, recalls have had limited impact on stock performance, even though they often attract significant attention—particularly in the case of Tesla, given its status as one of the world’s most valuable automakers and the heightened scrutiny surrounding electric vehicles.
Stock remains under pressure
Tesla shares have remained under pressure in recent months.
Coming into Tuesday’s session, the stock was down about 16% for the year and has declined more than 3% following its March quarter results.
The muted market reaction to the closure of the safety probe reflects broader investor concerns that extend beyond regulatory issues.
Investor attention has increasingly shifted toward Tesla’s progress in artificial intelligence, particularly its “physical AI” initiatives such as robo-taxis and humanoid robots.
While Tesla launched a robotaxi service in Austin, Texas, in June, expansion into additional cities has been slower than anticipated.
This has raised questions about the company’s ability to scale its autonomous driving business and generate meaningful revenue from these initiatives.
At the same time, Tesla’s core electric vehicle business is facing headwinds.
Demand across the sector has softened following the expiration of the federal $7,500 tax credit, putting pressure on sales growth.
The combination of slower AI rollout and weaker EV demand has left Tesla’s stock range-bound, with investors seeking clearer evidence of execution on its long-term strategy.
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