Key Points
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Chinese regulators are concerned that newer-technology door handles could be difficult to locate and use during an emergency.
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Nearly 3 million of the total vehicles being recalled belong to Tesla.
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U.S. regulators are also looking into the matter.
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Nine automakers, including Tesla (NASDAQ:TSLA), plan to recall a record 4 million-plus vehicles. Tesla by far has the most vehicles to recall, at nearly 3 million.
The stock fell nearly 4% on Aug. 24.
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Chinese regulators are enforcing the recall due to door handles that potentially make it difficult for people to find and use them in an emergency.
On Tesla vehicles, exterior door handles are electric and draw power from the vehicle’s operating system, rather than being mechanical and connected to a latch. Manual door releases do exist on the inside, but they can reportedly be difficult to find.
Tesla’s door handles gave its electric vehicles a sleek, futuristic look, which other automakers have mimicked. Other automakers recalling vehicles in China include Xiaomi, Leapmotor, Xpeng, and Geely Holding.
In a statement on Aug. 21, Tesla said vehicles being recalled include its Model 3, Y, S, and X, citing door handles that blend into the interior.
“In extreme situations such as a severe collision causing the vehicle’s low-voltage system to fail, this could hinder occupants from quickly opening the doors to escape and impede rescue efforts by those outside the vehicle, posing a safety hazard,” Tesla said in a statement reported by various media outlets.
Here’s what else investors need to know.
Image source: Tesla.
Regulators crack down
According to Reuters, Chinese regulators are responding to several past incidents in which electric door-handle releases failed during emergencies.
Last October, Chinese state media reported that a driver in a Xiaomi vehicle died after an accident in which people nearby could not open the vehicle’s door.
The recall is not a total surprise, as China announced a ban on concealed door handles in electric vehicles, starting in 2027, although existing vehicles that have already been approved have until 2029 to make the changes.
Under new rules, vehicles must have a manual release handle on both the inside and outside of the vehicle, according to the BBC.
In the near term, Tesla and the other automakers plan to add warning labels to their vehicles and make remote software updates. For instance, according to Reuters, Tesla’s update will have windows open following a crash or accident.
Chinese regulators aren’t the only ones looking at door handles.
In 2025, the National Highway Traffic Safety Administration (NHTSA) also investigated reported incidents in which vehicle operators could not get into their vehicles in certain situations due to malfunctioning door handles.
The NHTSA’s Office of Defects Investigation conducted a preliminary review that found the door handles may not work if they don’t receive enough power from Tesla’s battery system.
How big a deal is this for Tesla stock?
While Tesla stock fell nearly 4% on Aug. 24, tech stocks also underperformed due to rising long-term bond yields that have been rattling investors lately.
Tesla’s door handles have helped the company stand out, so perhaps this impacts the branding in some way.
But while it’s not a good headline, I doubt it will be a long-term issue for the stock. Most Tesla investors have moved on from the core EV business, which has struggled for several years.
Many Chinese competitors were already developing cheaper models with performance similar to Tesla’s.
Investors are now focused on Tesla’s emerging robotaxi fleet and humanoid robots, so yes, existing models still need to be fixed, but there are bigger issues the market is focused on.
Regardless, I still believe Tesla’s valuation is far too stretched to make it an appealing investment right now.
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Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.
