Shares of Tesla (NASDAQ: TSLA) continued to drop this week as the electric vehicle (EV) company came under fire by United States safety regulators. In fact, Tesla stock will need to recall about 2.2 million vehicles, nearly every single one in the U.S. right now. But, it keeps getting worse.
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What happened
Tesla stock will need to recall the vehicles after finding that the company used the incorrect font sizes on warning lights, creating a crash risk. Although no crashes or injuries have been reported, it was another blow to the stock, which saw shares fall 3%. This comes on top of the 63% drop in share price experienced since highs.
While this can be fixed through a software update, the probe later released more issues the same day. In this case, about 334,000 vehicles could be subject to a power steering loss.
U.S. safety regulators have upgraded their probe into Tesla (TSLA.O) vehicles over power steering loss to an engineering analysis – a required step before the agency could demand a potential recall. This occurred after steering control was lost in about 280,000 Tesla vehicles back in July.
More and more problems
These are just the latest recalls from Tesla stock, adding onto another 2.03 million vehicle recalls to install new autopilot safeguards. However, it has been reported that even the new safeguards aren’t sufficient.
So while the innovator remains on top when it comes to bringing out new ideas and tech, it doesn’t look like it’s all that safe. And it’s likely that these probes will continue until they are. Which leads many to perhaps wonder if there isn’t another EV stock to consider besides Tesla stock?
Buy this instead
If you want a deal with lots of exposure to EVs, then I would consider Magna International (TSX: MG) instead. Magna stock continues to make quite the comeback after falling to dramatic lows during the pandemic. The company suffered under supply-chain disruptions. Yet now, it has shown that it can pick up the pace.
Magna stock continues to make partnerships with some of the largest manufacturers in the world. It continues to create new assembly locations across the country. As the world shifts towards EVs, it’s likely that Magna stock will only surge in use.
So with shares trading down 14% in the last year, but up 12% since bottoming out in October, now could be the time to buy. Especially with earnings around the corner. Meanwhile, investors today can bring in a dividend yield of 3.24% as of writing.
Bottom line
Tesla stock continues to be an innovator, it’s true. But that brings attention along with it, and not all of it positive. Therefore, it might be a better choice to choose a safer EV stock such as Magna stock today – one that seems to only be climbing higher, instead of falling further down. As for Tesla stock, it’s certainly best to remain on the sidelines. At least perhaps until this probe comes to an end.
