Prof. Howard Weiss, recently retired from Temple U., shares his stimulating insights monthly on our blog.
Tesla is about to recall 135,000 automobiles, reports The Wall Street Journal (Feb. 2, 2021). Recalls occur after delivery of an item to a customer and as noted in Chapter 6’s “Cost of Quality” section in your textbook, their external failure costs can be extremely expensive. In particular, this recall means that the direct costs to Tesla will include the “cumbersome physical repair” (according to Tesla); the cost of the computer chip that needs to be replaced; the cost of reimbursement for the 23,000 owners who paid out of pocket for the repair prior to the recall; and the cost of informing Tesla’s service centers and owners about the recall. Your text also notes that there may also be a loss of goodwill or possibly liability costs.
The Tesla recall has to do with the touch screen control. Its failure can impact many different features, including backup cameras, defog and defrost controls, turn signals, heat and air-conditioning. Tesla claims that the touch screen should last 5-6 years. This is analogous to the Mean Time Between Failures (MTBF) in Chapter 17’s discussion of Reliability. But the National Highway Traffic Safety Administration (NHTSA) expects the touchscreen to last “at least the useful life of the vehicle.”
Tesla, of course, is not the only automobile manufacturer to experience recalls. According to NHTSA, from 2000 to 2019 there have been 14,791 vehicle recalls in the U.S. affecting roughly 680,000,000 vehicles. Over 90% of the recalls were for safety reasons whereas the other recalls were for non-compliance with federal standards. Manufacturers voluntarily initiated 80% of these recalls, while the remainder were instigated by the NHTSA.
Classroom discussion questions:
- Have you been affected by the recall of any product?
- What will be the major cost to Tesla for this recall?