Hyundai Motor and Kia recently announced the recall of millions of conventional vehicles due to a fire risk. Despite concerns about electric vehicles, these recalls are unrelated to electric powertrains.
The Recall Announcements
The National Highway Traffic Safety Administration issued two recall notices affecting over 3 million vehicles.
Hyundai Recall Details
Hyundai, with the ticker symbol 005380.Korea, is recalling approximately 1.6 million vehicles produced between 2010 and 2015. The recall is due to a brake fluid leak that could result in an electrical short. To address the issue, dealers will replace a fuse at no cost. As a precautionary measure, Hyundai advises owners to park their vehicles outside and away from structures until the recall repair is complete. The notice was dated September 22 and is typically published on the NHTSA website within a few days.
Kia Recall Details
Kia, with the ticker symbol 000270.Korea, is recalling around 1.7 million vehicles manufactured between 2010 and 2015. The recall is related to a potential short-circuit in the hydraulic electronic control unit, increasing the risk of fire. Free replacements of the affected unit will be provided by Kia. Just like in the Hyundai recall, Kia also advises owners to park their vehicles outside. The recall notice was posted on September 25.
No Costs and No Safety Incidents
In an email statement, Kia assured owners that there would be no costs associated with the recalls. They also emphasized that there have been no reported crashes, injuries, or fatalities related to the identified issues. On the other hand, U.S. representatives for Hyundai have not responded to requests for comment.
Minimal Impact on Stocks
Despite the recalls, the stock prices of both Hyundai and Kia have not been significantly affected. On Wednesday, Hyundai shares closed up 0.2% in overseas trading, while Kia shares closed up 0.6%.
To ensure safety, Hyundai and Kia are taking proactive measures to resolve the identified issues promptly. Owners are encouraged to follow the instructions provided by the manufacturers and stay updated through official channels.
The Impact of Recalls on EV Stocks
Recalls are a common occurrence in the automotive industry, and they usually don’t have a significant impact on stock prices. However, when it comes to electric vehicles (EVs), recalls tend to generate more attention. EVs are still a relatively new technology, and both investors and consumers are still learning about their intricacies.
One notable recall that caught investors’ attention was General Motors’ (GM) recall of more than 50,000 Chevy Bolt EVs in August 2021 due to a battery fire risk. Owners were advised not to charge their cars indoors at night. While this had a temporary effect on GM’s stock price, it eventually recovered, and the cost of the recall was shouldered by the battery supplier.
This incident has led investors to associate recalls and fires with EVs. Tesla (TSLA), being the leader in the EV market and the most valuable car company globally, also attracts a lot of interest whenever there is a recall involving their vehicles. However, most Tesla recalls can be resolved through over-the-air software updates, a unique feature in the automotive industry.
Recalls will continue to be a part of the industry, with millions of vehicles being recalled each year. This process ensures that cars remain safe on the road and is overseen by the National Highway Traffic Safety Administration (NHTSA) and the automotive industry as a whole. As more EVs hit the road in the coming years, it is expected that there will be an increase in EV recalls. However, as the technology becomes more mainstream, investors are likely to become less concerned about every single recall, signaling the maturation of EV technology in the market.
