Tesla is recalling close to 2 million vehicles in the United States due to a safety concern with the hood latch that could potentially lead to accidents, the company announced on Tuesday. The National Highway Traffic Safety Administration highlighted that an unlatched hood could unexpectedly open while driving, obstructing the driver's view and increasing the risk of a crash. This recall affects certain models made between 2020 and 2024, including the Model 3, Model S, Model X, and Model Y.

Last month, Tesla initiated an over-the-air software update to address the issue, enabling the detection of an unlatched hood and providing alerts to drivers. While Tesla has received three reports of problems with the hood latch in the US, fortunately, there have been no incidents of crashes or injuries associated with the recall. The faulty hood latches were produced in China, and Tesla began investigating customer complaints about hood openings in Model 3 and Model Y vehicles in China earlier this year, subsequently implementing a hardware inspection and recovery process.

In response to this latest recall, Tesla shares experienced a slight 1% decrease on Tuesday morning. This recall stands as the largest one for Tesla since December, when the company recalled over 2 million vehicles in the US to enhance safety features in its Autopilot system. However, following reports of 20 crashes involving vehicles with the updated Autopilot system, the NHTSA initiated an investigation, citing concerns regarding the previous recall.

Despite these challenges, Tesla reported its lowest quarterly profit margin in over five years last week, indicating struggles in revitalizing auto sales amidst a decline in demand. The company attributed the profit decrease to heightened operating expenses focused on new AI projects. Additionally, Tesla has been reducing its workforce, carrying out layoffs equivalent to over 10% of its employees in the second quarter. Tesla remains committed to launching new vehicle models, including more affordable options, in the first half of 2025.