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Tesla (TSLA) is recalling over 2 million of its EVs to correct a defect in its self-driving Autopilot system and address overall safety concerns. An over-the-air software update will be deployed.

Yahoo Finance's Brad Smith and Seana Smith monitor Tesla's stock in pre-market trading, outlining previous crashes tied to Tesla's Autopilot feature and how these events may weigh on the electric vehicle maker's US strategy.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Video Transcript

BRAD SMITH: Well, more trouble for Tesla is coming. The EV maker is recalling almost all of its cars sold in the US totaling over 2 million across its lineup, as it looks to fix an aspect of its autopilot system. Now, this comes after allegations from the NHTSA over several accidents here. You're taking a look at shares pre-market, they are down by about 1%.

Now, what's always interesting is whether some of the recalls that took place with Tesla are something where they can just make an over-the-air update or where people, owners of the vehicles would actually have to bring those vehicles into a service center here. That's what makes it all the more important to track. This one specifically because one of Tesla's biggest marketing components has been self-driving at the end of the day or FSD. So with that acronym becoming household known at this point and it being one of the biggest marketing elements that Tesla and Elon Musk have continued to put forward out there into the market of potential EV buyers, this is another major hiccup in that messaging in order for them to, kind of, deploy and then ultimately get back to good graces at a time where we're already seeing some of the changes in expectations and production for a lot of the other legacy automakers, too.

SEANA SMITH: Yeah and, Brad, this also goes back to what we were talking to Colin Rusch about yesterday from Oppenheimer. And we were mentioning the fact that there was a "Washington Post" analysis out talking about the fact that there had been eight crashes. They had found eight crashes at least or of instances where people who have been driving the car were either killed or in a serious condition after those crash. And they were pointing to the fact that many of these vehicles had used the autopilot system in areas where Tesla had deemed it not reliable.

So when he was talking about that, the reason that we were bringing it up from an analyst perspective where we were asking him about whether or not this shakes the confidence of some people who are thinking about buying Teslas, thinking about buying those vehicles. And he said, yes, that it is a short-term risk here at least over the coming months until we get a bit more clarity. A lot of that on regulators in terms of what exactly needs to happen from a transparency point of view.

But I bring that up because that obviously can translate into demand for Tesla. And we know Tesla demand has been struggling just a little bit. They have been-- they have been forced to lower prices here in the US and abroad in order to boost that demand.

It's not only a Tesla problem. We're seeing it also play out from GM, from Ford, from some of the legacy automakers in terms of that waning demand or maybe demand not meeting the initial expectations for EVs. So the fact that we are seeing more trouble here is a bit of a worrisome sign for Tesla. But again, I think it's how quickly they're able to resolve these issues, and move past it, and also just win back that confidence that maybe they had lost from some customers.

BRAD SMITH: Yeah, it sounds like they will be issuing that software update.