Sports car manufacturer Porsche, which is a division of automotive giant Volkswagen (DE:VOW3) is recalling 27,527 electric vehicles in the U.S. over an issue that could lead to battery fires.
The National Highway Traffic Safety Administration (NHTSA), which ordered the recall following an investigation, says that batteries in Porsche’s electric sedans may short circuit and potentially catch fire. “A short circuit in a high-voltage battery increases the risk of a fire,” said the regulator in a news release.
The recall impacts Porsche’s 2021-2024 Taycan fully electric vehicle models, said the NHTSA. In a separate statement, Porsche said that it plans to have the batteries fixed at its U.S. dealerships, which will install diagnostic software and perform free repairs on the vehicles as needed. Impacted vehicle owners will be notified by email and/or mail.
A Difficult Time for Volkswagen
News of the recall at Porsche comes at a difficult time for Volkswagen. Europe’s largest automaker recently lowered its guidance for the remainder of this year as motor vehicle sales, particularly sales of electric vehicles, continue to slump. The vehicle manufacturer said that it now expects to deliver nine million vehicles worldwide this year, which would be about 3% less than it delivered in 2023.
Volkswagen is also contending with labor unrest in its home market of Germany. The company is engaged in contract negotiations with IG Metall, its largest union and one of the most powerful labor groups in Europe. In September, management at Volkswagen said they are considering closing some manufacturing facilities as they try to achieve €10 billion (US$11 billion) in cost savings.
Is Volkswagen Stock a Buy?
Volkswagen stock has a consensus Moderate Buy rating among 13 Wall Street analysts. That rating is based on nine Buy, three Hold and one Sell recommendations made in the last three months. The average VOW3 price target of €141.58 implies 53.36% upside from current levels.
