As China's NEV industry sees brisk sales, it continues to face daunting challenges over safety concerns.

Tesla (TSLA) will call back approximately 127,785 Model 3 cars in China for potential faults in semiconductor components that might lead to collisions, the country's market regulator said on Thursday.

The automaker will recall the cars manufactured between Jan. 11, 2019 and Jan. 25, 2022, with 34,207 units imported and 93,578 units made in China, according to a statement of the State Administration for Market Regulation (SAMR).

The statement also specified the minor manufacturing differences in the semiconductor components of the recalled vehicles' rear drive unit inverters, which may fail to control the electric current.

Cars won't be able to start if the malfunction occurs when parked, and they will lose driving power when in motion. In extreme circumstances, it may lead to vehicle collisions.

To address the issue, Tesla's Beijing and Shanghai subsidiaries will perform an over-the-air (OTA) motor control software update. The brand's service center will contact clients to replace malfunctioning inverters for vehicles that cannot be upgraded with the OTA technology.

It is common for companies to call back products, but Tesla's recall came after the defect investigation by SAMR. "With rising sales, market supervision departments receive increasing complaints about new energy vehicles (NEV)," said Gan Lin, deputy director of SAMR, when talking about the auto industry in March.

Safety issues have been a key concern for the NEV industry. Data from SAMR showed 59 NEV recalls in 2021, an increase of 31.1% year-on-year. NEVs involved reached 830,000 units, spiking 75.9% over the previous year and accounting for 9.5% of the total cars recalled during the same period.

So far, Tesla China has made six recalls in China involving over 543,000 units, ranking fourth among domestic carmakers.

Besides new entrants like Tesla, some traditional carmakers are also among initiators of NEV recalls. In 2021, Mercedes-Benz issued three recalls in China on the all-electric EQC SUV. BMW also called back the domestically made iX3 electric SUV. Volkswagen Group said it will recall more than 100,000 plug-in hybrid electric vehicles (PHEV) worldwide.