According to Chinese regulators, Tesla Inc (Nasdaq:TSLA) will 'recall' nearly 300,000 China-made and imported vehicles. 

What Happened

Tesla will recall Model 3 and Model Y cars to update its Autopilot software remotely because drivers were accidentally turning it on, Reuters reports. On Saturday, China's State Administration for Market Regulation announced the remote software recall for vehicles made locally and abroad. 

As it would be an online software update, vehicle owners are not required to return their vehicles.  According to the regulators, drivers easily activate the cruise control function by mistake, causing their vehicles to either quickly speed up or slow down.

The company will update the software on 211,256 Model 3 vehicles made in China and 35,665 imported Model 3 vehicles, according to Bloomberg.

The software on 38,599 Model Y vehicles made in China will also be updated. The Palo Alto-based company sold 33,463 China-made electric cars in May, and its sales in China jumped by 29% from the previous month.

Why It Matters 

Tesla has been facing various setbacks in China over the last few months. The company suffered backlash at the Shanghai Auto show, with protestors alleging their vehicles were plagued by malfunctioning brakes.

In February, Chinese officials raised concerns about safety issues with the Elon Musk-led firm related to rapid acceleration and battery fires. In March, the Chinese government banned Tesla vehicle access to military and state-owned enterprises, citing national security concerns over vehicle cameras.

What Else

China is the largest electric vehicle market in the world. Tesla sold almost 147,445 vehicles in China in 2020, which comprises 30% of its total sales. Last year was the company's first profitable year in China.  

The automaker has also halted plans to expand its Gigafactory in Shanghai and make it a global export hub due to the strained US–China relations.

Price Action

Tesla stock closed 1.17% lower, at $671.87 on Friday and was trading at $669 after-hours.