Tesla Stock News and Forecast: TSLA dips 2% on Model Y steering wheel investigation

Tesla stock dips 2% early Wednesday.
NHTSA begins investigation of Model Y steering wheels.
TSLA stock appears to be in a downtrend.
Fed Chair Powell speaks to House Committee on Wednesday.

Clay Webster FXStreet

Tesla (TSLA) stock dropped nearly 2% in Wednesday's premarket after US regulators said they would begin an investigation of Tesla's steering wheels in its 2023 Model Y vehicles. Tesla stock broke below $185 in the premarket even as the NASDAQ futures rebounded from Tuesday's sell-off.

Tesla stock also lost 3.2% on Tuesday after Federal Reserve Chair Jerome Powell raised worries during Senate testimony that the central bank will continue raising interest rates as inflation appears stubborn in the latest data.

"The latest economic data have come in stronger than expected, which suggests that the ultimate level of interest rates is likely to be higher than previously anticipated," Powell told the Senate Banking Committee on Tuesday. "If the totality of the data were to indicate that faster tightening is warranted, we would be prepared to increase the pace of rate hikes."

Powell will address the House Financial Services Committee on Wednesday.

Tesla stock news: NHTSA to focus on Model Y steering wheel

After receiving two complaints of Model Y steering wheels literally falling off while the vehicles were in motion, the National Highway Traffic Safety Administration (NHTSA) has opted to open an investigation. The regulators will narrow their focus to 120,000 Model Y vehicles of the 2023 vintage. In both cases, the NHTSA said that the vehicles were delivered with a missing retaining bolt that is supposed to fasten the steering wheel to the steering column.

According to one of the complaints, a driver in New Jersey alleges that the steering wheel came off while the vehicle was on the highway just five days after the Model Y had been delivered. Tesla replaced the driver's vehicle free of charge. No one was injured in either reported case.

Neither CEO Elon Musk nor Tesla has commented on the investigation. Tesla's media relations office has been closed. Musk has been in hot water this week after bashing a former Twitter employee who is handicapped on Twitter. Musk has since apologized.

Source: NHTSA website

Tesla stock forecast

Tesla stock has two regions of support going forward, and it may need them since the stock is now in its third week of a pullback. The 9-day moving average has crashed below its 21-day counterpart, which is one way of confirming a downtrend.

The first region has worked as resistance in the past and may now revert to support. This region stretches from $180 to $182.50. Below that is the $167.50 level that was respected in November and December of this past year. Tesla stock needs to break above $214 in order to bring the bulls back in.

TSLA daily chart

Author

Clay Webster

FXStreet

Clay Webster grew up in the US outside Buffalo, New York and Lancaster, Pennsylvania. He began investing after college following the 2008 financial crisis.

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