File Photo/Huang Xinlei (NBD)

Jan. 21 (NBD) -- U.S. electric car maker Tesla is caught in a string of troubles recently.

China's top market regulator said last Friday that Tesla will recall a total of 14,123 imported Model S vehicles in the country over potential deadly airbags produced by Takada, starting from April this year.

According to the Chinese regulator, the airbag in the front passenger seat of the vehicle within this recall range is equipped with an ammonium nitrate gas generator without a desiccant. When the co-pilot airbag is deployed, the gas generator may be damaged, causing the debris to fly out and injuring people inside the vehicle.

Industry insiders said Takada defective airbags have affected over 1.2 billion vehicles worldwide of brands including Jaguar Land Rover, Lexus, Honda, Ferrari, BMW and Chrysler. Although the recall of faulty Takada airbags started 10 years ago, about 100 million cars with such airbags are still waiting to be taken back.

According to incomplete statistics compiled by China Business Journal, this is Tesla's fourth large-scale recall during the past three years and four recalls took back in total approximately 200,000 Tesla models. Prior recalls were due to faulty parking brakes, seats and power-steering bolts, according to China Business Journal.

Renowned economist Song Qinghui said although Tesla admitted the defects and recalled the vehicles, yet recalls would be detrimental to Tesla brand image. It may cause butterfly effect and undermine consumers' confidence in Tesla products.

Moreover, at least 12 Tesla Model S battery sets have caught on fire worldwide in a crash or in stationary state in the past five years, according to a lawyer with Chicago law firm Corboy & Demetrio. Its severed bearings have also injured passengers, raising safety concerns.

Except for quality issues, Tesla may be embroiled into a cash crunch.

Describing a "very difficult" road ahead, Tesla CEO Elon Musk last Friday said in an open letter the automaker will cut its full-time workforce by about 7 percent as it tries to lower the cost of its Model 3 sedan.

Song said that 7 percent workforce is equivalent to 3,000 employees, which can save some costs but won't be very effective in improving production. After all, manpower is still needed to attend robots in the automated assembling process.

In addition to that, Tesla is also seen cutting other costs.

Elon Musk announced that Tesla will end its customer referral program at the end of this month, about 40 days earlier than its original plan. Besides, it will be putting brakes on the sale of its lowest-priced versions of the Model S and Model X, Elon Musk posted on Twitter last Wednesday.

Song held that Tesla's moves to axe cost may be indicator of the company's financial strain and the carmaker may be unable to pay convertible debts due in March. 

It's noted that about 920 million U.S. dollars in convertible senior notes will expire on March 1 at a conversion price of 359.87 U.S. dollars per share. But Tesla's stock hasn't traded above 359 U.S. dollars for weeks. If the shares are above 359.87 U.S. dollars, then Tesla debt converts into Tesla shares. If not, Tesla will have to pay holders of its convertible notes in cash.

In an investment report released by Morgan Stanley last Friday, it maintained a "Hold" rating on Tesla with a price target of 291 U.S. dollars.

Apart from recall, cost cut and debts, Tesla is also facing fierce competition from car makers worldwide.

Internationally, it has to take on large players like Ford, Nissan, and General Motors. In China, it also faces competition from EV startups such as, Nio, Xiaopeng Motors, and WM Motor, which rival Tesla's localized production.

Email: tanyuhan@nbd.com.cn