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Volkswagen Recalls 5,600 Cars in the U.S. over Battery Flaw

Volkswagen AGVLKAY announced that it is recalling around 5,600 of its 2015-2016 electric e-Golf cars in the U.S. These vehicles are being recalled due to a battery problem that can cause the cars to halt suddenly.

The recall covers almost all electric cars sold by Volkswagen in the U.S. since the launch in Nov 2014. Volkswagen sold 357 and 4,232 e-Golf vehicles in the country in 2014 and 2015, respectively. In the first two months of 2016, the automaker sold 526 vehicles. The recall also covers 157 unsold vehicles which are currently with dealers.

Volkswagen detected that the software of the high-voltage battery may consider a brief internal electrical current surge as a critical battery condition. This will deactivate the vehicle's electrical drive motor, causing it to shut down all of a sudden.

Volkswagen got to know about this defect for the first time in early 2015. The problem was identified again in Jun 2015, in an internal U.S. test vehicle. Moreover, the company recently received further complaints about sudden halting, which subsequently led to the recall. The automaker confirmed that dealers will update the battery software in these vehicles.

Recently, Volkswagen announced that it is recalling around 800,000 VW and Porsche vehicles globally. These vehicles are being recalled due to a defect in the foot pedals which can make them loose.

The vehicles covered under this recall mainly include 409,477 Cayenne SUVs and 391,000 Touareg vehicles of model years 2011 through 2016. Volkswagen found that these vehicles may have a loose clip on the bearing bracket of the pedals. The automaker detected the issue during internal assessment. There have been no reports of any casualties related to this problem.

Volkswagen found itself in troubled waters after the Environmental Protection Agency ("EPA") revealed that it had developed a software algorithm to deceive U.S. emission tests. Volkswagen admitted to its diesel vehicles being installed with software that makes the engines appear to have low emission levels during tests. According to the EPA, Volkswagen vehicles emit nitrogen oxides, or NOx, at almost 40 times the standard amount. Nitrogen oxide emissions lead to smog and acid rain, and can cause serious health concerns like lung cancer.

Volkswagen currently carries a Zacks Rank #3 (Hold).

Stocks that Warrant a Look

Some better-ranked automobile stocks include Wabash National Corp. WNC , Federal-Mogul Holdings Corporation FDML and Superior Industries International, Inc. SUP . All the three stocks sport a Zacks Rank #1 (Strong Buy).

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VOLKSWAGEN-ADR (VLKAY): Free Stock Analysis Report

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WABASH NATIONAL (WNC): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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