Tesla latest recall could be just the beginning - here's how it compares with other car companies

REUTERS/Noah Berger

The Tesla Model S.

• Tesla is recalling 123,000 Model S sedans to fix a steering wheel problem.
• The markets haven't taken the news and used it as fodder for a continuing Tesla sell-off.
• As Tesla increases production, more recalls are likely.

Tesla announced in Thursday that it's voluntarily recalling 123,000 of it's Model S vehicles because corrosion under limited circumstances in cold weather could cause the power-steering assembly to fail.

The recall comes at a time when Tesla's stock has been getting hammered down from previous highs. But the recall didn't seem to add more negativity to sentiment, as investors bid Tesla shares back up on Friday.

Tesla has actually been quite proactive about recalls, typically issuing them when there's limited evidence of dangerous incidence. The company usually says that it's exercising an abundance of caution. This recall, Tesla's largest so far, affects Model S production up to 2016.

It's worth noting that because Tesla has on balance built a relatively small number of vehicles - it just crossed a 100,000 annual threshold last year - and because it currently sells just three cars, its recalls are going to have a disproportionate impact. If a key component goes out, chances are it was used in most of the vehicles Tesla built during a given period.

Recalls are business-as-usual

Recalls in the auto industry happen all the time. Sometimes, they're extremely serious, such as Takata exploding airbag recall or GM's ignition-switch scandal. More often, they're run-of-the-mill: a window seal will leak or connection will fail, leading to annoyance rather than menace. A trip to the dealership takes care of everything. Automobiles are complicated machines, composed of thousands of components.

Tesla's recalls are more intense because the company doesn't stall on doing them, they attract outsized media scrutiny, and more importantly, they stress Tesla's service network, which continues to be a work in progress. They also consume financial resources, at a time when Tesla is losing billions. They don't, however, appear to affect goodwill toward the brand; if anything, they enhance it because Tesla makes such a serious effort to fix the problems.

Giving the carmaker the benefit of the doubt that it will resolved its production difficulties with its new mass-market Model 3 sedan and his ambitious targets for later in 2018, we should get ready to see many more Tesla's on the road. And as a result, we should get used to more frequent Tesla recalls.

That doesn't mean Tesla makes bad cars. It just means that the company is becoming like other carmakers, as it increases its manufacturing scale.

Get the latest Tesla stock price here.