Tesla Motors has introduced a simplified, lower-priced Model 3 variant in Hong Kong and Macau, a version often dubbed the 'budget edition.' Customers have noted that aside from the wheels, it's difficult to spot any difference from higher-tier versions, which could be welcome news for prospective buyers.
Existing Tesla Motors owners, however, are grappling with a string of quality complaints. Multiple drivers report that their Model YL vehicles, delivered less than a year ago, suffer severe rear suspension sagging during long-distance trips, with the gap between the rear wheel arch and tire visibly shrinking and compromising driving stability and safety. Some owners who had springs replaced under warranty say the problem reappeared shortly afterward, leading them to suspect a systemic defect.
Meanwhile, the State Administration for Market Regulation recently issued recall notices covering several automakers including Tesla Motors, Chery, Dongfeng Motor, BAIC BluePark, and FAW Group, all related to door handle issues. Tesla Motors accounts for the largest number of vehicles recalled in this round.
The company's second-quarter earnings report, released not long ago, painted a mixed picture. While sales and revenue grew, profitability weakened, with net income down 5% year-over-year and operating profit plunging 57%.
Where to begin with the recalls
The latest recall batch involves Tesla Motors along with several domestic manufacturers, all stemming from door handle problems. Notably, Tesla Motors has the highest recall volume among them.
In the first recall, Tesla Motors is bringing back 2,975,910 vehicles across models including Model 3, Model Y, Model S, and Model X. The issue involves interior emergency mechanical release handles that are similar in color to the cabin trim, making them hard to spot and operate. In extreme scenarios such as a severe collision causing low-voltage system failure, this could impede occupants from quickly opening doors to escape and hinder outside rescue efforts, posing a safety risk.
A second recall covers certain domestically produced Model 3 and Model Y vehicles manufactured between March 4, 2019 and December 7, 2025, totaling 2,740,642 units. The problem lies with the assisted steering function: when the vehicle is in a combined driver assistance state, the current attention monitoring mechanism is insufficient to alert the driver if their gaze leaves the road, potentially increasing collision risk if the driver fails to intervene in time.
Together, the two recalls add up to 5,716,552 vehicles at once, a scale that has triggered alarm among many Tesla Motors owners.
Regarding the door handle recall, Tesla Motors customer service says it will take two free measures for vehicles within the recall scope. First, it will provide warning labels to be affixed near the emergency mechanical release handles, heightening occupant awareness in extreme collision situations. The stickers are expected to reach service centers by the end of September, with installation carried out over three years; owners are advised to collect them during routine maintenance rather than making a special trip. Second, Tesla Motors will add a post-accident window lowering strategy: when the vehicle detects a severe collision, the windows will gradually descend according to the strategy, providing an escape route for occupants and access for outside rescuers. This is implemented through a software update, requiring no dealership visit.
Severe rear axle collapse concerns
Beyond the door handle recalls, Model YL owners are dealing with their own frustrations. The Model YL, built at Tesla Motors' Shanghai Gigafactory as a flagship model, is a large six-seat luxury electric SUV designed for families and launched in August 2025.
A Hebei owner posted on social media that her Model YL developed severe rear wheel sagging in July this year. She said the vehicle rarely carried a full load—with just one or two occupants, no problems appeared—but during a long trip to Tibet with four adults, one child, and luggage, the rear wheels sank, and the gap between the wheel arch and tire shrank noticeably, "to less than one finger." At that point, the vehicle had only about 9,000 kilometers on the odometer.
"We take long road trips every year in other cars and never had this issue. This was the first time taking the Model YL out, and now the chassis is almost sitting on the ground. Has anyone else seen it worse than mine?" she questioned.
A Shanghai owner said he took delivery in late October 2025 and has covered nearly 30,000 kilometers. He had previously seen online posts about rear spring replacements for Tesla Motors and dismissed them, since his own vehicle seemed fine. "Unexpectedly! After returning from a long trip, my Model YL's rear wheels had collapsed too!" He measured the wheel arch gap at just two fingers and ultimately had two springs replaced, but remained full of doubt afterward, suspecting a common defect.
He told us that while the spring replacements were free under warranty, the inner edges of the rear tires had worn down to the safety line and needed replacing—at his own expense. "Only 30,000 kilometers, and the tires are going that fast? Could it be related to the rear sagging?"
These cases are far from isolated. On social platforms like Xiaohongshu and Douyin, numerous Model YL owners have reported similar rear wheel collapse. In one WeChat group dedicated to the issue, nearly 100 owners have gathered.
When asked about the problem, Tesla Motors had no official response as of this writing. On the specific standards and solutions for rear sagging, customer service said no notices have been received; if a vehicle shows abnormalities, owners are advised to book a service center inspection, with details determined at the shop.
Based on feedback from multiple owners, Tesla Motors' after-sales position is that a rear wheel arch height of 784±20mm is within normal range, and springs are only replaced if the measurement drops below 764mm. Owners have also devised their own check: park on level ground, squat down, and insert fingers into the rear arch gap—a normal reading is about four fingers, three fingers warrants caution, and under two and a half fingers means the vehicle is likely affected.
However, replacing the springs does not guarantee a permanent fix. One owner reported that the sagging returned ten days after spring replacement, with the vehicle swaying noticeably from side to side, raising worries about stability and safety. On a second visit to the service center, the after-sales team declined to replace the springs again. "They said to wait and didn't give a final solution. We're just stuck in limbo."
Operating profit halves in Q2
In addition to the door handle recall and rear suspension troubles, Tesla Motors' second-quarter earnings were a mixed bag.
On the positive side, sales and revenue grew. In Q2, Tesla Motors produced 451,800 vehicles, up 10% year-over-year, and delivered 480,100 units, up 25%—a record for the period. Total revenue reached $28.236 billion, up 26%, with automotive revenue at $20.516 billion, up 23%.
On the negative side, profitability deteriorated. Net income attributable to common shareholders was $1.114 billion, down 5%; operating profit fell sharply to $398 million, down 57%; the operating margin dropped from 4.1% a year earlier to 1.4%; and the automotive gross margin slipped from 21.1% in Q1 to 16.9%.
Industry observers attribute the profit decline mainly to lower average selling prices. Tesla Motors has rolled out various purchase incentives to stimulate demand while discontinuing the higher-priced Model S and Model X, squeezing margins.
FSD subscriptions and Robotaxi are seen by Elon Musk as new growth sources beyond the automotive business. As of the end of Q2, paid FSD users reached 1.48 million, up 56% year-over-year. Musk believes demand will rise further as FSD gains regulatory approvals in more countries.
The path for FSD in China, however, has been bumpy. In February, Tesla Motors' vice president for China, Grace Tao, said that while full-featured FSD has not yet been pushed to Chinese users, the company has been adapting it for the local market, operating a training center in China with pre-deployed training capabilities. In April, Tesla Motors executives said on the Q1 earnings call that FSD still lacks "broader approval" in China and aimed for formal approval in the third quarter of 2026. With September fast approaching, however, there is still no clear word on FSD's launch in China.
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