Tesla recalls 2,700 Model X SUVs

Tesla Model X recall
Tesla Model X recall
Tesla replacing Model X 3rd row seat backs
Tesla replacing Model X 3rd row seat backs
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Tesla is warning owners of its Model X SUV to not have anyone sit in the back of the vehicle until it can replace the third-row seat backs, which could fail in an accident.

The automaker on Monday announced the voluntary recall of 2,700 Model X vehicles built before March 26 at the company's plant in Fremont, California. Tesla said it knows of no incidents where the hinge for a third-row seat has failed, but after a crash test, it determined the seat backs could collapse forward in some accidents.

"It's actually with the leverage of weight in the seat pulling it forward. So this would be an example of a front crash where the weight of the passenger seat belted to that seat could cause that latch to fail," said Jon McNeill, president of sales and service at Tesla.

The seat backs in question are provided by an outside supplier, Futuris. Tesla said Futuris will cover the cost of replacing the seat back. Futuris is owned by Clearlake Capital, and headquartered in Melbourne, Australia.

"A fix to this issue is already in place. We have worked with our supplier to develop a new recliner design with improved quality that resolved the issue. We are now constructing new third-row seat backs to match all affected vehicles," Tesla said in a letter to Model X owners.

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Shares of Tesla were down slightly about an hour after the company announced the recall.

"Headed into this call, which people got word of this morning, a lot of people expected a Model S refresh, so we saw the stock up in early morning trading today, so I think this is a big disappointment on that side. Now, a thing to remember about this recall is that we also had a similar type recall in 2013, when … a similar number of S's rolled out, and it was a seat-welding issue," Ben Kallo, a senior research analyst at R.W. Baird, told CNBC's "Power Lunch." "The stock ended trading up on it because Tesla was proactive in its recall. But still, with the stock having a big run here, you could see a little pressure" to the downside.

This is the first recall for the Model X, which has been the subject of design and production delays since shortly after Tesla unveiled the electric vehicle a couple of years ago. CEO Elon Musk has said Tesla may have been too ambitious in designing certain features within the Model X, which led to slower-than-expected production. The third-row seats had not been cited as problem before this recall.

Deliveries for the Model X started in late 2015.

Tesla said the recalled vehicles will take a couple hours to fix, and all repairs should be done within five weeks. Meanwhile, the company said production of the Model X in California will not be impacted by the recall, and it expects no financial impact on its bottom line.

"Until the recall is performed, you may make full use of your Model X, although we ask that you temporarily not have anyone sit in the third-row seats while the car is in use," Tesla said.

In November, Tesla recalled all Model S vehicles delivered before Nov. 19 over an issue related to the front seat belt, which could prevent it from functioning properly.

Disclosure: Tesla is an investment banking client of Baird. The firm also makes a market in Tesla securities.

— CNBC's Fred Imbert contributed to this report.