Tesla said it would recall 362,000 US vehicles to update its Full Self-Driving (FSD) Beta software after US regulators said on Thursday the driver assistance system did not adequately adhere to traffic safety laws and could cause crashes.

The National Highway Traffic Safety Administration (NHTSA) said the Tesla software allows a vehicle to “exceed speed limits or travel through intersections in an unlawful or unpredictable manner increases the risk of a crash.”

Tesla will release an over-the-air (OTA) software update free of charge, and the electric vehicle maker said it is not aware of any injuries or deaths that may be related to the recall issue. The automaker said it had 18 warranty claims.

The recall covers 2016-2023 Model S and Model X vehicles, 2017-2023 Model 3, and 2020-2023 Model Y vehicles equipped with FSD Beta software or pending installation.

Tesla shares were down 3.6 per cent at $206.62 on Thursday afternoon. It was among the most actively traded stocks on US exchanges.

This is a fresh setback for Tesla’s driver assistance system, which faces regulatory and public scrutiny. Chief Executive Elon Musk has repeatedly missed his own targets to achieve self-driving capability, which he has touted as a potential cash cow.

NHTSA asked Tesla to recall the vehicles, but the company said despite the recall it did not concur in NHTSA’s analysis. The move is a rare intervention by federal regulators in a real-world testing programme that the company sees as crucial to the development of cars that can drive themselves.