(Yicai Global) Feb. 21 -- Shares of Sanhua Intelligent Controls rose after the Chinese maker of auto thermal management components said Tesla’s latest big recall in China is due to a software problem and has nothing to do with the expansion valves it supplied.

Sanhua [SHE: 002050] closed up 2.3 percent today at CNY19.67 (USD3.11), after earlier gaining as much as 2.8 percent.

Sanhua has not received any quality complaints from Tesla about the electronic expansion valves in relation to the recall, the Zhejiang-based company said in the statement yesterday.

It has been confirmed that the problem with the US automaker’s electronic expansion valves was caused by a break in communication with the controller. The vehicles’ heat-pump software cannot close the valves when communication with controller is interrupted, it noted.

Tesla Shanghai will recall 26,000 Model 3 and Model Y cars as their heat pump electronic expansion valves may have small movements when conducting positioning operations, which could result in failure of the in-car heating function, according to a statement released by China’s State Administration for Market Regulation on Feb. 18.

This is a safety hazard which could cause sub-standard defrosting and reduced visibility, the SAMR pointed out.

Sanhua is Tesla’s thermal management products supplier, the firm said on the investor relations interactive platform p5w.net in September 2017 and 2018. The company said it had signed a contract with Tesla, with several of its car models already equipped with the products.

Sanhua also said publicly that it would increase supplies in line with Tesla’s soaring production, with the larger Model 3 output expected to boost its own performance.

Sanhua’s production lines are busy amid strong demand and limited supply, the company said, according to the findings of a survey published on Feb. 15.

Editor: Peter Thomas