The shares were down 0.9 percent to $302.69 as of 1:56pm in NY trading.
We don't believe this issue could ever lead to a safety concern for our customers, and we have not seen a single accident or injury relating to it.
Customers who bought the said models manufactured from February to October a year ago will be sent an official recall notice by mail.
The recall applies to vehicles built in 2016, between February and October.
Tesla said if no reports are there for parking brake failure, then it is "safe to continue regular use of your vehicle".
If the small gear were to break, the vehicle's parking brake would be stuck and the auto would be prevented from moving, Tesla said.
The process for fix is said to take less than 45 minutes and Tesla says that it is able to begin replacing parts immediately and that sufficient parts for all affected vehicles should be obtained by October 2017.
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Tesla's total production for 2016 was 83,922 vehicles and included both Model S and Model X. They accused the company of selling them cars with "Enhanced Autopilot" technology, knowing fully well that it was not functional and also lacked standard safety features.
The company stated that they have "determined that only a very small percentage of gears in vehicles built during this period were manufactured improperly".
The recall comes as Tesla remains close with General Motors as the United States automaker with the highest market capitalization. A spokeswoman from the supplier told AFR in an email that it is now working with Tesla to resolve the issue.
The company said on April 20 it was working with Italian supplier Freni Brembo SpA to get the replacement parts.
The recall is the company's second-largest to date, according to a report by Bloomberg. Tesla said there has been no reports of the parking brake system failing but made a decision to proactively change the parts.
Tesla stock fell 1% to 302.51 in the stock market today.
The company issued a voluntary recall for 3,000 of its Model S cars in November 2015, due to seatbelt connectivity problems.