Five bolts holding the power steering motor in place can corrode and either come loose or break, possibly causing a loss of power steering. Manual steering would still work.
Failure of the part would make it harder to steer the car, but the company said it "does not materially effect control at high speed."
"This primarily makes the car harder to drive at low speeds and for parallel parking, but does not materially affect control at high speed, where only small steering wheel force is needed," Tesla wrote in an email to customers.
Even though the issue was limited to cold climates, the firm is recalling all the cars, even in warm-weather climates, just in case.
Tesla said service centers will replace the bolts with ones that are more corrosion-resistant.
The firm added that replacement parts will be available first in cold-weather areas, then in warmer climates.
The announcement likely marks the largest-ever recall in Tesla's history.
In 2015, Tesla recalled 90,000 of the electric sedans as a result of a faulty seat belt issue.
In 2016, the firm recalled 53,000 Model S and Model X vehicles due to a parking brake fault.
It caps off a rough week for billionaire tech mogul Elon Musk's electric car firm.
Tesla's stock has been battered more than 25 per cent in the past month, marking one of its worst-performing months in a while.
That's after Moody's Investor Service on Tuesday downgraded Tesla's credit rating to B3 from B2.
Moody's said the rating "reflects the significant shortfall in the production rate of the company's Model 3 electric vehicle."
The agency also said it's likely that Tesla will have to again raise significant capital to maintain liquidity.
Tesla has looked to eleventh-hour cash injections as a way to meet its ambitious production goals.
Despite this, the firm has so far been unable to meet Musk's lofty targets - recently lowering its weekly production goals to 2,500 Model 3 vehicles by the end of March, and 5,000 per week by the end of June.
That's down from the company's year-earlier production expectations of 5,000 per week by the end of 2017 and 10,000 by the end of 2018.
Tesla is expected to give an update on production of its affordable Model 3 sedan soon.
On top of that, federal investigators said they're looking into a fatal Model X crash in California.
The news comes as Elon Musk's other company, SpaceX, has had a recent string of successes.
SpaceX launched the latest batch of Iridium satellites to orbit today atop a reused Falcon 9 rocket.
The rocket, which was previously used for the Iridium 3 launch back in October, lifted off from the SpaceX Launch Complex Space Launch Complex 4E at Vandenberg Air Force Base in California at 10:13 ET.
Today's launch marks the fifth set of 10 satellites the firm has delivered to orbit, for what will eventually be a global satellite constellation of 75 craft.
- Additional reporting AP
