NHTSA had required Tesla to respond to its recall demand by Jan. 27. Tesla agreed that same day to the recall, the company said.
Tesla said in its filing with NHTSA that "in the interest of bringing administrative closure to the investigation and to ensure the best ownership experience for our customers" it agreed to a voluntary recall.
NHTSA opened a probe in June 2020 into complaints that media control unit (MCU) failures led to touch screen displays not working.
The agency said other automakers issued numerous recalls for similar safety issues stemming from the touch screen failure.
NHTSA said in November when it upgraded its probe that it reviewed 12,523 claims and complaints about the issue.
NHTSA said last month that "during our review of the data, Tesla provided confirmation that all units will inevitably fail given the memory device’s finite storage capacity."
Many complaints had said Tesla required owners to pay to replace the unit once warranties expire. Tesla will replace the defective part and reimburse customers who paid to replace a part that failed because of lifetime wear.
Tesla acknowledged the problem but said if the display was not working, "the driver can perform a shoulder check and use the mirrors. If the screen is not visible to control the climate control and defroster settings, the driver will be able to manually clear the windshield."
The recall will begin March 30. NHTSA sought a recall of 158,000 vehicles but Tesla said the recall does not include some vehicles with upgraded processors built after March 2018.
Tesla said 88 percent of U.S. owners have gotten over-the-air updates to some functionalities that may be lost if displays fail.