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The State of the Tesla Autopilot Probe


The National Highway Traffic Safety Association (NHTSA), the US automobile regulator, has opened an investigation into Tesla’s Autopilot feature based on twelve crashes in which Teslas with Autopilot enabled crash into emergency vehicles. 

The NHTSA is asking Tesla for specific information on how Autopilot responds to emergency vehicles, as well as a barrage of other information.

This investigation could affect about 765,000 Tesla vehicles, across all of Tesla’s models which have the Autopilot feature, should Tesla be forced to issue a recall.

Why Is The NHTSA Investigating Tesla?

There have been twelve crashes documented by the NHTSA in their letter to Tesla in which Tesla cars collide with parked emergency vehicles.

In each crash, the emergency vehicles had “flashing lights, flares, illuminated arrow boards, or road cones,” according to Ars Technica. One death and 17 injuries have been reported from these crashes. 

As a result, the NHTSA’s letter to Tesla has an exhaustive list of data they’re requesting from Tesla to determine Autopilot’s role in the crashes, and if a recall is required. They gave Tesla a due date of October 22, 2021 to fulfill the request. 

Tesla has faced a number of regulatory inquiries over the years, with the regulators reporting little or no findings.

Elon Musk has a history of making bold claims about Tesla’s autonomous driving technology, which is unlikely to help Tesla’s case should the NHTSA find that Autopilot was to blame for any of these crashes.

Perhaps the most bold statement is when Musk claimed that Tesla would reach full autonomy by the end of 2021. A fully autonomous car would be “Level 5,” the highest level in of the rubric used to measure driverless technology by the Society of Automotive Engineers (SAE).

Level 5 means zero driver involvement is required. According to Kelley Blue Book’s explainer on the five levels of autonomy, there would be “no steering wheel, no pedals, and no shifter.” in a Level 5 vehicle.

Currently, Tesla’s technology is at Level 2, which is used to help keep the car in lanes, park the car, and serve as a kind of adaptive cruise control. The driver’s hands still need to be on the wheel and they must keep their eyes on the road when using a Level 2 car.

Comments From US Senators About Tesla

Two US Senators, Richard Blumenthal and Ed Markey, called on the US Federal Trade Commission (FTC) to investigate Tesla’s claims about the capabilities of its Autopilot and Full-Self Driving (FSD) features.

The two Senators take issue with referring to their premium Full-Self Driving feature as “full self driving,” when, in fact, there are zero fully autonomous vehicles available for sale on the global market, and that the NHTSA doesn’t expect fully autonomous vehicles to be available until at least 2025.

Implications For Tesla Stock

Tesla’s stock had fallen 10% since NHTSA’s announcement of the investigation, showing that the market is taking this seriously, but that they don’t view it as a very significant roadblock for Tesla to get through.

But in the days following, the stock has recovered completely. After all, those who have called for Tesla’s demise at every piece of bad news have lost a lot of money if they’ve been trading their opinions. 

But that doesn’t mean this investigation doesn’t threaten Tesla’s software business, even if in a small way.

Tesla receives $10,000 for each Full-Self Driving system they sell with a Tesla car (which is an opt-in, additional feature), which is a very high margin product compared to selling the car itself. Any significant hampering on Tesla’s ability to sell this product would have huge implications on their earnings and future growth. It’s no secret that selling cars alone is a really tough business.

Without software to improve margins, it damages Tesla’s growth story. 

However, it seems unlikely that even a mandated recall of Autopilot by the NHTSA would completely halt that end of the business.

One of Tesla’s biggest strengths is their ability to send automatic software updates to their cars much in the same fashion you update an app on your iPhone. 

Recalls aside, an FTC investigation, which the two US Senators called for, could force Tesla and Musk to adopt a more measured tone when discussing their technology.

While Tesla’s tech is impressive, it’s no secret that Musk’s reputation and public statements are one of the biggest selling points of the cars. After all, there are several cars on the market that also have Level 2 technology, but with a much more cautious approach to their autopilot systems. 

Bottom Line

Agency investigations, especially one this sweeping, take quite long. The NHTSA probably cannot even begin their investigation until they get all of the required data from Tesla in late October.

As headlines trickle out in the coming months, expect some volatility in Tesla stock.


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