Tesla shares fall after U.S. regulators launch formal investigation into Autopilot system

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Tesla Safety Probed by Government, Stock Gets Crushed

Barron's 16 August, 2021 - 09:24am

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The National Highway Traffic Safety Administration, or NHTSA, is looking into accidents involving Tesla’s driver-assistance features. That could cause some volatility for Tesla investors. But it will also open up a debate about how the government should approach a new era of vehicle safety.

NHTSA opened the investigation after identifying 11 Tesla (ticker: TSLA) vehicles that struck vehicles of first responders attending to road incidents. “The involved subject vehicles were all confirmed to have been engaged in either Autopilot or Traffic Aware Cruise Control during the approach to the crashes,” reads the NHTSA document announcing the investigation. Most incidents took place after dark, and included things such as flares, flashing lights and road cones, according to the NHTSA document.

Tesla stock is down 4.8% in early trading Monday. The S&P 500 index and Dow Jones Industrial Average are off 0.7% and 0.4%, respectively.

Tesla’s driver-assistance feature is dubbed Autopilot, and Tesla sells a higher-end version of its driver-assistance technology it calls full self driving. Tesla’s systems, along with the systems from all other auto makers, aren’t truly self driving. They are so-called level 2 autonomous systems that require drivers to be engaged at all times. Level 3 to 5 systems allow drivers to stop paying attention in certain circumstances.

Most auto makers have driver-assistance features in their vehicles. General Motors (GM) calls its system Super Cruise. Ford Motor (F) call its system Blue Cruise. Volvo’s system is named Pilot Assist.

NHTSA didn’t comment on any other auto makers it might be looking at, but said in an emailed statement. the agency said it “is committed to ensuring the highest standards of safety on the nation’s roadways.” It added that “in keeping with the agency’s core safety mission and to better understand the causes of certain Tesla crashes, NHTSA is opening a preliminary evaluation into Tesla Autopilot systems and the technologies and methods used to monitor, assist, and enforce the driver’s engagement with driving while Autopilot is in use.”

Tesla didn’t immediately respond to a request for comment.

Tesla does publish quarterly safety reports that give company-generated statistics about the safety of its pilot-assistance systems. The most recent report is from the first quarter of 2021 and reads: “We registered one accident for every 4.19 million miles driven in which drivers had Autopilot engaged.” Tesla says there is typically one crash about every 500,000 miles, but the breakdown of where autopilot is used and where typical crashes takes place isn’t provided.  

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There is little doubt driver-assistance features improve vehicle safety. “Automated vehicles’ potential to save lives and reduce injuries is rooted in one critical and tragic fact: 94% of serious crashes are due to human error,” reads a NHTSA report on self-driving features. But it’s a new era of safety. Features such as seat belts and anti-lock brakes, for the most part, only have benefits. Driver-assistance features raise the possibility of misuse, creating accidents, and headlines.

The impact on the stock is difficult for investors to assess. Recalls and safety incidents are a way of life in the auto industry. GM has recalled tens of thousands of Bolt EVs for fire risk. It will cost the company more than $1 billion to fix. GM stock dropped about 9% the day the cost was revealed, but that was during second-quarter earnings, and company financial guidance for the second half of the year disappointed investors.

Tesla stock has autonomous-driving features priced in. Just how much is difficult to say.

Tesla sells its full-self-driving software for $10,000 or a monthly subscription. A subscription brings in recurring revenue, something new for car companies. ARK Invest’s Cathie Wood believes Tesla stock will be $3,000 in 2025 partly because self-driving technology will enable a fleet of self driving robotaxis the company can profit from. The Future Fund’s Gary Black, however, doesn’t assume robotaxis will emerge. He says self-driving features will just allow Tesla to sell more vehicles.

The investigation should result in some near term volatility for the stock. That is probably the easiest conclusion to draw for now.

Down the road, Citigroup believes the probe might result in feature changes. Tesla might have to alter the configuration of what its self-driving features can do.

Tesla might also be forced to change its branding or marketing for its driver assistance features. Changes might come to how Tesla communicates upgrades to its features. Right now CEO Elon Musk’s Twitter (TWTR) feed is the best way to get updates about Tesla driver-assistance developments.

Musk regularly tweets about updates to the company’s driver-assistance features. Version 9.3 or version 10 refer to software upgrades, like an operating system for a computer.

Tesla recently removed radar from its vehicles because it was limiting the improvement of the system. Radar readings were conflicting with readings from optical cameras. Intel’s (INTC) Mobileye unit also achieves self driving with only cameras.

Tesla remains the world’s most-valuable car company by a wide margin. It’s success with electric vehicles, and self-driving software are two reasons for that fact. Shares, however, are up just 2% so far in 2021, coming into Monday trading. That trails the comparable 19% and 16% respective gains of the S&P 500 and Dow Jones Industrial Average. Tesla stock has paused after gaining 743% in 2020.

Write to Al Root at allen.root@dowjones.com

The National Highway Traffic Safety Administration, or NHTSA, is looking into accidents involving Tesla’s driver-assistance features.

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NHTSA launches investigation into Tesla Autopilot crashes involving emergency vehicles

Fox Business 16 August, 2021 - 07:41am

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Wall Street Journal reporter Tim Higgins explains why Tesla is missing in action at the president's address.

The National Highway Traffic Safety Administration (NHTSA) has launched a formal investigation of the Tesla Autopilot electronic driver aid's apparent difficulty identifying parked emergency vehicles and first responder scenes.

The agency said 11 crashes in which 17 people were injured and one person died have occurred since 2018 where drivers were confirmed to have been using Autopilot or its Traffic Aware Cruise Control function when their vehicles collided with "one or more vehicles" in or on the side of the road. According to the Office of Defects Investigation report most of the incidents occurred after dark and all involved illuminated vehicles, signs and cones.

The investigation covers all four of Tesla's models from the 2014 to 2021 model years and will "include examination of contributing circumstances."

Tesla sold approximately 765,000 of the affected cars, the NHTSA report said.

In June, NHTSA ordered all automakers to begin actively reporting accidents involving their Level 2 advanced driver assistance systems, which includes Autopilot.

Elon Musk, who has taken sole responsibility for Tesla communications in the U.S., has not yet commented on the announcement, but on Sunday was tweeting about upcoming improvements to its Full Self-Driving system, which offers more automated driving capability than Autopilot.

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