The National Highway Traffic Safety Administration (NHTSA) has initiated an investigation into Tesla's Full Self-Driving (FSD) system, following a series of concerning incidents, including a fatal crash involving a pedestrian. On October 17, 2024, the NHTSA announced that it would evaluate the FSD software's ability to operate safely in low-visibility conditions after a 71-year-old woman was struck by a 2021 Tesla Model Y in Rimrock, Arizona, on November 27, 2023. The driver reported being blinded by sun glare at the time of the accident. This investigation encompasses approximately 2.4 million Tesla vehicles manufactured between 2016 and 2024. [1fefce35]
The inquiry is particularly focused on whether Tesla's self-driving systems can adequately detect and respond to reduced visibility, a critical factor in ensuring pedestrian safety. This investigation follows four crash reports linked to Tesla's FSD software, raising alarms about the technology's reliability. Critics have expressed concerns about Tesla's reliance on cameras and artificial intelligence, contrasting it with competitors like Waymo, which utilize lidar and radar for enhanced safety. [1fefce35]
In conjunction with this investigation, Tesla's recent 'Cybercab' rollout on October 12, 2024, has also contributed to a decline in the company's stock, which dropped 8% shortly after the announcement. The NHTSA's investigation marks a significant shift in focus, emphasizing the capabilities of the FSD system itself rather than solely the attentiveness of drivers. [1fefce35]
Elon Musk has been vocal about the future of Tesla's autonomous technology, announcing plans for 'unsupervised' FSD capabilities in Texas and California by 2025, with robotaxi production expected by 2026 or 2027. However, regulatory hurdles remain, as California requires permits for driverless testing and deployment. Investors have shown apprehension regarding the feasibility of these ambitious plans, leading to a nearly 10% drop in Tesla's stock following Musk's announcements. [1fefce35]
UBS recently downgraded Tesla's stock from 'Neutral' to 'Sell', citing deteriorating expectations for its core automotive business and uncertainties surrounding its AI investments. The bank noted that Tesla is trading at over 85 times its forward earnings, despite lower growth expectations for its electric vehicle business. [1fefce35]