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Tesla Comes Under Greater Scrutiny than Ever Before

April 18, 2022 By Jeremy Jones, CFA

Elon Musk, founder of Space Exploration Technologies Corp.- SpaceX, joins President Donald J. Trump at a launch briefing in preparation for the launch of the SpaceX Falcon 9 rocket with the Crew Dragon vehicle Wednesday, May 27, 2020, at the Kennedy Space Center in Cape Canaveral, Fla. (Official White House Photo by Shealah Craighead)

As Elon Musk, CEO of Tesla, attempts to personally buy Twitter in what appears to be an effort to expand free speech on the platform, the National Highway Traffic Safety Administration has decided to, coincidentally of course, apply greater scrutiny than ever before to Tesla’s autopilot feature. Bloomberg reports:

Derrick Monet and his wife, Jenna, were driving on an Indiana interstate in 2019 when their Tesla Model 3 sedan operating on Autopilot crashed into a parked fire truck. Derrick, then 25, sustained spine, neck, shoulder, rib and leg fractures. Jenna, 23, died at the hospital.

The incident was one of a dozen in the last four years in which Teslas using this driver-assistance system collided with first-responder vehicles, raising questions about the safety of technology the world’s most valuable car company considers one of its crown jewels.

Now, U.S. regulators are applying greater scrutiny to Autopilot than ever before. The National Highway Traffic Safety Administration, which has the authority to force recalls, has opened two formal defect investigations that could ultimately lead Tesla Inc. to have to retrofit cars and restrict use of Autopilot in situations it still can’t safely handle.

A clampdown on Autopilot could tarnish Tesla’s reputation with consumers and spook investors whose belief in the company’s self-driving bona fides have helped make Tesla Chief Executive Officer Elon Musk the world’s wealthiest person. It could damage confidence in technology other auto and software companies are spending billions to develop in hope of reversing a troubling trend of soaring U.S. traffic fatalities.

It also could also bring long-simmering tensions between Washington and Tesla to a boil. The iconoclastic Musk has already derided NHTSA as the “fun police” and chafed at President Joe Biden’s unwillingness to lavish the pioneering company with praise. He’s not shy about lambasting lawmakers and regulators on Twitter, the social media platform he has offered to purchase for $43 billion.

Read more here.

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Jeremy Jones, CFA
Jeremy Jones, CFA, CFP® is the Director of Research at Young Research & Publishing Inc., and the Chief Investment Officer at Richard C. Young & Co., Ltd. Richard C. Young & Co., Ltd. was ranked #5 in CNBC's 2021 Financial Advisor Top 100. Jeremy is also a contributing editor of youngresearch.com.
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