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Tesla’s (NASDAQ:TSLA) Autopilot technology is once again getting it into trouble. The National Highway Traffic Safety Administration (NHTSA) is investigating the electric vehicle (EV) leader due to a recent change to its autonomous driving technology. According to the regulatory agency, Tesla may be putting drivers at risk by making it too easy for its drivers to take their eyes off the road while using the Autopilot system. As Reuters reports, it “allows drivers to use Autopilot for extended periods without prompting the driver to apply torque to the steering wheel.” News of this special order from the NHTSA hasn’t pushed TSLA stock down yet, but that doesn’t mean investors shouldn’t be concerned about what it could mean for the company.
This isn’t the first time Tesla’s Autopilot technology has come under scrutiny for its alleged safety risks. Let’s dive deeper into its history and take a closer look at how this investigation may impact share prices.
What’s Happening With TSLA Stock
After taking a tumble halfway through August 2023, TSLA stock looks poised to close out the month on a positive note. There’s no reason it shouldn’t. Rising gas prices mean higher demand for EVs, and Elon Musk hasn’t done anything too outrageous recently to call his leadership capabilities into question. Shares have been rising today and are currently up more than 7%. However, this development regarding a NHTSA special order is far from good news.
According to Reuters, the agency issued a special order to Tesla on July 26 regarding its Autopilot change. It has requested “documents and explanations” from the EV producer no later than Aug. 25. Failure to provide the requested information can result in a fine of $26,315 per day. In the four days since this deadline, neither Tesla nor the NHTSA have issued any statements regarding the special order.
Tesla can afford to pay the fines that are likely piling up. But its failure to respond raises the question of why its leaders are unwilling to comply? When it comes to crashes and its Autopilot technology, Tesla’s history is against it. Per Reuters:
“The agency is investigating the performance of Autopilot after identifying more than a dozen crashes in which Tesla vehicles hit stationary emergency vehicles. It is also investigating whether Tesla vehicles adequately ensure drivers are paying attention when using the driver assistance system.”
Failing to provide the required documents by NHTSA’s deadline doesn’t make the company look good. And if Tesla is found to have put drivers at unnecessary risk, it could certainly push TSLA stock down in the coming months.
Other EV producers are breaking new ground all the time, closing in on Tesla’s market share. Unlike the sector’s leader, companies like Ford (NYSE:F) and General Motors (NYSE:GM) don’t have a history of self-driving-related crashes and regulatory probes. A further investigation could be added to the list of reasons not to bet on Tesla in the second half of 2023.
On the date of publication, Samuel O’Brient did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.