Federal auto regulators have escalated their investigation into Tesla after several crashes involving its self-driving feature, coinciding with CEO Elon Musk's preparations to launch a new model without steering wheels or pedals [1]. The National Highway Traffic Safety Administration (NHTSA) stated in a memo dated March 18 that it is examining nine crashes where Tesla's self-driving software failed to promptly alert drivers to take control in poor visibility conditions, such as fog, due to the vehicle's cameras not detecting road hazards [1]. This regulatory probe, which began in 2024, could potentially lead to enforcement actions, including a recall of 3.2 million Tesla vehicles [1].
Tesla's stock reacted negatively to the news, falling 3.2% to $380.30 [1]. The heightened scrutiny comes as Tesla attempts to shift its business model from car sales, which are declining, to widespread adoption of its self-driving software. Elon Musk has announced plans to turn millions of existing Tesla vehicles into taxis that owners can rent out, and to launch a robotaxi service with no driver in several U.S. cities this year [1]. Production of the no-wheel-no-pedal Cybercab is scheduled to begin next month [1].
Unlike other autonomous vehicles, Tesla relies solely on cameras for hazard detection, whereas competitors use additional technologies like lidar, which Musk has dismissed as unnecessary [1]. The NHTSA probe will now advance to an “engineering analysis,” indicating a more serious level of regulatory scrutiny [1]. Tesla has renamed its driver assistance software from Full Self-Driving (FSD) to Full Self-Driving (Supervised) after criticism that the original name was misleading, as drivers must remain attentive and ready to take control at all times [1].
Of the nine crashes under review, Tesla informed regulators that three would not have occurred with recent over-the-air FSD upgrades [1]. The company is also facing other regulatory investigations, including probes into FSD-equipped cars running red lights and door handles failing during crashes, which reportedly trapped passengers inside [1].
CONCLUSION
Tesla's expanded regulatory probe and the potential recall of millions of vehicles have triggered a notable decline in its stock price. The company's ambitious plans for driverless robotaxi services and new models are now under increased scrutiny, raising questions about the safety and reliability of its self-driving technology. Investors and regulators will closely monitor the outcome of the NHTSA investigation and Tesla's forthcoming product launches.