Tesla, Inc. (TSLA.US) "Autopilot Core" under pressure: FSD investigation upgraded, recall risks increase

The National Highway Traffic Safety Administration (NHTSA) has upgraded its investigation into Tesla, Inc.'s (TSLA.US) partially automated driving system called "Full Self-Driving" (FSD), citing multiple accidents that suggest flaws in the technology under low visibility conditions. According to a memorandum published on its website, NHTSA stated that a review of these accidents raised concerns that the system may fail to detect road conditions and properly warn the driver when the visibility of the vehicle's cameras is reduced. The agency has upgraded this investigation, initiated in 2024, to what is known as an engineering analysis this week. This move could provide a basis for NHTSA to eventually seek a recall and strengthen its scrutiny of the technology that Tesla, Inc. relies on for its future autonomous driving and self-driving taxi businesses. Tesla, Inc. CEO Elon Musk has stated that the company's ability to develop autonomous driving technology will ultimately determine whether its value is sky-high or "virtually worthless." The latest memorandum released by NHTSA revealed that there have been a total of 9 accidents involving Tesla, Inc.'s autonomous driving system, an increase from the 4 accidents reported when the investigation was first initiated in 2024. In the accidents under review by NHTSA, "Tesla, Inc.'s FSD failed to detect common road conditions that impeded its visibility and failed to issue warnings when camera performance declined, only issuing alerts right before the accidents occurred." NHTSA also noted that Tesla, Inc. cited limitations in the company's "data and labeling" as it attempted to identify more similar accidents, which NHTSA believes may lead to an underestimation of the number of accidents during certain periods.