Could Tesla’s Autopilot Controversy Hit Its Stock?



Tesla (TSLA) stock has been hovering around 52-week highs. The stock has risen by a whopping 57% quarter-to-date. Positive news pointing at robust growth next year has boosted TSLA stock. The run-up in the stock began with the company’s surprise third-quarter earnings.

The increase continued with updates on Tesla’s Gigafactory 3, the announcement of Gigafactory 4, the revelation of the Cybertruck, and updates on the Model Y launch. To learn more, read How Tesla’s Elon Musk Has Crushed Shorts This Year.

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Tesla stock: Latest crash investigation

The increasing number of incidents involving Tesla’s autopilot feature could impact TSLA stock. The National Highway Traffic Safety Administration is now investigating its 12th crash where Tesla’s autopilot was deployed.

According to ExtremeTech, the incident happened on Interstate 95, when a Tesla Model 3 driver activated autopilot and turned back to check on his dog. Meanwhile, two police cars were waiting for a tow truck’s help. The Model 3 crashed into these police cars and then jumped to hit another vehicle.

Tesla’s autopilot feature

The crash has raised eyebrows on the engagement of the autopilot feature. However, the main problem is that consumers usually do not read or understand the fine print for such features. They believe that once autopilot is activated, their attention is mostly not required. But this not the case.

The autopilot feature falls under Level 2 autonomy. The Society of Automobile Engineers has specified six levels of automation, from being driver-driven to fully autonomous. Level 2 indicates partial automation, meaning the driver still needs to monitor the vehicle at all times. The car could automate some functions, such as steering, braking, or accelerating.

According to Tesla’s website, “Autopilot enables your car to steer, accelerate and brake automatically within its lane. Current Autopilot features require active driver supervision and do not make the vehicle autonomous.”

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Impact on Tesla stock

Tesla stock has been rising by leaps and bounds this quarter. The positivity is based on the company’s increasing volumes and new launches. Earlier, despite consumers’ belief in Tesla’s technology, the company did not have the bandwidth to deliver more cars. Tesla’s rising capacity to deliver vehicles is boosting consumers’ confidence in the company. Incidents such as the abovementioned accident partly offset that confidence. Regardless of whether autopilot caused the crash, it can create negative sentiment about the company’s vehicles.

Therefore, the company should create more awareness about the uses and limitations of the feature to prevent such incidents from happening. Autopilot is a great feature if used as directed. As noted in a CNN Business report, “Tesla’s new Navigate on Autopilot technology can do amazing things but, even with all the car’s cameras, sensors and computer brains, you’d better keep your eyes on the road because, seriously, there are crazy people out there.”

Tesla on the road to self-driving cars

Tesla plans to launch self-driven cars next year. The company is spending heavily on researching and developing autonomous technology. Tesla plans to launch a fleet of autonomous taxis. These taxis will run at a fraction of the cost of their standard manual rivals. Plus, they will be equipped with advanced battery technology capable of lasting about a million miles. Tesla owners could also place their cars on the Tesla Network, changing the way consumers look at car ownership. To learn more, read Is Elon Musk Right about Tesla’s Self-Driving Timeline?

Ford Motor (F) is also investing in autonomous vehicle development. It plans to launch its self-driving taxis with geofenced areas by 2021. The company intends to lead the segment with its Smart Mobility Plan.

Ford stock has risen by just 4% quarter-to-date. However, this year, Ford stock has outperformed Tesla. While Ford stock has risen 31% year-to-date, Tesla stock has gained 14%. Tesla’s lower gain is due to weakness in its stock earlier this year.


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