Tesla’s Full Self-Driving Vehicle Isn’t Ready Despite What Musk Says. That’s Raising Red Flags For Investors.

Tesla’sTSLA journey to fully autonomous vehicles has hit some major roadblocks, leaving investors questioning the feasibility of CEO Elon Musk’s ambitious robotaxi plans. The electric vehicle maker’s stock has taken a hit in recent weeks, falling over 10% since the company pushed back its highly anticipated robotaxi event to October.

A fatal flaw? Concerns surrounding Tesla’s Full Self-Driving (FSD) technology intensified after a deadly accident in Seattle, where a Model S operating in FSD mode struck and killed a 28-year-old motorcyclist in April. This marks at least the second fatal crash involving the controversial driver-assistance system, which Tesla markets as “Full Self-Driving” despite requiring active driver supervision. The incident has drawn the attention of the National Highway Traffic Safety Administration (NHTSA), gathering information from local law enforcement and Tesla as part of its investigation.

• Experts point out the limitations of Tesla’s camera-based system, which lacks the expensive sensors like lidars used by competitors such as Alphabet’s Waymo.
• Carnegie Mellon University professor Raj Rajkumar told CNN that it’s “extremely challenging to collect and curate data from all sorts of real-world elements such as motorcycles and bicycles in the broad range of possible weather, lightning, road and traffic conditions.”

Analyst’s Close Call Raises Doubts

The reservations about FSD’s readiness were further underscored by the experience of Truist Securities analyst William Stein, who narrowly avoided a crash while testing the system. Despite Musk’s insistence that investors won’t understand Tesla unless they use FSD, Stein’s test drives revealed significant issues.

• During one test, Stein had to quickly intervene to avoid rear-ending a car that had only partly completed a right turn.
• The analyst also noted that the system allowed him to take his eyes off the road for extended periods without issuing warnings.

Robotaxi dreams deferred: Tesla’s decision to delay its robotaxi unveiling has added to investor uncertainty. The roughly two-month postponement is intended to give teams more time to build additional prototypes and rework certain elements of the car.

• Musk has been talking up Tesla’s autonomous vehicle technology for over a decade, but the company’s slowing vehicle sales and production cuts in the face of swelling inventory have put increased pressure on the CEO to deliver on his promises.
• Despite the setbacks, Musk remains bullish, recently stating that he would be shocked if Tesla cannot achieve full self-driving capability next year and envisioning a future where vehicles serve as “tiny mobile lounges” (CNN).

However, Tesla’s FSD efforts face growing regulatory and legal scrutiny. The NHTSA has been investigating Autopilot, Tesla’s less-advanced driver-assistance system, since Aug. 2021 and forced the company to recall nearly all its vehicles in the US in Dec. 2023 to add safeguards to the software.

Forward-looking: As Tesla navigates these challenges, investors will be closely watching to see if Musk can steer the company back on track and deliver on his robotaxi vision. With competitors like Waymo taking a more cautious approach, relying on expensive sensors and extensive testing, Tesla’s camera-based system and aggressive timeline may prove to be a risky bet. For now, the road ahead for Tesla’s self-driving ambitions remains uncertain, and the company’s stock performance hangs in the balance.