Tesla Inc. (NASDAQ:TSLA) is facing a critical regulatory hurdle. The National Highway Traffic Safety Administration (NHTSA) escalated its investigation into Full Self-Driving (FSD) on Wednesday.
The probe now moves from a Preliminary Evaluation (PE) to an Engineering Analysis (EA). This move impacts approximately 2.4 million vehicles.
Analyst Warns of Robotaxi Narrative Collapse
Gordon Johnson, an analyst at GLJ Research, said on X (formerly Twitter) on Thursday, that an EA represents a confirmed pattern and active vehicle testing. “We are now at engineering interrogation. One step from a mandatory recall,” Johnson stated.
The analyst believes the stakes are existential for Tesla’s valuation. “You cannot build a $1.2T [trillion] robotaxi company on software the federal government is one determination away from forcing off the road,” Johnson wrote. He added, “A forced recall on the software stack that powers the robotaxi story ends the robotaxi story. This is not priced in.”
NHTSA Focuses on Visibility Failures
NHTSA focuses on FSD collisions in reduced roadway visibility. The Office of Defects Investigation (ODI) is evaluating Tesla’s “degradation detection system.” The agency wants to know if the system alerts drivers with sufficient time during glare or airborne obscurants.
Current data raises concerns that Tesla’s vision-based system fails to warn drivers appropriately.
In reviewed crashes, FSD reportedly lost track of lead vehicles. Tesla’s internal data limitations may have also led to under-reporting of such incidents.
Hardware vs. Software Safety
CEO Elon Musk recently touted the upcoming AI5 chip, claiming it will “punch far above its weight.” However, critics remain.
Ross Gerber of Gerber Kawasaki suggests current hardware may need upgrades for true unsupervised driving.
Legal and Regulatory Headwinds
This escalation follows a $1 million lawsuit in Texas involving a Cybertruck. The plaintiff alleges the Autopilot system failed to navigate a curve, hitting a barrier.
While Musk claims logs show the driver disengaged Autopilot four seconds before impact, the NHTSA probe highlights broader systemic concerns regarding Tesla’s camera-only “Tesla Vision” approach.
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