Tesla’s Autonomous Future at Risk Amid Federal Investigation

A key component of Tesla’s vision for autonomous mobility has come under intense scrutiny as the National Highway Traffic Safety Administration (NHTSA) launches a new investigation into the automaker’s Full Self-Driving (FSD) system. The probe, announced on Friday, covers 2.4 million Tesla vehicles across multiple model years, following reports of crashes, including one fatal incident.

The NHTSA’s preliminary findings indicate that Tesla’s FSD software may have difficulty responding to poor visibility conditions such as sun glare, fog, and airborne dust. As a result, federal regulators are assessing whether Tesla has taken adequate steps to update its software and improve safety measures. This investigation is a critical step before the agency can recommend a recall of affected Tesla vehicles.

Tesla’s Autonomous Ambitions and the “We, Robot” Event

On October 10, Tesla CEO Elon Musk hosted the "We, Robot" event at the Warner Bros. studio backlot, unveiling his vision for fully autonomous vehicles. He introduced concept designs for the Cybercab, a pedal-less, steering wheel-free taxi, and the Robovan, another futuristic self-driving vehicle. Musk’s goal is to make driving obsolete, giving people their "time back" through a fleet of robotic taxis.

While Tesla continues to push forward with its vision, including plans for robotaxi and Optimus robot production in 2025, regulatory challenges could impact the timeline. Despite the enthusiasm surrounding these announcements, Tesla has a history of delayed product launches, including the long-awaited Tesla Roadster and the Cybertruck. Now, with U.S. regulators closely examining FSD’s safety record, the timeline for Musk’s autonomous future remains uncertain.

Crashes Prompt Regulatory Action

The NHTSA’s decision to investigate Tesla’s FSD technology follows four reported crashes where Teslas were operating with FSD engaged. In two of these cases, pedestrians were struck, resulting in at least one fatality. Another incident involved a reported injury. These accidents raise concerns about whether the software can reliably detect and react to obstacles, especially in less-than-ideal road conditions.

In response, the NHTSA is expanding its analysis to determine whether Tesla vehicles have been involved in additional crashes under similar circumstances. The agency is also examining Tesla’s software updates to assess whether they have addressed these potential failures.

Legal and Regulatory Hurdles for the Robotaxi Future

Musk recently announced that Tesla plans to introduce a more advanced "unsupervised FSD" in Texas and California in 2025, with wider deployment expected based on regulatory approval. He emphasized that Model 3 and Model Y owners would be the first to experience this technology, followed by Model S and Model X users.

However, Tesla’s Cybercab—the company’s envisioned driverless taxi—faces significant regulatory challenges. Under current NHTSA guidelines, even if Tesla successfully receives approval for a vehicle without pedals or a steering wheel, the company would be limited to deploying only 2,500 units per year.

Bryant Walker, a law professor specializing in autonomous vehicles at the University of South Carolina, explained:

"Exemptions aren’t a viable route for a mass manufacturer like Tesla unless Congress increases this limit."

This restriction poses a substantial obstacle to Musk’s long-term vision, as Tesla aims to deploy millions of autonomous vehicles on the roads.

Tesla’s Stock Performance Amid Regulatory Uncertainty

Despite the growing regulatory scrutiny, Tesla Inc. (NASDAQ: TSLA) saw a slight increase in its stock price, rising 0.25% and trading at $221.44 per share at the time of writing. Investors continue to monitor how the ongoing federal probe and potential legal challenges will impact Tesla’s ambitions in the rapidly evolving autonomous vehicle industry.