Uber isn’t the only tech company that’s reeling in the aftermath of a fatal car accident. A Tesla Inc (NASDAQ:TSLA) Model X was involved in a fatal crash and fire last week. Yesterday, the National Transportation Safety Board (NTSB) said investigators were looking into the crash. That news, thrown into a mix that includes uncertainty over autonomous vehicles after the Uber accident and Tesla’s Model 3 production woes, was too much for many investors.
TSLA stock was battered, dropping 8.2% on the day, hitting its lowest level in more than a year.
NTSB Investigating Fatal Model X Crash
Last week, a Tesla Model X crashed on a highway near Mountain View, California. The vehicle caught fire after the accident and the driver was killed. That news was overshadowed by Uber’s problems, but it was in the spotlight yesterday when the NTSB tweeted that it had dispatched investigators.
According to the NTSB, the post-crash fire and the steps that emergency responders had to take to safely clear the accident scene with the battery packs involved are a focus. That’s bad news because it could potentially spook buyers who would buy a Tesla because it’s run by batteries. And naturally, a fatal Model X crash getting this kind of publicity doesn’t do much to promote the safety aspect of Tesla vehicles.
This is the second time this year the NTSB has investigated an accident involving a Tesla vehicle.
News of the federal agency’s involvement had an immediate impact on TSLA stock, which rapidly began dropping.
Tesla responded yesterday with a blog post:
“We were deeply saddened to learn that the driver of a Model X vehicle involved in an accident last Friday passed away. Safety is at the core of everything we do and every decision we make, so the loss of a life in an accident involving a Tesla vehicle is difficult for all of us. Earlier this week, Tesla proactively reached out to the authorities to offer our assistance in investigating.”
The company also went on to say that Tesla vehicles have driven the same section of highway with Autopilot engaged over 20,000 times in 2018 already. The company pointed out that the highway median the Model X crashed into had been badly damaged in a previous accident and the impact-absorbing barrier had not been replaced. It also noted that witnesses say the driver had been extracted before the fire “could have presented a risk.”
That all sounds re-assuring, but it wasn’t enough to stop the TSLA stock sell-off.
Other Challenges Are Dragging TSLA Stock
The prospect of negative publicity of the NTSB Model X crash probe is bad news for Tesla, but there are other worries for TSLA investors.
Last week’s fatal accident involving an Uber test vehicle in self-driving mode has thrown the entire autonomous vehicle industry into turmoil. Arizona forced Uber’s test fleet of Volvo test cars off its roads in the aftermath. Yesterday, Nvidia Corporation (NASDAQ:NVDA) suspended its autonomous car testing. Regardless of the outcome of the NTSB’s Model X crash, public — and investor — faith in self-driving car technology has been shaken. And that’s not good news for TSLA stock, given that Autopilot is one of the key features of Tesla cars.
Technology aside, Tesla is facing another big challenge with Model 3 production. The first mass-produced Tesla is looked at by many as the “make or break” car for the company. And it has had a rough time meeting its goals, letting rivals from traditional auto companies begin to catch up. Tesla was initially supposed to be churning out 5,000 of the $35k electric cars every week by this time — a target that has been pushed out several times.
At this point, Bloomberg estimates that Model 3 production difficulties have the total output since July at roughly 11,350 cars, with a current production rate of just over 1,000 units per week.
Both of these issues have worried investors dumping TSLA stock. Combined with the news of the NTSB Model X crash investigation, Tuesday turned into a very bad day for Tesla.
As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.
