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Tue, June 6 at 7:00PM ET

Should TSLA Stock Fans Give Up on Driverless Cars?

  • Tesla (TSLA) may be experiencing a setback in the driverless race.
  • The company has posted a video in which it tells viewers a car is “driving itself.”
  • This claim has led to a criminal investigation from the U.S. government.
"TSLA stock" - Should TSLA Stock Fans Give Up on Driverless Cars?

Source: helloabc /

Tesla (NASDAQ:TSLA) may be about to fall significantly behind in the driverless race. As Elon Musk prepares to close his Twitter (NYSE:TWTR) acquisition, Tesla is facing a new criminal investigation. The electric vehicle leader has long touted its progress in autonomous driving, shaping what has become known as the driverless race. But a recent claim that Tesla made on its webpage has gotten it into trouble. The company posted a video in which it says “the car is driving itself.” Now, the Department of Justice has launched an investigation on the grounds that this description is false. TSLA stock is down slightly as this news unfolds.

Does this mean that buyers should be wary of Tesla’s claims about its self-driving vehicle progress? Let’s take a closer look at this news and where the investigation is likely to lead.

What This Means for TSLA Stock

Since its early rollouts, Tesla’s full-self driving (FSD) technology has generated plenty of controversy.

In February 2022, it recalled 54,000 EVs due to a problem with its FSD software that negatively impacted safety features. A few months later, regulators reported that vehicles with Tesla’s autopilot technology had been involved in 273 crashes between 2021 and 2022. This news didn’t push TSLA stock down by too much, but the new investigation could generate problems on the road ahead.

What exactly did the video that sparked a criminal investigation say? It featured the following description:

“The person in the driver’s seat is only there for legal reasons. He is not doing anything. The car is driving itself.”

Reuters reports that the video is still live on Tesla’s webpage. Musk has issued no statements on it, which suggests that the company isn’t too concerned about the investigation. Reuters also notes that Tesla has told drivers that they must keep control of the vehicle while driving on autopilot with their hands on the wheel. That may make it hard for the Department of Justice to bring a case against the company. But if it is true, then clearly the driver in the video is there for more than just “legal reasons.”

That doesn’t bode well for Tesla’s future in autonomous driving. At the very least, the investigation has shown a light on Tesla, revealing that claims of its self-driving progress may have been exaggerated.

Meanwhile, competition is mounting as other automakers make progress toward perfecting their own driverless cars. Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) subsidiary Waymo has announced plans to launch a fleet of self-driving robotaxis in Los Angeles in the near future. Baidu (NASDAQ:BIDU) is planning to do the same in multiple Chinese cities.

Can Tesla Win?

Taylor Ogan, founder of Snow Bull Capital, has praised Waymo and Baidu for their autonomous driving progress. But the EV expert isn’t optimistic about Tesla’s chances of catching up. “With Tesla’s current technology, it can’t win,” he told InvestorPlace in an exclusive interview. “It just won’t.”

TSLA stock will recover from today’s news, but if Ogan is correct, it could face significant setbacks down the road. It is entirely possible that Tesla will not win the driverless race. Investors looking for plays on autonomous driving technology may be advised to look elsewhere.

On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

Samuel O’Brient has been covering financial markets and analyzing economic policy for three-plus years. His areas of expertise involve electric vehicle (EV) stocks, green energy and NFTs. O’Brient loves helping everyone understand the complexities of economics. He is ranked in the top 15% of stock pickers on TipRanks.

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