Is Tesla Still A Good Investment?

Tesla’s Self-Driving Features Are Under Pressure, How Is The Stock Doing?

Safety probes and investigations into Tesla’s self-driving and autopilot features are mounting up, is the stock suffering?

Tesla (NASDAQ: TSLA) is one of the most famous companies in the world. With an eccentric CEO and groundbreaking technology that has brought the entire EV industry to new heights, the stock has received a lot of attention over the last decade. 

However, as sales of its vehicles have increased over the world, a number of complications have arisen. Tesla introduced innovative autopilot and full self-driving technologies to the market, but it hasn’t been all smooth sailing. 

This week, the National Highway Traffic Safety Administration (NHTSA) opened an investigation into its Autopilot system whilst stating that since 2018, 11 crashes involving a Tesla vehicle using Autopilot have been recorded. On Monday, the NHTSA released a report which said that it is investigating roughly 765,000 Tesla cars that were built between 2014 and 2021. While Tesla has always stated that its Autopilot feature still needs a human to control it, the bad press has worried some shareholders. Shares in Tesla closed down 4.32% on Monday this week after the NHTSA made the announcement.

Over the past few months, there have been numerous safety probes into the EV maker’s Autopilot. In March, Tesla’s Model Y using the feature allegedly crashed into a stationary police car which was viewed very negatively by the press. 

On Wednesday, it emerged that two Democratic senators sent a letter to the Federal Trade Commission (FTC) asking it to investigate the company’s marketing of its Autopilot and Full Self-Driving technologies. The issue here is that many believe that Tesla should not be able to advertise these features as ‘full self-driving’ and ‘autopilot’ if a human still needs to be fully aware at the wheel. 

Senators Richard Blumenthal and Ed Markey wrote: 

Tesla and Mr. Musk’s repeated overstatements of their vehicle’s capabilities — despite clear and frequent warnings — demonstrate a deeply concerning disregard for the safety of those on the road and require real accountability.”

Is Tesla still a good investment? 

Even with all the bad press this week, Tesla stock still increased 3.5% on Wednesday. If these probes and investigations will have any lasting impacts on the stock is still unclear, but they are worrying signs as continued government intervention and safety scandals are never good signs, especially for an auto company that relies on consumers feeling safe. 

These issues are not new for Tesla and despite all these concerns, Tesla’s earnings are still improving quarter-on-quarter. In late July, the Texas-based company reported record profitability in Q2, posting $1 billion in quarterly net income for the first time ever. Tesla’s revenue of $11.96 billion, up 98% year-over-year, also impressed investors and proved how popular its models have become.  

Long-term, Tesla still looks like a great investment but the company needs to address these safety concerns to alleviate concerns that potential investors might have. As more rivals enter the EV space, Tesla might have a good bit of work to do to fend off competitors. This will prove especially important as more traditional, experienced automakers like Volkswagen boost their EV efforts.

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