The Wall Street Journal reported the Palo Alto electric vehicle maker is facing a SEC probe for not telling investors about a fatal crash of a Tesla driver using the Autopilot feature. The crash, which occurred in Florida, is believed to be the first fatal incident involving Tesla’s semi-autonomous technology.
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Following the crash, Tesla told The DCNF it received a message from the auto indicating a crash event, but logs were never transmitted. The SEC declined to comment.
Tesla alerted the National Highway Traffic Safety Administration, the US car-safety regulator, to the crash and investigated to determine whether the vehicle was using the company’s Autopilot system, which lets cars drive themselves under certain circumstances.
The car’s software notified Tesla of the crash, and Tesla reported it to the National Highway Traffic Safety Administration. Tesla’s secondary stock offering included several million dollars of shares belonging to Elon Musk, so he stood to lose personally if news of the crash had affected the stock offering.
Musk has recently boasted that he hopes Tesla can produce 500,000 cars a year by 2018 – two years earlier than the company’s original target.
As The Wall Street Journal reports, “the SEC is scrutinizing whether Tesla should have disclosed the accident as a “material” event, or a development a reasonable investor would consider important, according to a person familiar with the matter”. Furthermore, it called a collision on Autopilot a “statistical inevitability”.
Tesla spokeswoman Alexis Georgeson said the company was aware of the Montana accident and is looking into it.
But Tesla fired back with a blog post asserting it hadn’t even finished its investigation into the crash until “the last week of May”, or after the stock offering. There has been another crash, though not fatal, it has been blamed on the Autopilot system. Fortune claimed Musk had said the accident was “not material to the value of Tesla” and went on to describe the 1m deaths from cars worldwide every year.
Lawyers for the family of Brown said they are investigating the circumstances of the crash, and awaiting conclusions from police and federal agencies. Musk is also facing some criticism for his decision to merge Tesla and SolarCity, a solar panel firm where he serves as both its chairman as well as one of its biggest shareholders. Numerous Tesla fan communities online share videos of drivers using Autopilot in a hands-free mode despite the company advising them against this.
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Investors may have also seen the Autopilot feature as technology in development, and that errors were inevitable, which makes it a hard case, said Yoon-Ho Alex Lee, an associate professor of law at USC.
