Tesla in trouble

Tesla has admitted that during the recent deadly car crash that took place in California this month, the car was on autopilot. The car in question was a Tesla model, and the crash resulted in the death of the driver. The company has faced a series of setbacks in the recent months.

Background

Tesla is an American automaker founded in 2003 by Elon Musk. It specializes in electric cars, lithium-ion battery energy storage and more. It is predominantly known for manufacturing luxury electric cars. In 2008, it released the world’s first electric sports car called the Tesla Roadster. One of its models, Model S has been the world's best-selling plug-in electric car in 2015 and 2016.

In countries like the US, the sale of electric cars has significantly increased. In 2016, the sale of electric vehicles in the US rose by 37%. California, in particular, was the biggest market for electric cars. Globally, the sales of electric vehicles have more than doubled since 2014. This was due to concerns over growing oil prices and the environment.

In July 2017, the governments of UK and France announced that they would be banning diesel and petrol cars and vans by 2040. The nations are hoping to promote the sales of electric vehicles, which are more environment friendly.

Elon Musk is a South African-born Canadian American business magnate, investor and inventor. He is listed by Forbes as the 53rd richest person in the world. As of January 2018, his net worth was $20.9 billion. Best known as the Founder, CEO and CTO of SpaceX, a private aerospace manufacturing and space transport services company, Musk is known for his aspiration to enable the colonization of Mars, and reduce costs of space travel within the next two decades.

Analysis

Tesla Autopilot is an advanced driver-assistance system feature offered by Tesla. It has lane centering, adaptive cruise control, self-parking, ability to automatically change lanes without requiring driver steering, and enables the car to be summoned to and from a garage or parking spot.

On March 2018, a deadly car crash in California resulted in the driver’s death. The car in question was a Tesla model and according to newly released data from the company, it was on autopilot. This has further raised questions about the safety of self-driving technology.

In a blogpost, Tesla said the driver of the sport-utility Model X that crashed in Mountain View, 38-year-old Apple software engineer Wei Huang, “had received several visual and one audible hands-on warning earlier in the drive and the driver’s hands were not detected on the wheel for six seconds prior to the collision. The driver had about five seconds and 150 meters of unobstructed view of the concrete divider … but the vehicle logs show that no action was taken.”

Tesla’s further stated, “In the past, when we have brought up statistical safety points, we have been criticised for doing so, implying that we lack empathy for the tragedy that just occurred. Nothing could be further from the truth. We care deeply for and feel indebted to those who chose to put their trust in us. However, we must also care about people now and in the future whose lives may be saved if they know that autopilot improves safety.”

Tesla’s bad run continued after CEO Elon Musk CEO Elon Musk published a series of tweets on April 1st (April fool’s day) joking that the company had filed for bankruptcy. Despite this being a joke, the company’s shares took a hit and closed 5.1% lower on Monday. In addition, this month Moody's downgraded its debt rating deeper into junk status.

Earlier this month, a self-driving car belonging to Uber was involved in car crash that resulted in the death of a woman.

Assessment

Our assessment is that the admission that the car was in autopilot will have a negative effect on Tesla as well as self-driving technology. Elon Musk has struggled with obstacles in the recent past – many of SpaceX missions have been deemed failures and Moody’s downgraded Tesla’s credit rating. Investors have also become concerned about Tesla’s future. It remains to be seen whether the company can regain customer trust. Is it possible that Musk’s April fool’s joke may one day come true?

Read more: Tesla builds world largest battery