The road to the future is paved with uncertainties. And Tesla has offered customers a chance to make their rides smoother and stress-free with the use of driver-assist technologies. The US Department of Justice (DOJ) could be a roadblock on Tesla’s drive to an automated future. According to a regulatory filing, the DOJ has asked the carmaker to submit documents related to its Autopilot and Full Self-Driving features. The Department of Justice reviewing Tesla’s papers could spell trouble in more ways than one as the company attempts to regain its foothold.
On the other hand, despite the uncertain economic climate, Tesla shares have risen by around 38% and are considered a buy. Considering recent changes, investors have christened Tesla stock a buy, although it was one of the worst-performing stocks in 2022.
Previously, The Wall Street Journal had reported that the Department of Justice and the Securities and Exchange Commission (SEC) were investigating the company for deliberately misleading stakeholders about its Autopilot features.
The Department of Justice Reviewing Tesla: Proactive or Reactive?
“To our knowledge no government agency in any ongoing investigation has concluded that any wrongdoing occurred,” Tesla said in the filing on January 31 with the SEC.
In the past, Tesla has come under fire from the National Highway Traffic Safety Administration (NHTSA) for not revealing problems with its driver-assist technologies. It is facing multiple investigations as the agency probes its role in various accidents related to driver-assist, Autopilot, and Full Self-Driving features.
Tesla’s driver-assist technologies do not allow cars to drive themselves. This is clarified on the company website, and in October 2022, CEO Elon Musk admitted that they are not yet ready to let technology take full control of the wheel.
Nearly 35 accidents allegedly include some relation to Tesla’s Autopilot and Full Self-Driving features.
Federal prosecutors are in the process of examining statements by the company about the safety and functioning of the Autopilot feature. Although Tesla has so far not been prosecuted for its technologies, the company admitted in the filing that any action from law enforcement could negatively impact its brand.
While the Justice Department has not revealed the purpose behind the request, experts feel that the agency is looking for inconsistencies pertaining to the company’s message and actual product.
“Should the government decide to pursue an enforcement action, there exists the possibility of a material adverse impact on our business, results of operation, prospects, cash flows and financial position,” read the filing. Tesla stock had fallen almost 65% in 2022.
The Department of Justice reviewing Tesla might force the automaker to refine its systems, benefiting customers who have waited long for its automated features.
Tesla stock: Ups and Downs
The company’s track record combined with worries about Elon Musk’s lack of attention to the EV-maker had resulted in a Tesla stock selloff earlier.
But the tide appears to be changing. Tesla’s current market value hovers around $560 billion. A Bloomberg analyst reportedly told Business Insider that the company’s recent share price cuts have made it a buy, as it’s investing in growth.
Tesla shares are up by almost 38% this January and investors are hopeful that the trend will continue. The company’s recent price cuts on its best-selling models have been taken in stride as an investment in future prospects. Its Q4 earnings also showed that the company’s automotive gross margin declined to 25.9%, the lowest in five quarters.
The financial results for 2022 also assuaged worried investors and CEO Elon Musk appears optimistic about the company’s prospects for the year 2023.
This year, Tesla is working to build up production and make optimum use of its manufacturing plants. The company might ramp up production closer to full capacity for its Berlin and Texas factories. Musk even commented that Tesla might be able to hit two million, if there were no external disruptions (read supply chain issues).
The Road Ahead
Tesla stock faced the worst year of its journey in 2022. It was compounded by Musk’s Twitter takeover deal, with investors worrying that the EV company was no longer a priority for the billionaire.
Things started changing after Tesla revealed its 2022 full-year financial report. Tesla share prices are also within reach of most and investors expect the company to make up for lost time.
However, there is no denying that the Department of Justice and NHTSA could dampen Tesla’s prospects. The results of the Department of Justice reviewing Tesla’s documents might send it back into a downward spiral, but for now the EV company appears to be holding its own. Fans of the carmaker are also waiting to see when Tesla will launch its fully automated driver-assist tech. So far, it appears to be a work in progress, just like Tesla’s share prices.
