Tesla Autopilot probe could hurt the technology more than the carmaker’s bottomline

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The National Highway Traffic Safety Administration’s probe into 11 crashes of Teslas (TSLA) using the company’s Autopilot mode could prove to be more than a black eye for the electric automaker. According to experts, it could slow the deployment of advanced driver-assistance technologies, and erode the trust people have in them, something that’s incredibly important for such new, high-tech systems.

Announced Monday, the investigation into the crashes, which occurred from 2018 to 2021 and involved Teslas using Autopilot, or the company’s Traffic Aware Cruise Control, that came into contact with emergency vehicles, sent Tesla’s stock tumbling more than 9% from $717.28 to $649.48 by midday Tuesday. The company’s shares recovered slightly Wednesday afternoon, rising about 4% to $690

A Tesla sedan is shown after it struck a parked Laguna Beach Police Department vehicle in Laguna Beach, California, U.S. in this May 29, 2018 handout photo. (Image: Reuters)

And while the impact of the probe could range from Tesla having to implement greater limitations of the use of its vehicles’ driver-assistance capabilities, or even the outright disabling of the features, the harm it may have done to consumers’ confidence in the still relatively new technologies could take years to rebuild.

“Trust is built over time and eroded quickly,” Bryan Reimer, a research scientist at the MIT Center for Transportation and Logistics, told Yahoo Finance. “We need to fully build this trust, and overselling things doesn’t help us over the long run.”

The impact on adoption

According to multiple polls, Americans are still wary of self-driving cars. A 2020 Partners for Automated Vehicle Education poll of 1,200 American adults found that nearly three quarters of people don’t think self-driving cars are “ready for primetime.” Another 48% said they would never get into an autonomous cab, though the survey found that educating users improved their overall faith in the technology.

Still, according to Reimer, the NHTSA’s probe could directly impact the trust of some of Tesla’s most important users: the early adopters who have flocked to its technology.

“I think it hurts the trust in the system as a whole, but not to as large a degree as many might fear because…this isn’t a focus point for the average consumer at this point. It’s a focus point for the elite adopter or the tech savvy consumer,” he said.

Reuters journalist Paul Ingrassia sits in the drivers seat of a Tesla S-Type in Autopilot mode in San Francisco, California, U.S., April 7, 2016.   To match Special Report AUTOS-DRIVERLESS/ REUTERS/Alexandria Sage

Reuters journalist Paul Ingrassia sits in the drivers seat of a Tesla S-Type in Autopilot mode in San Francisco, California, U.S., April 7, 2016.

If drivers lose faith in the autonomous systems that are supposed to be the key to a future of self-driving cars that eliminate traffic deaths, it could result in lower interest in the technologies, which could slow its adoption in the long run.

The probe is, “an industry issue and there will be a trend of higher scrutiny on advanced driver-assistance systems and autonomy across the sector,” Morgan Stanley analyst Adam Jonas told Bloomberg Wednesday.

Outside of driver trust, Loop Ventures’ Gene Munster said the government’s involvement could stymie the deployment of future self-driving systems.

“Unfortunately, it’s going to slow things down,” Munster said. “Whenever the government meddles it adds extra layers. “It’s probably more of an industry slowdown, than Tesla specific.”

Of course, the probe itself could still spell serious trouble for the automaker.

“It’s a cause for concern and clearly shows there will be speed bumps before reaching the holy grail of full self-driving,” Wedbush analyst Dan Ives told Yahoo Finance.

According to Reimer, the NHTSA investigation could result in Tesla having to recall its driver-assistance technology entirely.

“I think they are highly vulnerable. And I think that it’s anything from a black eye to an absolutely detrimental impact to the organization,” he said. “NHTSA does have the ability to order a recall on the whole system of which you would then have consumer outrage.”

Overselling Autopilot

Tesla’s Autopilot and Full Self Driving modes aren’t exactly what their names imply. According to Reimer, who also serves as associate director of the New England University Transportation Center, the automaker’s systems are far from the point of allowing drivers to sit back and let the car take control.

Photo by: STRF/STAR MAX/IPx 2021 8/16/21 Tesla's Autopilot under federal investigation following crashes. Here, a Tesla Dealership is seen in White Plains, New York.

Photo by: STRF/STAR MAX/IPx 2021 8/16/21 Tesla’s Autopilot under federal investigation following crashes. Here, a Tesla Dealership is seen in White Plains, New York.

On the Society of Automotive Engineers’ “Levels of Driving Automation” scale, which ranges from Level 0, or totally driver dependent, to Level 5, or full autonomy, Tesla’s capabilities are only Level 2. That means while Teslas equipped with Autopilot or Full Self Driving mode have advanced sensors and capabilities that can help keep your car in its lane, slow down when other cars are in its way, and make certain turns, you still need to be in control.

In fact, Tesla says as much on its customer support page for both Autopilot and Full Self Driving. But that doesn’t come across very clearly when the name of the technology is, well, Autopilot or Full Self Driving.

“We do not need overhype, we need to actually move consumers, over time, to trust highly automated technologies as part of their daily lives,” Reimer said.

It doesn’t help that Autopilot is nothing like General Motors’ (GM) Super Cruise system. That system has head-tracking technology that can determine if you’re not paying attention to the road and eventually slows the car to a stop and calls OnStar services to determine if you’re experiencing any issues. Tesla’s system requires a certain amount of pressure on the steering wheel, which can be defeated with something as simple as weight attached to the wheel.

“I think that one of the things that’s really important here is that it’s not only the system’s impact on a driver that’s the concern, it’s the fact that the decisions here impact other road users,” Reimer said.

For now, Tesla will have to await the outcome of the NHTSA investigation to determine its next steps. As for drivers, if the automakers’ driver-assistance systems are found to be a problem, they’ll have to begin rebuilding consumers’ confidence from scratch.

Daniel Howley is tech editor at Yahoo Finance.

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