Tesla (TSLA) stock is under scrutiny after the U.S. National Highway Traffic Safety Administration (NHTSA) launched an investigation into the company’s Full Self-Driving system. The probe, which covers 2.88 million vehicles, comes amid reports of traffic violations linked to the system, prompting both regulators and investors to take notice.
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For context, Tesla’s FSD system, first introduced in 2016, is designed to automate driving tasks using advanced AI and sensors. However, it has come under scrutiny from regulators over reports of traffic violations and safety concerns. The system’s performance and legal compliance continue to be closely watched by both authorities and investors.
Tesla Faces Another Investigation
On Thursday, the NHTSA opened another investigation into 2.88 million Tesla vehicles equipped with the FSD system. The probe follows more than 50 reports of traffic safety violations and several crashes.
The NHTSA is reviewing 58 reports of traffic safety issues involving Tesla’s FSD system, including 14 crashes and 23 injuries. The agency further reported that some Tesla vehicles using FSD have been driving through red lights and changing lanes in the wrong direction.
The new investigation comes amid growing scrutiny from Congress and just weeks after a new NHTSA administrator was confirmed. Tesla, which did not immediately respond, issued a software update to FSD this week.
Tesla’s Troubles Continue
Tesla is no stranger to these investigations. Last month, NBC News reported that two U.S. senators are urging federal safety officials to launch a formal investigation into Tesla’s FSD software. The call comes after the report highlighted concerns, including complaints from Tesla drivers that the software sometimes failed to detect oncoming trains at railroad crossings. The senators argue that these issues warrant a more thorough investigation.
Earlier in September, the NHTSA launched a preliminary probe into Model Y electronic door handles after complaints that children were trapped inside because the doors couldn’t be opened from the outside.
What This Means for TSLA Investors
For TSLA investors, the ongoing FSD investigation adds regulatory risk and could affect stock volatility in the near term. While Tesla continues to grow its EV business, potential safety issues, recalls, or negative headlines may weigh on sentiment, making it important for investors to monitor updates from NHTSA and company responses closely.
TSLA stock has rebounded sharply in the last six months, rising over 70%. The company has faced declining sales and growing pushback tied to CEO Elon Musk’s political activism, but the robotaxi rollout and autonomous driving solutions are renewing investor confidence.
Is Tesla a Good Stock to Buy?
According to TipRanks, TSLA stock has received a Hold consensus rating, with 15 Buys, 13 Holds, and nine Sells assigned in the last three months. The average price target for Tesla shares is $363.60, suggesting a potential downside of over 16% from the current level.
