Tesla Autopilot investigation, focusing on securities and communications fraud

According to three individuals familiar with the matter, the company's electric self-driving cars have caused misunderstandings among investors and consumers, leading to securities fraud and telecommunications fraud.

Tesla's Autopilot and full self-driving systems assist with steering, foundation brake, and lane changes, but they are not fully autonomous. Tesla warns drivers to be prepared to take over driving, but the Department of Justice is investigating Tesla and CEO Elon Musk for other statements implying that their vehicles can self-drive.

Regulators in the USA have been individually investigating hundreds of collisions, including fatal accidents, that occurred while Tesla's Autopilot was engaged, leading to a massive recall by the auto manufacturers.

In October 2022, reports emerged of a criminal investigation against Tesla in the USA, detailing the specific criminal liabilities being investigated by federal prosecutors for the first time.

According to sources, investigative authorities are examining whether Tesla misled consumers about its driving assistance systems, committing telecommunications fraud to deceive interstate communications. Two sources also mentioned that Tesla is under investigation for securities fraud involving investors.

According to one individual, the Securities and Exchange Commission is also investigating Tesla's disclosures to investors regarding its driving assistance systems.

Last October, the company revealed in a filing that the Department of Justice had requested information about Tesla's Autopilot and full self-driving capabilities.

While this investigation is not evidence of wrongdoing, there is a possibility of criminal charges, civil sanctions, or no action being taken. According to one individual, the prosecution is meticulously reviewing the extensive documents submitted by Tesla in response to the subpoena, without reaching a decision on the next steps.

The prosecution could not determine that the specific statements under review were illegal. And Mr. Mask has actively promoted the excellent performance of Tesla's driving assistance technology for nearly 10 years.

The video demonstrating this technology, archived on Tesla's website, is described as follows:

"He did nothing. The car was driving automatically."

In 2022, Tesla's engineers testified in a lawsuit involving a fatal accident in which Autopilot was involved, stating that a video posted in October 2016 was intended to demonstrate the potential of the technology, not accurately depict the then functionalities. Nevertheless, Mr. Mask posted videos on social media, claiming that Tesla could automatically drive from city streets to highways and find parking spaces without any human intervention.

During a conference call with journalists in 2016, Mr. Mask stated that Autopilot is probably superior to human drivers. In a phone call in October 2022, he mentioned future FSD upgrades, stating that customers will be able to travel to workplaces, friends' homes, and grocery stores without touching the steering wheel.

While Tesla's car sales and profits are struggling, Mr. Mask is intensifying his focus on self-driving technology. Tesla recently shelved plans for the highly anticipated $25,000 model that was expected to boost revenue growth through massive personnel cuts to reduce costs.

"It is a visible action to continue pushing toward autonomy," a billionaire executive posted on his own social media platform X in mid-April. Tesla's shareshave fallen over 28% since the beginning of the year.However, Mr. Musk's visit to China in late April, where he made progress towards approval for FSD sales in the country, caused a sharp rise.

For about 10 years, Mr. Musk has repeatedly promised the realization of self-driving Tesla. Tesla's lawyer stated in a 2022 court filing, "It's not fraud just because you can't achieve long-term ambitious goals."

According to sources familiar with the investigation, the prosecution authorities scrutinizing Tesla's self-driving car claims are aware of the legal hurdles they face and are carefully proceeding with the investigation.

Three legal experts not involved in the investigation told Reuters that it is necessary to prove that Tesla's claims crossed the line from legal salesmanship to deliberately false statements that seriously and intentionally harmed consumers and investors.

Previously, U.S. courts have ruled that "arrogance" and "corporate optimism" in product advertising slogans do not constitute fraud. In 2008, a federal appeals court ruled that optimistic statements by corporate executives alone do not prove intentional deception of investors.

Daniel Richman, a former federal prosecutor and professor at Columbia Law School, stated that Justice Department officials are likely to seek internal Tesla communications as evidence that they knew Mr. Musk and others were making false statements. Richman said, "The safety risks associated with overselling the self-driving system tell a story about how seriously prosecutors, judges, and jurors take the statements."

Tesla's claims about Autopilot and FSD have attracted scrutiny from regulatory authorities and lawsuits.

Safety regulatory authorities and courts have expressed concerns in recent months that corporate messages regarding this technology, including brand names such as Autopilot and fully self-driving, have instilled a false sense of security in customers.

According to police records, the Washington State Patrol arrested a man in April for automobile murder after a Tesla operating Autopilot fatally hit a motorcyclist. An officer cited the driver admitting to 'inattentive driving while in autopilot mode... relying on the machine to drive for him.'

In Washington state, regardless of technical capability, drivers continue to be responsible for the safe and legal operation of the vehicle, a state patrol spokesperson said.

In the same month, the National Highway Traffic Safety Administration started an investigation to determine if safety issues related to Autopilot were properly addressed during the recall of over 2 million Tesla vehicles in December.

The recall was initiated as a result of vehicles operating on Autopilot repeatedly colliding at emergency scenes, leading regulatory authorities to launch a long-term investigation. Subsequently, authorities investigated hundreds of Autopilot-involved collisions, identifying 14 fatalities and 54 injuries.

Tesla disputed the NHTSA investigation results but agreed to a recall incorporating a wireless software update aimed at warning inattentive drivers.

According to NHTSA records, the investigation revealed a significant safety gap between 'driver expectations' of Tesla's technology and the 'true capabilities of the system'. 'This gap led to foreseeable misuse and preventable crashes.'