Tesla Faces July 1 Autopilot Data Deadline, Risks $135M Fines

Key Takeaway

• Tesla faces a July 1 deadline to provide NHTSA with Autopilot data amid a probe into crashes, risking fines over $135 million.
• Legal challenges mount as the DOJ and SEC investigate Tesla's Autopilot and self-driving claims, contributing to a 3% stock drop.
• Broader market shows cautious optimism, influenced by rate cut expectations and mixed earnings reports from companies like Disney.

Regulatory Scrutiny Intensifies

Tesla Inc. is under a tight deadline until July 1 to provide the National Highway Traffic Safety Administration (NHTSA) with detailed information regarding its largest recall to date. This recall was initiated due to concerns over drivers crashing while using the Autopilot system. NHTSA's inquiry focuses on the effectiveness of Tesla's over-the-air software update in preventing misuse of Autopilot, following 20 additional crashes post-recall. The agency's letter to Tesla seeks data on the mileage accumulated under Autopilot and the frequency of warnings issued to drivers about hand placement on the steering wheel. Failure to comply with NHTSA's request could result in Tesla facing fines up to $27,168 per violation per day, potentially exceeding $135 million.

Legal and Market Challenges

Tesla's challenges extend beyond NHTSA's scrutiny. The company disclosed in January 2023 that the Justice Department had requested documents related to Autopilot. Additionally, Bloomberg reported that the Securities and Exchange Commission is investigating CEO Elon Musk's influence on Tesla's self-driving claims. These legal inquiries coincide with Tesla's stock performance concerns, as preliminary data showed an 18% year-on-year drop in shipments from its Shanghai factory in April, despite the broader market for new-energy cars growing. This news contributed to Tesla shares falling as much as 3% in premarket trading.

Broader Market Movements

The broader US equity market shows signs of cautious optimism, with S&P 500, Nasdaq 100, and Dow Jones Industrial Average futures experiencing slight changes. This market sentiment is fueled by expectations that the Federal Reserve may begin cutting interest rates within the year. Notable stock movements include Ambac Financial's 14% jump after reporting a significant earnings per share increase, and Disney's 8.9% slide due to lower-than-expected Disney+ subscriber numbers. Other companies like Datadog and Vimeo also faced stock adjustments following their quarterly reports, highlighting the market's sensitivity to earnings and forecasts.