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What Tesla Investors Should Be Asking After Price Cut in China
What Tesla Investors Should Be Asking After Price Cut in China

Elon Musk's Tesla Under Criminal Probe About Inflated Assertions

Scrutiny increases over some contentions the electric vehicle company has made.

Last June, the U.S. Department of Transportation announced that as part of its efforts to improve road safety while still emboldening innovation, the National Highway Traffic Safety Administration (NHTSA) had released its initial round of data regarding car crashes involving vehicles with automated driving systems.

It turned out that one extremely popular electric vehicle with self-driving capability was involved in a much larger number of crashes than was known before.

The June report covered 10 months of data. It showed that using full self-driving features such as Tesla's Autopilot, cars using advanced driver-assistance systems (ADAS) crashed 392 times, and 273 of those incidents involved Tesla cars. That's nearly 70% of the incidents.

Elon Musk Tesla Lead

Tesla CEO Elon Musk.

A Criminal Investigation Is Underway

With this as background, it was understandable, but still a surprise, to find out the Department of Justice is investigating Tesla in a criminal probe.

Federal and California safety regulators have investigations in progress regarding Autopilot and whether drivers using it develop a false sense of security, Reuters reports.

But this is a new and more serious development.

"The Justice Department investigation potentially represents a more serious level of scrutiny," Reuters writes, "because of the possibility of criminal charges against the company or individual executives, the people familiar with the inquiry said."

The Justice Department investigation focuses on whether the company misled customers about the capabilities and safety of the self-driving feature.

"Officials conducting their inquiry could ultimately pursue criminal charges, seek civil sanctions or close the probe without taking any action," Reuters writes it was told.

It could be difficult to bring any sort of case against Tesla about exaggerated claims for the simple reason that it emphasizes in its own materials that the cars are not yet capable of fully self-driving. 

"Autopilot, Enhanced Autopilot and Full Self-Driving Capability are intended for use with a fully attentive driver, who has their hands on the wheel and is prepared to take over at any moment," the Tesla Website says. "While these features are designed to become more capable over time, the currently enabled features do not make the vehicle autonomous."

On its investor call Oct. 19, Tesla CEO Elon Musk said the cars were close to being completely self-drivable, but even he tempered expectations about when. "We’re not saying that that’s quite ready to have no one behind the wheel,” he said.