Bloomberg reported that the US SEC is investigating Tesla (NYSE: TSLA) CEO Elon Musk for the company’s self-driving claims. It could be yet another trouble for the billionaire who is also facing a class action suit over his tweet to take Tesla private.
Bloomberg cited a person who has knowledge about the matter and reported that the SEC is probing whether Musk made inappropriate forward-looking statements about the technology. It is however not clear which of Musk’s statements the SEC is investigating.
Musk, who slipped to second rank in the world billionaire index, is anyways battling the SEC on multiple issues. Musk settled the 2018 “taking Tesla private” issue with the SEC by paying a $20 million fine.
However, he has often criticized the US securities regulator and rechristened it “short seller enrichment corporation.” There were also reports that the SEC could investigate Musk’s 2022 stock sales, some of which came shortly before its tepid Q4 2022 delivery report.
The stock slid to multi-month lows after the delivery report but by then Musk had already sold billions of dollars worth of shares.
Coming back to Tesla’s self-driving claims, they have always been controversial including the very term FSD (full-self driving) which implies that it is fully autonomous which obviously it is not. Even Tesla advises drivers to keep their hands on the steering all the time even if the car is on Autopilot.
The SEC Is Reportedly Investigating Musk for Tesla Self-Driving Claims
The reports of the SEC investigating Musk for Tesla self-driving claims come days after a Tesla engineer testified that the company had staged a 2016 video that promoted the company’s self-driving.
The video, which is still on the company’s website, showed a Model X driving on its own. It carried the tagline, “The person in the driver’s seat is only there for legal reasons. He is not doing anything. The car is driving itself.”
The US NHTSA (National Highway Traffic Safety Administration) is also separately investigating Tesla Autopilot after multiple crashes involving the software. The California DMV (Department of Motor Vehicle) also accused the Elon Musk-run company of using deceptive practices to market the FSD.
Last year, former US presidential candidate Ralph Nader called upon the NHTSA to issue a recall for Tesla’s FSD.
Terming what he calls “so-called” FSD, Nader who is a consumer advocate, calls it “one of the most dangerous and irresponsible actions by a car company in decades.” He adds that the software, which is installed in over 100,000 Tesla cars malfunctions every eight minutes.
Musk Sees Autopilot as a Key Driver of Tesla’s Growth
Meanwhile, Musk sees Autopilot and other software capabilities as key to Tesla’s growth. The company charges $15,000 for the FSD in North America or $199 for monthly subscriptions. It raised the FSD price by $5,000 last year in two tranches. Musk previously predicted that the price would eventually rise to $100,000.
Last year, the company extended FSD to all North American buyers. In the fourth quarter of 2022, Tesla earned $300 million from FSD sales and said that nearly 400,000 customers in North America have the software.
During the company’s Q4 2022 earnings call, Musk said that he does not see any company which is even a “distant second” to Tesla in self-driving. He added, “I don’t think you could see a second place with a telescope, at least we can’t.”
Chinese Companies Are Also Focusing on Self-Driving
Even as Musk claimed that no company comes closer to it in self-driving, many Chinese companies look like good competitors.
Late last year, Baidu started offering robotaxis during the night in Wuhan. People in Wuhan can now ride a Baidu robotaxis between 7 pm to 11 pm without safety drivers. Previously, the company’s robotaxis could operate between only 9 am and 5 pm.
In September, Chinese EV company Xpeng Motors debuted a semi-autonomous driving system in China. It also launched the pilot program of its Navigation Guided Pilot (City NGP).
NIO meanwhile partnered with Tencent for self-driving technology. Recently, Baillie Gifford also increased his stake in NIO. Many analysts see NIO as a worthy competitor to Tesla. There is a guide on buying NIO stock.
Musk Praised Chinese EV Companies During Tesla Q4 2022 Earnings Call
Musk was otherwise all praise for Chinese EV companies during Tesla’s Q4 earnings call. He said, “we have a lot of respect for the car companies in China. They are the most competitive in the world. That is our experience.”
He added that the Chinese market is “most competitive.” He also said, “if I would have guessed, there are probably some company out of China as the most likely to be second to Tesla.”
Tesla stock has rebounded in 2023 and last week it soared 33% and had its best week since 2013. Cathie Wood who bought the dip in Tesla stock sees it rising way above the current price levels.
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