Autopilot verdict deals Tesla a 'black eye', threatens Musk's robotaxi ambitions

Reuters

3 days ago

SAN FRANCISCO, Aug 5 (Reuters) - A court verdict against Tesla (TSLA.O), opens new tab last week, stemming from a fatal 2019 crash of an Autopilot-equipped Model S, could hurt its plans to expand its nascent robotaxi network and intensify concerns over the safety of its autonomous vehicle technology.
A Florida jury ordered Musk's electric vehicle company on Friday to pay about $243 million to victims of the crash, finding its Autopilot driver-assistance software defective. Tesla said the driver was solely at fault and vowed to appeal.
The verdict follows years of federal investigations and recalls related to collisions involving Tesla's autonomous-vehicle technology, and comes as CEO Elon Musk seeks regulatory approval to rapidly expand the robotaxi service across the U.S.
"The public perception of this verdict or things like this are going to fuel pressure on regulators to say, 'We just can't let this stuff be launched without a lot more due diligence'," said Mike Nelson, founder of Nelson Law and an expert on legal issues in the mobility sector.
Tesla could have a tough time convincing state regulators that its technology is road-ready, threatening Musk's goal of offering robotaxis to half the U.S. population by year end, legal experts and Tesla investors said.
Expanding its robotaxi service is crucial for Tesla as demand for its aging lineup of EVs has cooled amid rising global competition and a backlash against Musk's far right political views. Much of Tesla's trillion-dollar market valuation hinges on his bets on robotics and artificial intelligence.
Success in the self-driving realm will require winning the confidence of regulators and potential customers on the full-self driving (FSD) software that underpins Tesla's robotaxis, analysts said.
"The timing (of the verdict) for Tesla in light of the FSD rollouts and robotaxis is awful," said Aaron Davis, co-managing partner at law firm Davis Goldman. "Now there's essentially an opinion that some aspect of Tesla's business is not safe and maybe the safety that the company advertises isn't what it's cracked up to be."
The FSD is an advanced version of Autopilot.
Autopilot, which was been updated since 2019, controls speed, distance and lane centering on highways, while the FSD can operate on city streets, helping the vehicle make automatic turns and change lanes.
"This case does not have direct implications for Tesla's FSD roll-out," analysts at Piper Sandler said in a note on Sunday, citing the modern iterations of the software.
A spokesperson on behalf of Tesla acknowledged the company had received a request for comment from Reuters but had not provided one by the time of publication.
Perfecting autonomous vehicles has been harder than expected. The high costs of hardware, years of trial and error, and regulatory hurdles have forced many players to close shop or pivot, including General Motors' (GM.N), opens new tab Cruise unit.
Musk, however, has pursued what he calls a simpler and cheaper path, relying only on cameras and AI instead of pricey sensors such as lidars and radars used by Alphabet's (GOOGL.O), opens new tab Waymo, Amazon's (AMZN.O), opens new tab Zoox and others.
After years of missed deadlines, Musk rolled out a small robotaxi trial in June with about a dozen Model Y crossover SUVs in Austin, Texas, each overseen by a human safety monitor in the front passenger seat.
While Musk has said Tesla was being "super paranoid about safety", he has also pledged to expand the service fast and make it available for half of the U.S. population in the next five months - a stark contrast to Waymo's cautious years-long rollout.
Until Tesla's entry, Waymo was the only U.S. firm to operate a paid, driverless robotaxi service.
Tesla is currently awaiting approvals in several states, including California, Nevada, Arizona and Florida.
California's department of motor vehicles declined to comment on the impact of the verdict on regulatory approval.
Nevada said it held talks with Tesla about a robotaxi program several weeks ago, while Arizona said it was still considering Tesla's request for certification. Both did not comment on the verdict.
Florida did not respond.
Tesla has typically either won other Autopilot litigation or resolved the case with the plaintiffs out of court. The Florida verdict stands out. Several such cases are pending.
The case involved a Model S sedan that went through an intersection and hit the victims' parked Chevrolet Tahoe as they were standing beside it. The driver had reached down to retrieve a dropped cellphone and allegedly received no alerts as he ran a stop sign before the crash.
The jury found that Tesla's Autopilot had a defect and held the company partially responsible, despite the driver admitting fault.
"It's going to take time to get regulators to move forward and time being more than the end of the year," said Gene Munster, managing partner at Deepwater Asset Management, a Tesla investor. "From an image standpoint, it's a black eye."