Tesla Autopilot investigation takes 'bloom off the rose' for investors: Analyst - Yahoo Finance

Dan Ives of Wedbush gives us his take the fallout from the new investigation into Tesla Autopilot crashes occurring at crash scenes.

Video Transcript

- Hi. We're watching shares of Tesla right now, because if you go to the Yahoo Finance page, whether it's on your app or on your computer, there's an article about the Tesla investigation. The US National Highway Traffic Safety Administration, what we all call NHTSA, they've initiated the investigation of Tesla's autopilot system. This is involving 11 crashes with what's referred to as parked first responder vehicles, all of this dating back to 2018. And these resulted in roughly 17 injuries and one death.

So what's the impact on this, and what are we going to learn. Let's bring in Dan Ives, friend of this program, who's also an analyst at Wedbush Securities. It's good to have you here. What should people who are Tesla fans consider as this investigation is now official, Dan?

DAN IVES: Yeah, look, I mean, this is definitely a bit of a black eye. And I think it formalizes some of the concerns there have been on self-driving. I think, you know, Tesla was never going to get there without some of these unfortunate issues. I think from an investor perspective, you know, especially given it's the gold standard from a technology perspective, this formal investigation definitely takes a bit of the bloom off the rose when it comes to FSD.

EMILY MCCORMICK: Dan, this is Emily McCormick. We're seeing Tesla shares down about 4% as we speak. This is certainly not the first safety concern raised about Tesla's autopilot system. And in the past, the stock has been able to shake off these concerns, in the near to medium term. So is this time, and this probe, different than these times past?

DAN IVES: Well, I think this is really the build up. I mean we've seen it in China. Now we've seen it in the US. And I think investors are starting to get more concerned around the scale and scope of this investigation, because it's been something that we've seen, the last year or two, from some of these high profile crashes.

Now in terms of the stock, is it affecting demand in the near term? No, but when you look at the big technology difference that Tesla has over others, even within a GM and others that are going after the market, it's FSD. So FSD, full self-driving, is a big piece of the future holy grail. And this is definitely a step back.

And now Tesla and Musk need to navigate this to make sure they get on to the other side successfully. And I think that's really right now a bit of the uncertainty that you're seeing in the stock.

- And yet the defense Tesla keeps saying is, look, you're not supposed to use this for autonomous driving. You have to be awake and have your hands by the wheel. Is this perhaps a greater threat to the whole industry of autonomous vehicles, I mean UPS has been testing autonomous driven trucks for delivery. And they've had successful runs from city to other city. Is this going to push everything back, simply because it's an investigation of Tesla?

DAN IVES: I don't think it necessarily pushes things back. But I think it does show the clear hurdles and pitfalls, if not used correctly, in terms of full self-driving. I'm not going to tell you as someone that's focused on the industry for years, the technology advances that have been made are eye-popping, not just on the consumer side, but even when it comes to long-haul trucking. But I think what this just shows is that, you know, there's going to be regulatory and safety issues that need to be a focus.

I mean before we can get onto the other side, these need to be resolved for the safety of any consumers that use the actual vehicles. But like you said, I think Tesla is going to fight this in terms of at least what their defense is.

EMILY MCCORMICK: And then in terms of the timing of the announcement of this probe, this, of course, came just a couple of days before AI day for Tesla later this week. And, Dan, I'm wondering if you expect this probe and this announcement to really impact the recruiting effort that Tesla was trying to put together on that date, as it relates to their AI efforts?

DAN IVES: Yeah, and in terms of the AI day coming up later this week, I think it just speaks more to Tesla being focused on software and services, right? I mean that's a big part of the differentiation, also a big part of the margin and accretion, the model. And when you think about the growth over the coming years. I don't think it necessarily impacts that.

But I think it does show they're trying to juggle a lot of balls at the same time. And they need to make sure that they execute flawlessly on every part. And the AI and the software piece is a big part of the broader Tesla flywheel, as we look forward.

- Dan Ives, next time you're with us, really want to dive deep into what you were writing about just a couple of weeks ago with China's Green Wave and how Tesla will benefit from that. But at this point, we have to say thank you for helping us understand what's at stake with this NHTSA investigation. Again Dan Ives is a analyst with Wedbush Securities, and he covers Tesla.

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