Tesla Inc.'s (TSLA, Financial) stock fell 2% following an announcement that the company faces an investigation after one of its autopilot vehicles crashed into a firetruck. The vehicle, a Model S, was operating in autopilot mode at the time of the accident.
The National Transportation Safety Board (NTSB) said the firetruck was attending to another accident when the Model S slammed into it.
Two investigators were sent to determine which vehicle was responsible for the crash. The agency will focus on how the autopilot vehicle performed leading up to the incident. Tesla's autopilot feature includes warnings that alert the driver to take control of the vehicle when it is in autopilot mode.
Investigators will determine if autopilot was engaged at the time of the accident and if the driver was responsible due to failing to adhere to warnings.
No one was injured in the crash, but the firetruck has to be taken out of operation while being repaired. The driver of the Model S insists the autopilot feature was enabled at the time.
"The Tesla Model S ran into trouble with the driver overlap test, which is a test that looks at the performance of the driver’s cage when a vehicle strikes an object on the driver’s front corner such as what happens when a car hits a telephone pole, " claims Ankin Law Office LLC. "In the test of the Tesla Model S, the IIHS found that the car’s safety belt was not strong enough to protect the driver. In the test, the crash-test dummy moved forward far enough that it struck its head on the steering wheel, which could result in serious injuries to people."
Tesla's employees also raised concerns for investors in recent days after reports surfaced that the company's battery production is facing problems. The battery production may cause delays and quality issues for the Model 3.
Some batteries need to be made manually and reports suggest Tesla has gone as far as using the employees of their suppliers to help manually assemble the batteries.
The company has 400,000 people waiting for the Model 3, so its future relies heavily on Tesla's ability to mass-market and manufacturer its vehicles. Production for the Model 3 was delayed in November, with CEO Elon Musk claiming the company has made strides to correct the problem.
Investors fear manual production will boost the cost of the Model 3 from $35,000 to well over the mid-$40,000 range. An issue of profitability arises when a company is forced to use manual labor, rather than automation, to fulfill orders. The company delayed the Model X by two years, shipping the gullwing vehicle in 2016 instead of 2014.
Tesla also reduced its Model 3 production numbers from 5,000 per week by the end of 2017 to 2,500 per week by March 2018.
Production issues and a federal investigation into the crash between the Model S and a firetruck are expected to weigh on Tesla's stock well into next week.
Tesla is slated to report its fourth-quarter 2017 earnings on Feb. 7 after the closing bell.
Disclosure: The author does not own any stake in the listed equities.
