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A Tesla Model 3 in a Beijing retail mall.
Getty Images/AFP/Nick Asfouri
Tesla
On Tuesday, the stock market lost $20 billion. The main issue appears to be safety, despite the fact that Tesla automobiles are considered to be quite safe. It demonstrates that investors need to learn more about current car safety, just as they needed to learn more about electric vehicles when Tesla first appeared on the market years ago. On Tuesday, Tesla stock (ticker: TSLA) fell 2.8 percent to $659.58, a loss of 2.8 percent. The
S&P 500 Index
and
The Dow Jones Industrial Average (DJIA) is a stock market index
, on the other hand, fell 0.2 percent and 0.6 percent, respectively.
The first incident that could have weighed on shares was a single fire involving a Model S Plaid edition. The Plaid is Tesla’s newest and fastest Model S model. A single accident or fire may not change the value of any car company, including Tesla, but the Plaid is new, and initial reports stated the car caught fire while being driven. Furthermore, according to the New York Post, the car was being driven by an employee of the brokerage firm Susquehanna International Group, Bart Smith. An emailed request for comment from Smith was not immediately returned. A New York Times piece about a family suing Tesla after a family member died in an incident they blame on Tesla’s Autopilot driver-assistance software could be the second safety problem weighing on Tesla stock. Individual lawsuits, like individual accidents, are terrible, but they rarely wipe out a company’s market capitalization of more than $20 billion. The market, on the other hand, is adjusting to “active safety.”
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Tesla, like the rest of the car industry, is transitioning from passive to active safety features. Seat belts and anti-lock brakes, for example, are examples of passive systems. They sit there until they are used by drivers and passengers. Passive safety solutions aren’t controversial, and they’re seen favorably by investors. With active safety measures, this isn’t always the case. Lane-keeping assistance and automated braking are examples of active systems. The automobile is doing a task on its own. What will eventually become self-driving automobiles will include active safety systems. When lane-keeping assistance, adaptive cruise control, autonomous emergency braking, and blind-spot warnings are combined, a car can drive itself safely down the highway. Active safety technologies improve car safety as well, but giving up control to computers makes drivers uncomfortable. As a result, not all active safety measures are universally seen as advantages at this time. This is mainly due to the possibility of abuse. Remember, Tesla stock took a knock lately following a Texas collision in which authorities initially assumed no one was in the driver’s seat, and the driver was accused of demonstrating how a Tesla might drive itself. Tesla’s active safety features, like those of any other automobile manufacturer, are not designed to be used in this manner. The driver was in the driver’s seat, and Tesla’s driver-assistance systems were not turned on, as it turned out. Third-party safety organizations, on the other hand, claim that active safety measures make cars safer. In the midsize luxury sedan category, a Tesla Model 3 is an Insurance Institute for Highway Safety top safety pick for 2021. Tesla’s automated emergency braking system is rated “superior” by the IIHS for avoiding vehicle-to-vehicle crashes and “advanced” for avoiding vehicle-to-pedestrian collisions. Tesla received these scores thanks to its active safety measures. And every Tesla vehicle that has received a five-star overall crash rating from the National Highway Traffic Safety Administration has done so. Many other automobiles are rated five stars, but Tesla is on par with any other brand. Tesla, on the other hand, is a touch more outspoken about its self-driving capabilities than the competition. One of the reasons Tesla’s safety is being extensively studied is because of this. Elon Musk, the company’s CEO, has been tweeting about improved versions of the company’s autonomous driving software for weeks, predicting significant advancements by 2021.
Investor expectations have been raised as a result of the tweets. For $10,000, the most advanced versions of Tesla’s active safety measures are available. Without having to come in for service, the features are supplied as a software upgrade. As Tesla’s systems develop, Tesla bulls predict that more drivers will acquire systems, and more money will flow into the company’s coffers. However, the market must first overcome its worries. Al Root can be reached at allen.root@dowjones.com./n
