Key points:
- Tesla stock edged higher premarket despite the DoJ investigation.
- Many do not think the investigation will head anywhere hence the rally.
- The number of cases against Tesla continue to pile.
The Tesla Inc (NASDAQ: TSLA) stock price was trading higher during the premarket session despite Reuters breaking news of an ongoing investigation by the US Department of Justice regarding the company’s claims about the Autopilot features in its cars.
Investors largely ignored the news given that the DoJ has a lot to prove before it can file charges against Tesla simply because the EV manufacturer has numerous warnings about the limits of its autopilot systems. In addition, Tesla has multiple warnings on its website insisting that its cars are not autonomous.
Also read: The Best Electric Car Stocks To Buy.
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Some of the warnings posted by Tesla warn drivers to always remain in control of their vehicles by having their hands on the wheel and taking over in situations where the autopilot system may not react correctly to complex situations on the road.
However, the DoJ investigation centres around whether the company willingly misled its customers when promoting its autopilot system within marketing documents starting as far back as 2016 when Tesla CEO touted the system saying it might be better than a human driver.
Tesla has carved a niche for itself as a leader in autonomous driving technology, but the DoJ investigation paints an entirely different picture. If the DoJ proves that Tesla lied in its marketing materials and that its autopilot system is not as robust as the company claims, it will shake the entire industry.
Many leading tech companies are working on their version of autonomous driving technology. With the investigation knocked Tesla off the top, the enviable position will be up for grabs. Other companies, including Alphabet inc’s Waymo, Nvidia, Microsoft, Luminar Technologies, and others, would have a shot at rising to the top.
Still, experts argue that the DoJ will have a hard time making criminal charges against Tesla and its charismatic CEO Elon Musk, unless they can find internal communications proving that the company’s executives knew the flaws of its Autopilot and kept promoting it nonetheless.
The investigation looks like a long shot, and the DoJ is not ready to file charges yet.
*This is not investment advice.
Tesla stock price.
The Tesla stock price bounced off a crucial support level at the start of the week and is currently headed higher.