The Department of Justice (DOJ) is investigating Tesla (TSLA) to determine if it committed securities or wire fraud by misleading consumers about its Autopilot self-driving technology, people familiar with the matter told Reuters.
Tesla's Autopilot and Full Self-Drive (FSD) systems for its electric vehicles (EVs) are not fully autonomous. While Tesla says drivers "must be in control of your vehicle, pay attention to its surroundings and be ready to take immediate action including braking," the DOJ is examining other statements made by the company and its CEO, Elon Musk, which may have suggested that the cars can drive themselves.
One example Reuters gives is a video on Tesla's website shows a car using its Autopilot technology and states, "The person in the driver's seat is only there for legal reasons. He is not doing anything. The car is driving itself."
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
"The probe, which is not evidence of wrongdoing, could result in criminal charges, civil sanctions, or no action," Reuters said. "Prosecutors are far from deciding how to proceed, one of the sources said, in part because they are sifting through voluminous documents Tesla provided in response to subpoenas."
This is hardly the first investigation into Tesla's Autopilot system. In April, the National Highway of Traffic Safety Administration (NHTSA) said it is looking into the company's late-2023 recall of more than 2 million vehicles that include the Basic Autopilot package.
Additionally, the Securities and Exchange Commission (SEC) is investigating the representations of Tesla's self-driving capabilities to investors, a source told Reuters. Both the DOJ and SEC declined to comment on the report.
Is Tesla stock a buy, sell or hold?
Wednesday's headlines have Tesla shares trading down more than 2% in intraday action, making it the worst Magnificent 7 stock so far. Longer term, the stock is down 30% for the year to date, pushing most analysts to the sidelines.
According to S&P Global Market Intelligence, the consensus analyst target price for Tesla stock is $181.73, representing implied upside of about 4% to current levels. Meanwhile, the consensus recommendation is a Hold.
Still, Wedbush analyst Daniel Ives has a Buy rating and $275 price target on Tesla, representing implied upside of more than 57% to current levels.
Ives recently called Tesla's approval for FSD in China "a key moment for Musk as well as Beijing at a time that Tesla has faced massive domestic EV competition in China along with softer demand." The analyst added that while "the long-term valuation story at Tesla hinges on FSD and autonomous, a key missing piece in that puzzle is Tesla making FSD available in China which is now a done deal."
Related Content
-
Stock Market Today: Stocks Rally Despite Rising Geopolitical TensionThe main indexes were mixed on Tuesday but closed well off their lows after an early flight to safety.
-
What's at Stake for Alphabet as DOJ Eyes Google's ChromeAlphabet is higher Tuesday even as antitrust officials at the DOJ support forcing Google to sell its popular web browser. Here's what you need to know.
-
Stock Market Today: Stocks Rally Despite Rising Geopolitical Tension
The main indexes were mixed on Tuesday but closed well off their lows after an early flight to safety.
-
What's at Stake for Alphabet as DOJ Eyes Google's Chrome
Alphabet is higher Tuesday even as antitrust officials at the DOJ support forcing Google to sell its popular web browser. Here's what you need to know.
-
Lowe's Stock Is Falling After Earnings. Here's WhyLowe's stock is lower Tuesday as Wall Street weighs a beat-and-raise quarter against declining revenue. This is what you need to know.
-
Why Walmart Stock's a Buy After Its Beat-And-Raise QuarterWalmart is the best Dow Jones stock Tuesday after the retail giant's solid earnings report and outlook and Wall Street thinks it's just getting started. Here's what they're saying.
-
Winners and Losers of Fed Rate CutsNavigating interest-rate changes can seem daunting, but these areas of the fixed-income market could perform better (or worse) than others.
-
Six Ways to Optimize Your Charitable Giving Before Year-EndAs 2024 winds down, right now is the time to look at how you plan to handle your charitable giving. The sooner you start, the more tax-efficient you can be.
-
How Preferred Stocks Can Boost Your Retirement PortfolioHigher yields, priority on dividend payments and the potential for capital appreciation are just three reasons to consider investing in preferred stocks.
-
Structured Settlement Annuity vs Lump-Sum Payout: Which Is Better?As the use of structured settlement annuities grows, it can be tough to decide whether to take the lump sum to invest or opt instead for guaranteed payments.
