TESLA STOCK DROPS AS GOVERNMENT RAMPS UP SELF-DRIVING OVERSIGHT

Tesla stock was falling Tuesday as Chinese sales numbers—and results from electric-vehicle start-up Lucid—weighed on investor sentiment.

A bigger issue, however, might be the government ramping up scrutiny of driver-assistance systems.

In December, Tesla recalled some 2 million vehicles to update warnings to its driver-assistance systems and prevent misuse by drivers. The recalled Teslas weren’t removed from roads or sent to the ship for a visit—the fix was delivered via an over-the-air software update.

The National Highway Traffic Safety Administration, or NHTSA, recently opened an investigation into that recall to ensure the fixes were working. NHTSA investigations precede recalls, which can be the conclusion of an investigation.

On Monday, NHTSA sent a letter to Tesla pointing out that it had found 20 accidents involving Tesla’s driver-assistance systems since the fix was employed and asking for additional data on all of the crashes.

Auto makers are required to inform NHTSA of any accident involving a driver-assistance system. Tesla reports the most, by far, since it is the only auto maker operating a fleet of fully-connected vehicles.

Tesla shares were down 2.7% in midday trading Tuesday at $179.81, while the S&P 500 and Nasdaq Composite were up 0.3% and 0.2%, respectively.

Shares were little changed after reports of the NHTSA letter surfaced.

That might surprise some investors, but the ongoing investigation of Tesla’s driver0assistance systems, called AutoPilot and Full Self-Driving, was known. What’s more, investors are aware that NHTSA has ramped up oversight of these systems lately. The agency recently opened an investigation into accidents involving Ford Motor’s assistance system called Blue Cruise.

Ford stock has dropped about 4.5% since that investigation was disclosed. General Motors shares have fallen about 1% over the same span.

Along with the safety investigation, Chinese sales data are a factor for Tesla stock on Tuesday. In April, Tesla sold 62,167 units from its plant in Shanghai, according to the China Passenger Car Association. Tesla doesn’t report monthly sales or sales by region on its own.

Tesla’s sales in China fell about 30% from the 89,064 sold in March and were down about 18% from 75,842 a year earlier. The CPCA number is a wholesale figure that includes exports. CPCA retail sales data typically become available later in the month.

The CPCA number isn’t a complete surprise—investors get data such as weekly insurance registration data from China. Still, down isn’t the direction investors want to see Tesla sales going in the world’s biggest market for EVs.

While the China sales figure and safety investigations are bigger deals, weak results from Lucid also might have an impact. Lucid’s first-quarter sales were $173 million, better than the $154 million Wall Street was looking for. About $51 million of those sales, however, came from the Saudi government, which owns a majority of Lucid stock. Excluding related-party transactions, Lucid sales fell almost 20% year over year.

Lucid stock was down 13.3% in midday trading, at $2.64 a share.

Tesla, of course, dwarfs Lucid. First-quarter sales at Tesla totaled some $21 billion. Still, Lucid’s results are another example of slowing demand for EVs at the higher end of the U.S. car market. The Saudi government paid more than $100,000 per Lucid vehicle purchased.

The average revenue generated by a Tesla sale in the first quarter was about $44,000.

The early Tuesday drop for Tesla comes after a three-day winning streak for shares, which gained 2% on Monday, closing at $184.76.

Product lineup extension looked to be the biggest reason for the Monday move. Over the weekend, Tesla began offering a rear-wheel drive Model Y with a range of 320 miles per charge, starting at about $45,000. Before the change, the only rear-wheel drive Model Y had a per-charge range of 270 miles and started at about $43,000.

Write to Al Root at [email protected]

2024-05-07T09:03:24Z dg43tfdfdgfd