Tesla Settling Lawsuit Erodes Faith In Autonomous Driving

Tesla, the EV pioneer continues to suffer reputational damage after settling a lawsuit involving a tragic crash in 2018 with his Model X on Autopilot – fueling doubts over autonomous driving.

Tesla has settled a lawsuit over a 2018 car crash that killed an Apple engineer after his Model X, operating on Autopilot, swerved off a highway near San Francisco, court documents showed on 8 April 2024 according to Reuters. The settlement was made on the eve of the trial over the high-profile accident involving Tesla’s driver assistant technology.

Tesla faces a series of lawsuits over crashes related to the alleged use of Autopilot, putting the automaker at risk of large monetary judgments and reputational damage. The settlement, whose terms were not disclosed, came as Chief Executive Elon Musk makes major promotions of self-driving technology, touted as key to the financial future of the world’s most valuable automaker.

The 2018 accident killed 38-year-old Walter Huang. His family had alleged that Autopilot steered his 2017 Model X into a highway barrier. Lawyers for Huang’s family had also raised questions about whether Tesla understood that drivers likely would not or could not use the system as directed, and over what steps the automaker took to protect them.

Tesla contended that Huang misused the Autopilot system because he was playing a video game just before the accident. The crash is among hundreds of U.S. accidents in which Autopilot was a suspected factor in reports to auto safety regulators.

The U.S. National Highway Traffic Safety Administration has examined at least 956 crashes in which Autopilot was initially reported to have been in use. The agency separately launched more than 40 investigations into accidents involving Tesla automated-driving systems that resulted in 23 deaths.

“It is striking to me that Tesla decided to go this far publicly and then settle. What this does do, though, is it says to other attorneys, we might settle. We might not always fight it. That is the signal,” said Bryant Walker Smith, Law Professor at the University of South Carolina with expertise in autonomous vehicle law.

The case follows two previous California trials over Autopilot that Tesla won by arguing the drivers involved had not heeded its instructions to maintain attention while using the system. Despite marketing features called Autopilot and Full Self-Driving, Tesla has yet to prove it can produce an autonomous car despite years of predictions by CEO Elon Musk that one was just around the corner, an expectation that partly underpinned Tesla’s soaring valuation.

Musk said Tesla plans to unveil a completely self-driving robotaxi on 8 August 2024, after Reuters reported Tesla scrapped an inexpensive car plan in favor of robotaxis. He also said that Tesla will offer U.S. customers a month’s free trial of its driver-assist technology, Full Self-Driving.

Tesla says Autopilot can match speed to surrounding traffic and navigate within a highway lane. The step-up “enhanced” Autopilot, which costs $6,000, adds automated lane-changes, highway ramp navigation and self-parking features.

The $12,000 Full Self-Driving option adds automated features for city streets, such as stop-light recognition. Tesla materials explain the systems warn that it does not make the car autonomous and requires a “fully attentive driver” who can “take over at any moment.”

Autonomous Driving May Lose Its Charm (If Not Already?)

Evangelos Simoudis, investor, author and corporate adviser, said:

“Companies are realising that attaining level 4 of autonomous driving is way more difficult and expensive than the industry predicted.”

Level 4 autonomous driving refers to the vehicle moving automatically in longitudinal and lateral axes and the driver does not have to keep their eyes on the road or supervise the vehicle. Last October, GM found itself in hot water after an accident involving a pedestrian with its robotaxi. It resulted in General Motors’ Cruise recalling 950 driverless cars from the roads across the United States and slapped with federal investigations, Tesla’s brake systems fault also resulted in a massive recall.

This was in light of Aptiv, auto parts maker’s announcing its stake reduction in the autonomous vehicle joint venture after incurring millions in losses. Motional is a joint venture between Aptiv and Hyundai Motor Company, which uses the IONIQ 5 electric car as its robotaxi. The EV is used in Las Vegas through Uber and Lyft.

“While our Motional joint venture continues to make progress on their technology road map, we’ve decided to no longer allocate capital to it,” Aptiv CEO Kevin Clark said during the earnings call. Aptiv’s 2024 profit forecast of US$5.55 to US$6.05 per share includes a non-cash equity loss of about US$340 million, or US$1.20 of earnings per share, related to Motional’s losses. 

In January 2024, GM said it would cut about $1 billion in spending on its troubled robotaxi unit, Cruise, in 2024, while Ford and Volkswagen walked out of their self-driving startup Argo AI in 2022, saying the technology was a long way off.

The exit from Argo came after three years of joint efforts to develop automated driving systems and more than US$3 billion in investments, highlighting the cost pressure and safety hurdles automakers face. Aptiv joins Ford Motor, Volkswagen and General Motors in cutting down or backing out of the technology, which is often touted as the future of mobility.

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