Tesla’s biggest problem is still the Justice Department’s investigation

The aim of the investigation is to find out whether Tesla lied to customers and investors about the autonomous driving capabilities of its vehicles.

If you sat down to make a list of Tesla’s current challenges, you would sit there for a while. However, a larger problem is looming as the U.S. Department of Justice investigates whether Tesla misled investors, consumers and regulators about its vehicles’ self-driving capabilities. If this leads to criminal charges, it could be the biggest Tesla crisis ever.

A new report from Reuters details the federal investigation that has been ongoing since 2021, citing three sources who say the investigation is focused on whether Tesla committed wire fraud or securities fraud – two federal crimes that could potentially lead to criminal charges.

Tesla is also facing an investigation by the Securities and Exchange Commission over its claims against investors.

Reuters cites three unnamed sources familiar with the investigation as saying the probe is focused on Musk’s statements in which the Tesla boss suggested his cars were capable of fully autonomous driving. Which statements will be analyzed in detail was not disclosed. Nevertheless, there are many examples of him talking about how important autonomous driving is for Tesla’s future and how the manufacturer is and wants to remain a leader in this area.

Investigators are also taking a closer look at how Tesla represented its Autopilot and Full Self-Driving suites and whether those representations may have created the impression that the systems were more powerful than they actually were.

The Justice Department’s investigation is a serious matter as allegations of wire fraud and securities fraud have brought down other companies found to have misled investors about the performance of their technology. A notable example from recent years is Theranos, the popular Silicon Valley startup that was found to have lied about its blood testing procedures. Former CEO Elizabeth Holmes was sentenced to prison for investor fraud and conspiracy.

At the same time, it is unclear whether anyone at Tesla would have to expect this fee or any fee at all. “The investigation that fails to provide evidence of wrongdoing could result in criminal charges, civil penalties or forfeiture of action.” Reuters Reports. “Prosecutors are far from deciding how to proceed, one of the sources said, in part as they review extensive documents provided by Tesla in response to subpoenas.”

Still, the investigations by the U.S. Department of Justice and the U.S. Securities and Exchange Commission into the very technology on which Tesla has staked its future — Musk recently said the company is doing everything it can to achieve autonomy — are no small thing.

In 2016, Tesla released a video showing a model driving the model, according to an older Reuters report that quoted Ashok Elluswamy, Tesla’s director of autopilot software

In late April of this year, the National Highway Safety Traffic Administration concluded that Tesla’s Level 2 Advanced Driver Assistance System (ADAS), known as Autopilot, was not responsible for the 13 fatal crashes investigated. It concluded that there was misuse of the system and that “a weak driver engagement system was unsuitable for Autopilot’s permissive operating capabilities” – it was too easy to bypass Tesla’s safety systems designed to prevent misuse.

The investigation into Autopilot and FSD is ongoing and it is unclear when it will be completed.

Things have been a bit strange at Tesla lately. The automaker has laid off about 10% of its global workforce, including the entire division behind its sprawling Supercharger network, which is bigger and better than any other charging network currently available. Elon Musk says he wants to make an example of this round of mass layoffs to show how committed he is to streamlining the company’s business and cutting costs in the face of declining sales and increasing competition from other automakers, especially in China, to remain competitive.

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