SAFETY: Did Tesla Hide Fatal Crash News From Potential Investors?

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The news that a Tesla Model S was involved in a fatal crash as a result of its Autopilot feature was not good news for Tesla. The company is now in defensive mode, reiterating the fact that the feature requires the driver’s attention at all times and is not something that can truly drive the car while you zone our or read a book.

There are reports that the driver of the car involved in the fatal crash was watching a movie, which goes against Tesla’s instructions for using Autopilot. That may be true, but many are questioning whether the name itself is misleading and possibly confusing to some Tesla owners.

While Tesla defends its technology, it is also coming under fire for when it chose to reveal news of the accident.

Tesla learned about the May 7 crash not long after it happened, but didn’t notify regulators until nine days later on May 16. It then took the National Highway Traffic Safety Administration until June 30 to announce the news to the public.

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In the meantime, on May 18, Tesla and CEO Elon Musk decided to sell over $2 billion of Tesla stock at $215 per share without saying anything about the fatality. That seems like a rather large omission, but Musk says otherwise.

Tesla Autopilot

In an email exchange with Fortune, Musk wrote that the Autopilot death, “is not material to the value of Tesla.”

Taking a look at the value of Tesla’s stock over the course of the news, it looks like the man is right. Although the stock dropped from $212 to $206 on Thursday, it ended the day at $216. That makes it look like investors were initially jolted by the news, but quickly decided it wasn’t such a big deal after all.

While it truly may not have affected overall investor confidence in Tesla, that doesn’t change the fact that the company chose not to reveal an important piece of news before their May 18 stock offering. They may have believed it was immaterial to the company’s value, but there was no way to be sure investors would agree with that assessment.

The investigation into the accident is not complete. There’s the possibility that things will not look as rosy for Tesla once it’s all over. Investors who bought stock on May 18 didn’t have the opportunity to weigh that risk before they backed the company.

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Tesla further defended its position saying, “Tesla does not find it necessary, nor does any automaker, to share the details of every accident that occur in a Tesla vehicle. More than a million people die globally every year in car accidents, but automakers do not disclose each of these accidents to investors, let alone before those investigations are complete and without regard to what the results of those investigations end up being.”

That may be the case, but the technology that makes Tesla unique, including its Autopilot feature, is one of the big reasons people choose for investing in the company. Was it wrong, in this case, not to disclose the accident? Tesla thinks they’re in the clear, but investors who didn’t have the chance to make that call for themselves may disagree.

Nicole Wakelin

Nicole Wakelin