Tesla Recall Hits Nearly 363,000 Cars With “Full Self-Driving” Software

Key takeaways

• Tesla is recalling almost 363,000 vehicles due to concerns about its Full Self-Driving Beta software
• The National Highway Traffic Safety Administration posted the recall notice on their website last Thursday
• Tesla will address the recall with an over-the-air software update so drivers don’t have to bring their vehicles in
• The recall highlights some of the safety concerns that autonomous driving critics have warned about

Last Wednesday, Tesla issued a safety recall for its nearly 363,000 vehicles using the carmaker’s controversial Full Self-Driving (FSD) Beta software upgrade. The company will address the issue underlying the recall with an over-the-air software update.

The recall was prompted by an investigation by the National Highway Traffic Safety Administration (NHTSA). In “rare circumstances,” according to the NHTSA, Tesla’s FSD Beta software can increase crash risk and put drivers in danger.

In a spot of good news, the government agency added that Tesla is unaware of any deaths or injuries resulting from the flaw.

Following the announcement, Tesla’s stock fell around 1% before fully recovering by EOD Wednesday. Unfortunately, it shed nearly 7% Thursday after increased press coverage before bleeding an additional 1.8% in after-hours trading.

Still, Tesla’s stock remains up almost 93% year-to-date after an abysmal 2022 tanked the company’s valuation.

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What is Tesla’s “Full Self-Driving” Beta?

Tesla’s Full Self-Driving Beta software serves as a driver assistance program that makes navigating roads less stressful.

The main “attraction” of FSD Beta is known as “Autosteer on City Streets,” which allows Teslas to navigate urban environments with limited driver input. The software’s features allow Teslas to automatically:

• Accelerate, brake and steer
• Stay within their lane
• Make safe lane changes
• Parallel park
• Slow and stop for traffic signs and lights

But contrary to popular belief, the FSD software isn’t designed to be human-free.

In fact, despite the name, Tesla itself considers the program to be “driver assistance” or “driver support” feature. The carmaker includes controls to ensure that human drivers keep their eyes on the road and hands on the wheel. In theory, this keeps drivers prepared to assume control in complex or dangerous driving situations.

Even the NHTSA’s safety recall notes that drivers are “responsible for operation of the vehicle whenever the feature is engaged.” As such, they “must constantly supervise the feature and intervene…as needed to maintain safe operation of the vehicle.”

The origins of FSD Beta

Tesla originally released FSD Beta to a handful of Tesla-approved drivers in 2020. Customers were required to have a history of safe driving practices before taking advantage of the program.

In November 2021, Tesla released the feature to everyone who had the FSD package. (FSD Beta currently costs a whopping $15,000 on top of the vehicle’s price.) Tesla owners must purchase and install the premium FSD package to join the Beta program.

Through this program, Tesla permits drivers to test and provide data for the as-yet unfinished program on U.S. roads.

To date, Tesla hasn’t disclosed exact FSD driver counts. But in the company’s last earnings call, CEO Elon Musk noted that “roughly 400,000 customers in North America” received the FSD Beta release.

About the Tesla recall

Recalls are quite common in the auto industry, with automakers of all sizes bringing vehicles in for safety-related repairs and replacements. But Tesla’s recall is slightly unusual. For one, it’s huge in scope: all 362,758 vehicles equipped with its novel FSD software are required to participate.

The reason for the recall is similarly novel.

According to the NHTSA recall notice, Tesla’s FSD features present an “unreasonable risk to motor vehicle safety based on insufficient adherence to traffic safety laws.” The agency added that FSD could violate traffic laws “before some drivers may intervene” at certain intersections.

Reads the recall notice: “The FSD Beta system may allow the vehicle to act unsafe around intersections, such as traveling straight through an intersection while in a turn-only lane, entering a stop sign-controlled intersection without coming to a complete stop, or proceeding into an intersection during a steady yellow traffic signal without due caution.”

The notice adds that FSD Beta “allows a vehicle to exceed speed limits or travel through intersections in an unlawful or unpredictable manner [that] increases the risk of a crash.”

For its part, Tesla reportedly doesn’t agree with the agency’s analysis. However, it agreed to develop and issue a software patch to the following vehicles equipped with or pending installation of FSD Beta:

• 2016-2023 Model S
• 2016-2023 Model X
• 2017-2023 Model 3
• 2020-2023 Model Y

The NHTSA says that Tesla will fix the issues via an “over-the-air software update” in the coming weeks. Drivers will maintain access to the FSD Beta system as Tesla builds and implements the software patch.

Highlighting known concerns

For years, safety experts have sounded the alarm about the capabilities of current “self-driving” technology.

The Tesla recall highlights one concern particularly poignantly: that humans aren’t designed to hand over control while remaining on alert.

Specifically, the argument goes, dangerous road conditions can arise in literally fractions of a second. That leaves little time for humans to detect, prepare for and respond to potential life-or-death situations.

In other words, telling drivers that their vehicles can handle road conditions while warning them to stay vigilant is just begging for trouble.

A word from Elon Musk

Notably, Tesla hasn’t responded to any media outlets’ request for comments, given that it disbanded its entire PR department in 2020.

But CEO Elon Musk has, unsurprisingly, tweeted on the topic, saying “The word “recall” for an over-the-air software update is anachronistic and just flat wrong!”

In response, the NHTSA stated that “manufacturers must initiate a recall for any repair, including a software update, that remedies an unreasonable risk to safety.” The agency added that it will “continue to monitor the recall remedies for effectiveness.”

Ongoing investigations

Musk and Tesla have often heralded FSD as the company’s future – but its safety record remains dubious. The Tesla recall merely accentuates that reality.

Tesla’s mixed safety record

Tesla and Musk have often claimed that even FSD Beta is safer that human drivers. Musk highlighted “published data” from over 100 million miles of non-highway FSD driving in comments to investors last month.

Tesla also releases quarterly safety reports that it says shows cars using Autopilot – FSD’s less-capable predecessor – are less likely to crash than the average vehicle.

However, these comparisons don’t consider outside variables, such as the road location or type and age of the car. (In general, crashes are less common in urban areas and among newer and luxury vehicles.)

And of course, that’s not to say that Teslas have never been involved in self-driving-related accidents. Federal data suggests that Autopilot-enabled Teslas have been involved in over 630 crashes since July 2021.

Several of these accidents have been particularly high-profile, given Autopilot’s seeming affinity for smashing into parked emergency response vehicles.

In fact, the latest high-profile crash occurred just Saturday when a Tesla crashed into a parked fire engine on a California freeway. One fatality and one injury were reported at the scene. It’s unknown if the vehicle was under the driver’s control or using Tesla’s Autopilot or FSD Beta system.

The recall is just the first step

The NHTSA stated that the Tesla recall is just one piece in an ongoing investigation into Tesla. Though “this recall seeks to address a specific set of concerns identified by the agency,” it says, the recall doesn’t address earlier problems. “Accordingly, the agency’s investigation into Tesla’s Autopilot and associated vehicle systems remain open and active.”

The NHTSA added that Tesla has reported at least 18 warranty claims related to driver assistance programs between May 2019 and September 2022. (Tesla has said it’s unaware of any injuries or deaths related to those incidents.)

The safety agency itself has identified nearly 275 crashes involving at least one of Tesla’s driver assistance programs.

NHTSA’s acting head Ann Carlson said in January, “We’re investing a lot of resources. The resources require a lot of technical expertise, actually some legal novelty, and so we’re moving as quickly as we can, but we also want to be careful and make sure we have all the information we need.”

And last month, Tesla disclosed to investors that it “has received requests from the U.S. Justice Department for documents related to Tesla’s Autopilot and FSD features.”

But Tesla has received some recent positive press, too.

Just last week, the Biden Administration announced that Tesla would participate in a nationwide public charging network for EVs. Going forward, Tesla will permit other carmakers’ electric vehicles to fuel up at its nationwide Supercharger network.

The bottom line on Tesla’s recall

Elon Musk and co. have made the news this year…a lot. Like, a lot a lot. No wait, there’s more. (And one more, just for good measure.)

And that’s just one company on our radar, and the radar of millions of other investors.

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