If anyone remembers the 90s classic movie Tommy Boy, then you likely remember the part when, while driving down the road, a car’s hood unexpectedly flies open, completely blocking the driver’s vision. The incident ends safely, if alarmingly, and it’s certainly the kind of thing you don’t want to happen. Tesla (TSLA) found itself in a similar position, and put out a fix to address it. Shareholders called it too little, too late, apparently, and sent shares down nearly 5% in Tuesday afternoon’s trading.
The problem—which features a software issue that may fail to detect when the hood is unlatched—impacted around 1.85 million Tesla vehicles. Should the vehicle have this problem, the potential for a Tommy Boy-style situation emerges, allowing the hood to fly up and block vision until the driver can bring the car to a stop. The potential for an accident in the meantime is, thus, immense.
A host of models were part of the affected list, including Model 3 cars from 2021 to 2024, Model Y cars from 2020 to 2024, and Model S and Model X cars. Reports noted that the problem started in China back in March, and the software issue was subsequently found and addressed with an over-the-air software update. This marks Tesla’s second recall this year, after several models—including the Cybertruck—offered unusually small print on warning lights.
The Trouble with Autopilot
A hood that unexpectedly opens up might not be that much of a problem thanks to Tesla’s Autopilot and Full-Self Drive systems. A temporarily obstructed view would be a cause for brief alarm but it would be followed by instructions to the car to safely pull over. You’d be little more than startled. But new reports suggest that the Tesla Autopilot/Full-Self Drive system has one “fundamental flaw” that may be killing it. Or at least make it more readily fixed.
The problem, reports note, is that instead of pulling in other sensor data, like lidar or even outright radar, Tesla turns mostly to cameras. Thus, the reports note, the system can only respond to an object that it already knows how to respond to via training. Anything new or unexpected confuses the system.
Is Tesla a Buy, Sell, or Hold?
Turning to Wall Street, analysts have a Hold consensus rating on TSLA stock based on 11 Buys, 12 Holds, and seven Sells assigned in the past three months, as indicated by the graphic below. After a 17.25% loss in its share price over the past year, the average TSLA price target of $213.92 per share implies 4.02% downside risk.
