Regulatory Scrutiny Intensifies for Tesla's Autonomous Driving Ambitions

Tesla's autonomous driving tech faces a formal US investigation and a European rollout delay, while the company advances hardware plans amid cautious market sentiment.

Tesla finds itself navigating an increasingly complex regulatory landscape on both sides of the Atlantic. The company's core autonomous driving technology is facing heightened examination from authorities, creating new obstacles for its flagship software even as it manages other safety concerns.

US Investigation Escalates, European Rollout Delayed

The National Highway Traffic Safety Administration (NHTSA) elevated its probe into Tesla's Full Self-Driving (FSD) system this week, initiating a formal engineering analysis. This action encompasses more than 3.2 million vehicles manufactured since 2016. Regulators are reviewing crash data that suggests potential vulnerabilities in the camera-only system during poor visibility conditions, including fog, heavy rain, or glaring sunlight. While Tesla has been developing software updates for the past year, officials have raised questions about possible gaps in the company's data collection and reporting.

Simultaneously, the automaker encountered a setback in Europe. The anticipated approval for FSD from the Dutch vehicle authority, RDW, has been postponed. The new target date is April 10, a delay from the originally planned March 20. This shift likely pushes any broader European Union-wide introduction of the system into the summer months.

Hardware Development Continues Amid Market Caution

Despite these regulatory challenges, Tesla is pushing forward with its hardware roadmap. CEO Elon Musk has targeted December 2026 for the completion of the design phase for the next-generation AI6 chip. This processor, to be manufactured by Samsung, is expected to significantly outperform current systems while reducing costs. In a separate safety development, Tesla has issued a specific update for its Cybertruck model. The update utilizes the vehicle's external cameras to temporarily prevent doors from opening when cyclists are approaching.

Market sentiment, however, remains cautious. Tesla's share price has declined by over 14 percent since the start of the year, reflecting investor concerns. Analysts are forecasting a 12 percent drop in North American electric vehicle sales for the current fiscal year. Wall Street's rating of the stock reflects this tempered outlook. Morgan Stanley recently downgraded Tesla to a "Hold" rating, arguing that much of the positive speculation—including a $60-per-share valuation attributed to the Optimus robot project—is already fully priced into the stock.