Tesla Stock Falls. The Safety of Its Full Self Driving Is Under Investigation.

Coming into Thursday trading, Tesla stock was up about 9% so far in 2025 and up about 79% over the past 12 months. (Michael M. Santiago/Getty Images)

Key Points

• The National Highway Traffic Safety Administration opened an investigation into Tesla’s Full Self-Driving technology, potentially affecting millions of vehicles.
• The investigation will assess the scope and safety consequences of FSD executing maneuvers that violate traffic safety, such as red light and lane changes into oncoming traffic.
• Tesla stock fell 0.7%. They are up 36% since its robo-taxi service launch in June, driven by AI potential.

Tesla stock fell Thursday as the National Highway Traffic Safety Administration opened an investigation into the company’s Full Self-Driving driver assistance technology.

Millions of vehicles could be affected.

Shares of the electric-vehicle maker lost 0.7%, closing at $435.54, while the S&P 500 and Dow Jones Industrial Average fell 0.3% and 0.5%, respectively.

The move came as NHTSA said its Office of Defects Investigation would open a “preliminary evaluation to assess the scope, frequency, and potential safety consequences of FSD executing driving maneuvers that constitute traffic safety violations.” It cited two scenarios: Cars traveling into an intersection on a red light and cars changing lanes into oncoming traffic.

FSD is Tesla’s highest-level driver assistance technology that is capable of doing most driving tasks most of the time. It still requires driver supervision 100% of the time, which NHTSA notes.

For NHTSA, investigations can precede recalls, which typically don’t take cars off roads or remove features. Millions of vehicles are recalled by dozens of vehicle makers each year. It’s part of the process of keeping cars on U.S. roads safe.

For investors, FSD-related investigations and recalls are definitely something to watch. Tesla uses AI to train its cars to drive themselves, and AI opportunities are what have investors most excited about the stock.

Tesla launched a self-driving robo-taxi service in Austin, Texas, in June. Coming to Thursday trading, Tesla’s stock was up 36% since then. And AI potential has driven several recent price target increases on Wall Street, including hikes from RBC, Baird, Stifel, and Wedbush.

Tesla recalls often involve large numbers because it uses software to control many operations. Updating the software constitutes a recall of every car running it.

Tesla recalled some two million vehicles in 2023 to address concerns about the misuse of its Autopilot feature, which is a lower-level driver assistance technology than FSD. Tesla made changes to driver monitoring via a software update to encourage drivers to pay attention.

Tesla uses an interior camera, flashing screens, and sometimes requires a touch of the steering wheel to ensure drivers are at the ready when FSD is engaged.

Write to Al Root at allen.root@dowjones.com