Tesla Faces Regulatory Scrutiny Over Full Self-Driving Technology, Stock Declines

Tesla's stock plummeted 8.77% this week following the announcement of a federal investigation into its Full Self-Driving (FSD) system. The U.S. National Highway Traffic Safety Administration (NHTSA) is probing 2.88 million vehicles after reports of traffic violations and crashes, including incidents of running red lights and improper lane changes.

The investigation comes at a critical juncture for Tesla, with analysts viewing FSD and the anticipated Robotaxi service as pivotal to the company's future valuation. Cathie Wood of Ark Invest projects a five-year price target of $2,600 per share, heavily contingent on the success of autonomous driving technology. The stock currently trades around $421, reflecting market skepticism amid regulatory headwinds.

Eighteen reports of FSD-engaged vehicles failing to stop at red lights have been documented, with six resulting in injuries. The outcome of the NHTSA probe could significantly impact Tesla's ability to realize its trillion-dollar Robotaxi ambitions.