Tesla’s Twitter Woes Ramp Up

By Staff Writer December 19, 2022 303

Tesla, under the stewardship of CEO Elon Musk, has been taking a drubbing in 2022’s Q4. Two areas that look to spell trouble for Tesla in 2023 involve the public's confidence in Musk at the helm of Twitter and Tesla’s overblown autonomous driving claims. Since Musk bought Twitter for $44 billion in October, double its estimated value (at the time, Twitter's valuation continues to fall), Tesla has been in an intertwined free fall with the social media platform.   

On Friday, Tesla’s shares had fallen to $150, a two-year low, having lost 55% of its share value so far this year (compared with losses of around 18% for the S&P 500 index). This spurred Oppenheimer Analyst Colin Rusch to downgrade shares of Tesla to perform from outperform, saying he can no longer 

Within minutes of posting the poll, more than one million people had voted.

In what may turn out to be another Musk attempt to affect stock shares via tweeting, on Sunday the self-proclaimed chief Twit, posted one of his rule-by-decree polls asking the twitterverse: “Should he step down as Twitter's CEO?” He received a resounding yes and Tesla stock had a 2% bounce on opening trading Monday morning, providing more fuel to the fire linking Musk's behavior on Twitter and Tesla’s Q4 stock meltdown. Wedbush analyst Dan Ives in a note on Thursday described Musk's handling of Twitter and his selling off of Tesla stock to stem the wound as a “funding nightmare.” He accused Musk of treating Tesla as an ATM machine. “The nightmare of Musk owning Twitter has been an episode out of the Twilight Zone that never ends and keeps getting worse,” Ives said, noting that Musk signaled in April he was done selling Tesla stock. Musk sold another $3.6 billion worth of Tesla stock last week, totaling $23 billion sold this year. 

Adding another dimension to Tesla's confidence woes, prosecutors in Washington and San Francisco are deciding whether to bring criminal charges against the automaker, contending Tesla misled consumers, investors and regulators by making unsupported claims about its driver assistance technology’s capabilities. 

The U.S. Department of Justice (DoJ) launched the previously undisclosed investigation last year following more than a dozen crashes, some of them fatal, involving Tesla’s driver assistance system known as Autopilot, which was activated during the accidents, the drivers said.

 

The family of Walter Huang filed a wrongful death lawsuit against Tesla, saying the company's Autopilot feature is defective and resulted in a fatal crash on U.S. 101 in Silicon Valley on March 23, 2018

 

Beginning in 2016, Tesla’s marketing materials have touted Autopilot’s capabilities. Musk described the tech as “probably better” than a human driver and last week he claimed Tesla’s newest software would be an upgraded version to “full self-driving,” allowing customers to travel “to your work, your friend’s house, to the grocery store without you touching the wheel.” A video currently on the company’s website says: “The person in the driver’s seat is only there for legal reasons. He is not doing anything. The car is driving itself.”  

In what would seem a direct contradiction of all the Autopilot hype, Tesla’s website also explicitly warns drivers that they must keep their hands on the wheel and maintain control of their vehicles while using Autopilot. The Tesla technology is designed to assist with steering, braking, speed and lane changes but its features “do not make the vehicle autonomous.”

Because of Tesla’s warnings about over-reliance on Autopilot, the Justice Department may have an upward battle in building its case. Barbara McQuade, a former U.S. attorney in Detroit who prosecuted automotive companies in fraud cases, said investigators likely would need to uncover evidence such as emails or other internal communications showing that Tesla and Musk purposely made misleading statements about Autopilot’s capabilities.

The question remains will Musk step aside from Twitter? And will confidence in his ability to run Tesla rebound in 2023? Stay tuned.

 

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Last modified on Friday, 23 December 2022 14:33