"Mad Max" mode - Is Tesla in trouble?

Tesla continues to experiment with the software of its cars, and the latest update has caught the attention of the American NHTSA, the federal agency responsible for road safety. The reaction in the stock market is lukewarm. Tesla's stock price is down more than two percent today despite a favorable climate following the publication of macroeconomic data, indicating that regulatory risk is starting to outweigh sentiment.
The company has introduced a new autonomous driving mode in its cars with the concerning name "Mad Max." The name naturally references action cinema and spectacular chases, which wouldn't be such a puzzling idea if it weren't for the fact that Tesla manufactures cars. Cars that still have a long way to go before proving to customers and regulators that their autonomous driving mode is safe. The manufacturer's description emphasizes "maintaining higher speeds and more frequent lane changes." However, user reports and media coverage suggest that the car in this mode ignores speed limits on the road. This immediately caught the attention of the regulator, who asked Tesla for detailed explanations as part of a broader investigation into the new FSD.

Federal regulators are well acquainted with Tesla and its CEO due to numerous investigations conducted in recent years. During its brief episode as an unofficial and unconstitutional part of the president's administration, the "DOGE" agency aimed at "optimizing" the federal budget caused irreparable damage to the work of many agencies and research institutes. However, Elon Musk did not manage to sufficiently influence the NHTSA, which continues a series of cases against the company. Today, the list of investigations has grown, and the company may face serious consequences if the agency concludes that endangering road users and breaking the law was intentional.

Currently, the NHTSA is analyzing the behavior of the driver assistance system in several million vehicles, including reports of traffic violations and collisions.
The legal environment remains challenging for the company, as reminded by the August court ruling in Florida with an awarded amount exceeding two hundred forty million dollars in a case related to Autopilot. Each new notification to the NHTSA may therefore increase the likelihood of further legal costs and product changes.
The timing of this software update is puzzling because the company released its third-quarter results this week. The results were received rather coolly despite solid revenues and successes in diversifying the company's portfolio. One must ask whether the company's shrinking margins over the years can afford further multimillion-dollar fines and lawsuits.
Time will tell how much patience regulators and investors still have. Such decisions, however, exert pressure on valuation and represent a risk that needs to be assessed.

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Source: xStation5