Another Model X crash, driver says autopilot was engaged

[msnow]

If you use it in conditions where it is supposed to be used and works best - it is GREAT.

just like a normal cruise control. If you turn on normal cruise control in stop and go traffic or back roads it is a pita.

I've had the usual bounciness, veering to large trucks on my right, freak out from too close center dividers, TACC breaking to aggressively and that's all in seemingly perfect conditions so yeah I play with it but I don't completely trust it therefore I'm not relaxed. Again, I see improvement and I'm glad I have it to experiment with.

 

[S4WRXTTCS]

I've had the usual bounciness, veering to large trucks on my right, freak out from too close center dividers, TACC breaking to aggressively and that's all in seemingly perfect conditions so yeah I play with it but I don't completely trust it therefore I'm not relaxed. Again, I see improvement and I'm glad I have it to experiment with.

On long freeway drives what percentage of the time do you use TACC by itself? With AP I've had all the issues you've had, but I haven't had the TACC braking too aggressively issue. Of course I don't live in southern california where drivers are a lot more aggressive. When I was in cali on a road trip I was glad to get out of there. In the pacific northwest a TACC setting of 3-5 works great. The only irksome issues is sometimes it will aggressively slow down for a false positive. It's not infallible, but it's certainly better than adaptive cruise control systems of the past.

 

[omarsultan]

As an investor I would want it disclosed that there was a fatal accident that is being investigated and Autosteer was active. Of course the legal/compliance people should wordsmith it including any nuances. But as someone who is in the risk and compliance business it's better (and safer) to disclose than not to. Shareholders could then weigh whether potential media attention or liability would have an impact on their investment decision.

I kinda want to agree with you--certainly the second part. For the former, I think it perhaps depends on whether the AP usage was relevant to the accident. For example, if you have a driver using AP with Tesla's established parameters and he/she get t-boned by a truck, is the fact auth AP was engaged relevant to the accident and any resulting injuries? I understand your point, but I think there is also a desire to not spawn unnecessary news cycles.

 

[NikeWings]

I'm certain that withholding a material fact (if that was the case, big "if") is both unlawful from the perspective of the SEC and opens a company up to shareholder lawsuits. So it's a double whammy as I understand it.
I also recall someone from Tesla Friday, in the context of the fatality, saying that they did not have liability insurance so they would have to self fund a judgement in that regard. That may be a harbinger of their coverage for shareholder lawsuits, don't know for sure.
I'd be very interested to hear what @Eclectic has to say on this.

TSLA has been battling 10b-5 litigation since 2013. It was dismissed in 2014 and currently under appeal. This type of event usually falls under E&O insurance and D&O if fraud is involved. Liability insurance is a broad term but generally applies to the product itself not the actions of officers. Company Lenders are highly unlikely to advance money without adequate insurance. Perhaps they are self funding health insurance which is very common.

 

[NikeWings]

TSLA has been battling 10b-5 litigation since 2013. It was dismissed in 2014 and currently under appeal. This type of event usually falls under E&O insurance and D&O if fraud is involved. Liability insurance is a broad term but generally applies to the product itself not the actions of officers. Company Lenders are highly unlikely to advance money without adequate insurance. Perhaps they are self funding health insurance which is very common.

Anyway, it would all be disclosed in Ks and Qs and underwrite docs, which I have not read. i guess its time to do so and avoid more pages of speculation.

 

[calisnow]

I've been a securities lawyer for 20 years and much of my work focuses on SEC compliance, which often includes determinations of materiality. ...If we don't agree with what the company is trying to do, we simply won't give the opinion that is required for an SEC offering and that would kill the offering. With that said, I think that Tesla's securities lawyers made a mistake in deeming this to not be material ...

...as someone who is in the risk and compliance business it's better (and safer) to disclose than not to.

Grant me that attorneys are human, and thus imperfect. Also grant me that it might be a difficult personal position to be in, to be the attorney who passionately argues for disclosure of something which could lower the value of an offering that the CEO desperately needs to get liquidity to continue R&D and operations.

Is it then perhaps possible that when faced with a desperate CEO, one who usually lives by "it is better to get forgiveness than permission" an attorney, faced with a materiality call which could be argued either way - might just go with the call that gives the CEO what he wants?

And I am certainly no conspiracy theorist - not at all. But it is not too difficult for me to imagine whispers in ears of "We know this is a difficult call for an attorney. We certainly understand how making a mistake could impact your career and reputation." Suitcases filled with 8 figures worth of cash are not much when looking at multi-billion dollar offerings, etc. Or, if that's too crude - a quiet understanding of a very cushy 7 figure yearly contract for life, etc.

Okay it's late and I've seen too many movies.

 

[Skotty]

You can roll anything with enough effort and the right application of force. The X is still probably the least likely to roll over compared to any other CUV or SUV.

 

[NikeWings]

Is it then perhaps possible that when faced with a desperate CEO, one who usually lives by "it is better to get forgiveness than permission" an attorney, faced with a materiality call which could be argued either way - might just go with the call that gives the CEO what he wants?

Okay it's late and I've seen too many movies.

Highly unlikely. Issuing securities at this level involves the board, internal counsel, external counsel, the underwriters (at least 5 here) and each of their respective in house lawyers and external law firms. They are all at risk, huge risk from any such intentional action. Further, even if TSLAs internal counsel was soft for the boss, the underwriters' external law firms care little about Tesla. They are hired independently to protect each underwriter on the hook (Goldman, Morgan Stanley etc) by identifying all risks, including come back risk. And if there was any fraud or misrepresentation to them....... it'd be the end of Tesla, SpaceX, SolarCity and our extended service agreements.

The offering proceeded because the collective position of all Counsel and Bankers involved, was that the absolute materiality tests failed.

 

[Matias]

I agree with you - it was such an obviously bad show that I got worried about Musk's physical and mental state when I read them - to me those tweets and e-mails to Fortune read like a man who isn't sleeping, is being pushed way too hard and is under so much stress he's losing his composure and what little filter he had and that his nerves are raw.

He does the work of three men under normal conditions. Now he has a fatality to deal with, vicious press, missed targets, the Solar City mini-debacle, an NHTSA investigation and just got a divorce. If I was religious I'd be praying for God to grant him physical and mental strength right now.

Yep. He is still after all a human being, and there's a limit for everyone.

 

[SSD420]

I wish that all of this AP stuff would just go away.

Me too. I take delivery of my long awaited MX on Friday, and all my ICE driving friends are all up in arms about what has been in the media lately.

 

[Gymee]

Especially if the road slopes downward at the leading edge.

 

[Filter]

Me too. I take delivery of my long awaited MX on Friday, and all my ICE driving friends are all up in arms about what has been in the media lately.

Enjoy your X. Forget about your friends. They won't get to drive your car everyday. My friends told me my tesla was "just marketing hype" until I took them for a drive. Then they started to ask how to get one .

Congrats on your purchase!
Post pics and enjoy autopilot. Just use common sense while using it, like anything else.

I'm jealous of your X!

 

[zambono]

Me too. I take delivery of my long awaited MX on Friday, and all my ICE driving friends are all up in arms about what has been in the media lately.

Well when they ask to take a drive in your new X tell them it's too unsafe for them

 

[msnow]

Anyway, it would all be disclosed in Ks and Qs and underwrite docs, which I have not read. i guess its time to do so and avoid more pages of speculation.

I found this in an L.A. Times article from last week:
"Product liability claims could be costly for Tesla, which notes in Securities and Exchange Commission filings that the company -- not an insurer -- would be on the hook to pay any such claims.

“Any product liability claims will have to be paid from company funds, not by insurance,” the company notes in the “risk factors” section of its latest annual report."

Fatal Tesla crash exposes lack of regulation over autopilot technology

 

[buckerine]

Highly unlikely. Issuing securities at this level involves the board, internal counsel, external counsel, the underwriters (at least 5 here) and each of their respective in house lawyers and external law firms. They are all at risk, huge risk from any such intentional action. Further, even if TSLAs internal counsel was soft for the boss, the underwriters' external law firms care little about Tesla. They are hired independently to protect each underwriter on the hook (Goldman, Morgan Stanley etc) by identifying all risks, including come back risk. And if there was any fraud or misrepresentation to them....... it'd be the end of Tesla, SpaceX, SolarCity and our extended service agreements.

The offering proceeded because the collective position of all Counsel and Bankers involved, was that the absolute materiality tests failed.

It's also entirely possible that the incident WAS in fact included in the offering docs, albeit in the form of a generic risk factor about how some of Tesla's technology is new, unproven, and could lead to potential lawsuits due to driver error or otherwise. Seems like a perfectly reasonable risk factor to include even if the incident hadn't happened.

 

[Canuck]

He should have just said "Our counsel made a determination that the information was not material and I stand by their determination."

Agreed but you have to take the good with the bad with the likes of an Elon Musk. You can find a ton of CEO's who do and say the right things legally but don't have the balls to make the tough decisions, or theinsight to make the wise ones, but they keep the lawyers happy. I'll take brash Elon any day, flaws and all, over a proper and considered CEO since these traits are, for the most part, mutually exclusive, at least from my observations.

 

[cjt3]

Anyway, it would all be disclosed in Ks and Qs and underwrite docs, which I have not read. i guess its time to do so and avoid more pages of speculation.

Having just gone through a similar process with securities lawyers, it amazes me that anyone who reads corporate filings would choose to invest in a company based on what is disclosed in the risk factors section. (Obvious answer is that no one actually does read the corporate filings.) As to the current topic, Tesla does disclose this:

We may become subject to product liability claims, which could harm our financial condition and liquidity if we are not able to successfully defend or insure against such claims.

Product liability claims could harm our business, prospects, operating results and financial condition. The automobile industry experiences significant product liability claims and we face inherent risk of exposure to claims in the event our vehicles do not perform as expected resulting in personal injury or death. We also may face similar claims related to any misuse or failures of new technologies that we are pioneering, including autopilot in our vehicles and our Tesla Energy products. A successful product liability claim against us with respect to any aspect of our products could require us to pay a substantial monetary award. Our risks in this area are particularly pronounced given the limited number of vehicles and energy storage products delivered to date and limited field experience of our products. Moreover, a product liability claim could generate substantial negative publicity about our products and business and would have material adverse effect on our brand, business, prospects and operating results. We self-insure against the risk of product liability claims, meaning that any product liability claims will have to be paid from company funds, not by insurance.

 

[msnow]

Agreed but you have to take the good with the bad with the likes of an Elon Musk. You can find a ton of CEO's who do and say the right things legally but don't have the balls to make the tough decisions, or theinsight to make the wise ones, but they keep the lawyers happy. I'll take brash Elon any day, flaws and all, over a proper and considered CEO since these traits are, for the most part, mutually exclusive, at least from my observations.

I worked for a CEO (Fortune 20 company) that was brash but also knew to choose his words carefully wrt analysts and investors, the press not so much. I think a *great* CEO has a good balance. Elon is both CEO and Chairman and some of the Directors are friends and family. That's important to know from a governance perspective.

 

[brkaus]

The day the news about NTSB looking at the crash was made public, the stock actually went up slightly. I would say its pretty clear that it is not material.

 

[brkaus]

I found this in an L.A. Times article from last week:
"Product liability claims could be costly for Tesla, which notes in Securities and Exchange Commission filings that the company -- not an insurer -- would be on the hook to pay any such claims.

“Any product liability claims will have to be paid from company funds, not by insurance,” the company notes in the “risk factors” section of its latest annual report."

I don't believe this to be any different from most major companies? All rental car companies I have used recently are self insured. I believe major automakers are the same. No insurance company (that I could find) is paying for GM recalls or liability. Ford / Firestone were responsible for their issues.