Expose Shows Why Tesla Is a Stock to Avoid

Reuters just published a devastating article about Tesla (TSLA).

In October, I named the electric-car maker one of my “Stinky Six” stocks to avoid. It’s down 5% since then, while the S&P Index has jumped 9%…

The Reuters article exposes what I think is massive fraud on customers, regulators, and investors. It highlights why AI trainers don’t trust Tesla’s full self-driving (“FSD”) technology – or its safety stats:

Tesla CEO Elon Musk says FSD will soon make all Teslas fully autonomous. But interviews with nine former labelers and a former Tesla self-driving engineer show that the technology continued to struggle in recent months to execute basic maneuvers – such as avoiding emergency vehicles or stopping for school buses loading or unloading students.

Despite such dangerous shortcomings, Musk and other executives have increasingly touted FSD’s safety as they pushed Tesla to stage public displays of the fully autonomous capability the CEO has promised investors every year for a decade…

FSD is widely regarded as capable of navigating many driving situations, sometimes for long periods. But full autonomy has proven elusive for Tesla and other companies, as it demands flawless execution by the technology – including in the most complex driving scenarios.

The article quotes numerous insiders warning about the dangers of FSD:

Seven of the former data labelers told Reuters they wouldn’t trust FSD to drive them. “We have all seen it fail,” one said… One veteran self-driving engineer, who reviewed Tesla crash data for years, called its safety claims “bullshit.”

“Definitely,” the engineer said, “don’t trust Elon on this”…

The former employees reported regularly seeing FSD fail at basic tasks, including pulling over for emergency vehicles and giving motorcyclists enough space. Sometimes, they saw FSD-piloted vehicles fail to brake on freeway off-ramps, including a case where a Tesla hit a concrete wall. (The footage, they said, didn’t show whether anyone was hurt.) Two employees said clips showed FSD failing to avoid construction zones. In one such incident, a Tesla drove into the zone, nearly striking workers, one of the people said.

Keep in mind what Musk said in 2019: “I consider autonomous driving to be a basically solved problem. We’re less than two years away from complete autonomy.”

Tesla Keeps Safety Data Secret

I’ve said it before and I’ll say it again – Musk’s recklessness is going to get someone killed. More from Reuters:

Inside Tesla, managers carefully controlled access to the videos. Because employees only see clips they’re assigned, they may or may not see FSD’s worst failures.

One data-labeling team focused on near-misses of pedestrians, three employees said. Known informally as the “trauma team,” one source said, these employees worked in Palo Alto, California, with special permissions to view the footage. Engineers closely guarded the trauma-team clips, but some footage would occasionally “slip through” to other teams, the person said.

The person and another employee said they saw clips showing drivers manually taking over at the last second when FSD failed to recognize pedestrians in crosswalks. Two other former employees recalled seeing videos last year of FSD-piloted Teslas nearly hitting children.

It’s little wonder that Tesla, unlike Alphabet’s (GOOGL) Waymo, doesn’t release its full safety statistics:

Waymo also points out shortcomings in its data and collaborates with outside researchers to publish its safety statistics in peer-reviewed journals.

Tesla, by contrast, seeks no peer review and publishes only top-line statistical safety claims while keeping its underlying crash data for Tesla cars secret.

Remarkably, Tesla’s stock hasn’t moved on this news. Trading at 215 times this year’s estimated earnings, it remains firmly at the top of my list of stocks to avoid.

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