Just two short decades ago, cars that drove themselves were nothing short of science fiction. With BMW announcing that they plan to market an autonomous car by the year 2020 to the public, it is no longer a pipe dream. Self-driving cars are not fantasy, but they are being developed and perfected industry-wide.
Tesla is one such company that is developing current technologies for self-driven cars. Having the capacity to turn over the wheel and let a machine do the driving, the intention is to do away with human error by having a machine use sensors to help people avoid accidents and to lessen the fatalities experienced on highways and roads around the globe.
Disheartening for the industry, the first autonomous driving accident just made the news. The repercussions may come not from the accident itself, but rather from the fact that the company hid the accident from their shareholders. Omitting the information to their constituents at their shareholder’s meeting, when they knew, may have them in a whole heap of trouble legally, more so than the legality behind the accident itself.
The Securities and Exchange Commission has set their sites on Tesla Motors to investigate whether failing to disclose the fatal crash in their May shareholder’s referendum may be a breach of contract. The car accident occurred while the electric car was using the self-driving technology, which could spell huge trouble for the Tesla technology and bring about a lawsuit that could put not only their finances in trouble but their reputation and the ability to expand and build into the future.
On May 7th, Joshua Brown was driving a Tesla when a truck pulled in front of him on a highway in Florida. The National Highway Traffic and Safety Administration notified Tesla and with an auto accident lawyer in Santa Ana, they quickly went to work to investigate whether the self-driving technology was being used during the accident. The problem is that Tesla didn’t disclose the information to the proper people.
Not only was the accident being investigated to see if the technology was being used, but it was also being investigated as to whether there was a flaw in the operation of the auto operation. If it found that the accident was due to some glitch in the system, not only could that tank the Tesla car and lead to a recall, it could halt any production going forward. Surely that was information that those who were investing in the company should have been privy to.
Now the SEC is working on determining whether Tesla had an obligation to disclose the “material” event to investors in the company. Likely, knowing that it could lead to a dip in stock prices or even a crash, did they have a responsibility to make the accident known and to tell the information that they had about the incident?
Spokespeople for Tesla insist that they were under no obligation to tell investors. The technology is now being used in over 130 million cars worldwide, with only one incident with potential implication to their technology, to tell investors would be premature. Noting that there have been no other incidents to-date and that there was no conclusive evidence that their technology had anything to do with the accident, they would have done nothing but spread speculative information harming the company and do their shareholders more damage. Giving information without confirmation would do nothing but create an immediate sell-off.
Since the investigation was just beginning and it wasn’t even determined whether the auto-pilot technology was even being used, there was no obligation for the Tesla company to notify anyone. Without any conclusive evidence that their technology had anything to do with the crash at all, how could they possibly be responsible for dismantling a company without proof?
The SEC, however, is disputing their claims. Soon after finding out about the car accident, Tesla was able to do their own investigation to find that the driver was using their technology at the time. Even if the transportation authorities hadn’t yet found the evidence, the company had it in their hands.
There is very little fear that the SEC could charge Tesla for not disclosing the information to their shareholders at the time of the last meeting. They have released the information since, which has resulted in a fallout for the stock, but the likely scenario is that they weren’t trying to hide their findings, rather find a strategy and to know definitely that their car was at fault before creating a company fall out.