SEC, DOJ Probe Tesla Over Statements About Autopilot Functionality

WASHINGTON—Federal prosecutors and securities regulators are investigating whether Tesla Inc.

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misled consumers and investors about how its advanced driver-assistance system performed, according to a person familiar with the matter.

The Justice Department is looking at statements that Tesla and its executives made about the safety and functionality of the system known as Autopilot, the person said. The Securities and Exchange Commission is conducting a similar civil investigation, people familiar with the matter said.

Tesla did not respond to requests for comment.

The company’s Autopilot system is among the most well-known advanced driver-assistance systems and comes standard on new Teslas. The technology helps drivers with tasks such as steering and maintaining a safe distance from other vehicles on the highway, but does not make cars autonomous.

The US auto-safety regulator and the California Department of Motor Vehicles have also stepped up scrutiny of Autopilot.

Tesla tells drivers using Autopilot to pay attention to the road and to keep their hands on the wheel, but the company’s public messaging has at times appeared inconsistent with that guidance. Some, including the California DMV, have said the language Tesla uses to describe its technological risks gives drivers an outsized impression of its capabilities.

Tesla CEO Elon Musk said data recovered so far from a fatal crash in Houston showed the car’s Autopilot system was ‘not enabled.’ Local authorities said they believe the Tesla Model S was operating with nobody in the driver’s seat when it hit a tree. Photo: Scott J. Engle/Reuters

The DOJ’s criminal investigation involves authorities in Washington and San Francisco, the person said. The SEC has authority to civilly enforce investor-protection laws.

The SEC’s probe has not been previously reported. Reuters earlier reported the Justice Department’s criminal investigation.

A Justice Department spokeswoman and an SEC spokeswoman declined to comment.

The National Highway Traffic Safety Administration, the federal auto-safety regulator, launched an investigation of Autopilot last year after a series of crashes involving Teslas and first-responder vehicles stopped at emergency scenes. The agency recently escalated that probe. This summer, the California DMV accused Tesla of falsely advertising its vehicles as autonomous. Tesla has requested to be heard on the matter, records show.

Tesla has said driving with Autopilot engaged is safer than doing so without it. The company points to internal data showing that crashes have been less common when drivers were using Autopilot, although some researchers have criticized Tesla’s methodology.

The SEC and Justice Department have a long history of investigating Tesla and its chief executive, Elon Musk. Tesla in 2018 settled an investigation that alleged Mr. Musk misled shareholders—through statements he wrote on Twitter—about his ability and plans to take the company private for $420 a share.

Tesla and Mr. Musk settled the claims by paying $20 million each, and Mr. Musk was forced to step down as the company’s chairman. He also agreed to have company lawyers pre-approve any of his tweets that are related to material information such as Tesla’s new products, performance, projections and potential acquisitions or mergers.

Tesla has said in securities filings that federal prosecutors also investigated Mr. Musk’s take-private tweets and corporate statements about the production rates for his Model 3 vehicle. Prosecutors haven’t sought any more information on those subjects since Tesla last provided records in May 2019, the company said.

The SEC has also investigated Mr. Musk over his tardy disclosure of his personal stake in Twitter Inc.,

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as well as Tesla share sales by Mr. Musk and his brother, Kimbal Musk, made around the time that Mr. Musk polled Twitter about whether he should unload 10% of his stake in the electric car maker.

Write to: Dave Michaels at dave.michaels@wsj.com and Rebecca Elliott at rebecca.elliott@wsj.com

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Appeared in the October 28, 2022, print edition as ‘US Probes Tesla Statements on Autopilot.’

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