David Shepardson

WASHINGTON (Reuters) – Tesla Inc is recalling more than 362,000 cars in the U.S. to update its Full Self-Driving (FSD) Beta software after U.S. regulators said on Thursday the driver assistance system did not comply with traffic safety laws and may cause accidents.

The National Highway Traffic Safety Administration (NHTSA) said Tesla’s software allows the vehicle to “exceed speed limits or drive through intersections in an illegal or unpredictable manner that increases the risk of a crash.”

Tesla said it disagreed with NHTSA’s analysis, but ultimately agreed to the safety agency’s request in January. The electric car maker has previously clashed with the NHTSA, which has a number of pending investigations into Tesla, over other safety issues and recall requirements.

Tesla, whose shares fell 5.7% to $202.04, will release a free over-the-air (OTA) software update. The electric car maker said it is not aware of any injuries or deaths that may be related to the recall. The automaker said it has 18 warranty claims.

The recall affects 2016-2023 Model S and Model X, 2017-2023 Model 3 vehicles. and 2020-2023 Model Y equipped with FSD Beta software or pending installation.

US Senators Ed Markey and Richard Blumenthal, both Democrats, said the recall was “long overdue”, adding that “Tesla must finally stop exaggerating the real capabilities of its cars”.

This is a new setback for Tesla’s driver assistance system. CEO Elon Musk has repeatedly fallen short of his goals for self-driving, which he has touted as a potential cash cow.

The move is a rare intervention by federal regulators into a real-world testing program that the company sees as critical to the development of self-driving cars.

The recall comes less than two weeks before the company’s March 1 investor day, during which Musk is expected to promote the electric car maker’s artificial intelligence capabilities and plans to expand its vehicle lineup.

While Tesla’s Autopilot feature assists with steering, acceleration, and braking for other vehicles and pedestrians within its lane, the company says FSD is a more advanced system “designed to provide more active guidance and steering assistance” under active supervision of the driver.

Tesla said it had $2.9 billion in future period revenue through the end of 2022 related to “access to our FSD features, Internet connectivity, free Supercharging programs and over-the-air software updates, primarily for vehicle sales.”

Tesla could not be reached for comment, but Musk tweeted Thursday that the word “revoke” for an over-the-air software update is “anachronistic and just plain wrong!”

In the fourth quarter, Tesla released the FSD Beta to nearly all of its 400,000 FSD customers in the United States and Canada, when it admitted that FSD revenue was $324 million. The company said it expects to recognize nearly $1 billion in deferred revenue that remains over time as software updates are delivered.


Musk has positioned FSD technology as one of several AI initiatives at Tesla.

Last May, in an interview with members of the Tesla Owners Club, Musk called full self-driving “necessary” for the company. “It’s really the difference between Tesla being worth a lot of money or nothing at all.”

The NHTSA is continuing a 2021 investigation into 830,000 Tesla vehicles equipped with the Autopilot driver assistance system over a series of accidents involving parked emergency vehicles. The NHTSA is testing whether Tesla cars are adequately paying attention to drivers. NHTSA said Thursday that despite the FSD recall, “the investigation into Tesla’s Autopilot and related vehicle systems remains open and active.”

Tesla said that in “some rare cases … the feature could potentially violate local traffic laws or customs while performing certain driving maneuvers.”

Possible situations in which the problem could occur include driving or turning at certain intersections during a yellow light and changing from certain lanes to continue straight ahead, according to NHTSA.

NHTSA said that “the system may not respond adequately to changes in posted speed limits or may not adequately account for the driver’s adjustment of vehicle speed to exceed posted speed limits.”

Last year, Tesla recalled nearly 54,000 U.S. vehicles with FSD Beta software that could allow some models to perform “roll stops” and not come to a complete stop at some intersections, posing a safety risk, NHTSA said.

Tesla and NHTSA argue that FSD’s advanced control features do not make cars autonomous and require drivers to pay attention.

In December, the NHTSA opened two new special investigations into crashes involving Tesla vehicles, including an eight-car crash in San Francisco on the Bay Bridge in which the driver reported a malfunction in the FSD function.

Since 2016, NHTSA has opened more than three dozen investigations into Tesla crashes involving the suspected use of advanced driver assistance systems and 19 reported deaths.

(Reporting by David Shepardson in Washington, additional reporting by Joseph White in Detroit and Hyun Joo Jin in San Francisco Editing by Ben Clayman, Peter Henderson and Matthew Lewis)




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