Is Tesla Motors Inc. on the NHTSA's Hot Seat ... Again?

Tesla Motors Model S. Photo: Tesla Motors.

It's no secret that distracted drivers are dangerous. Consequently, the National Highway Traffic Safety Administration, or NHTSA, has issued a set of voluntary guidelines to help cut down on secondary tasks that it believes "interfere inherently with a driver's ability to safely control the vehicle." The list includes in-vehicle electronic devices the driver uses to perform secondary tasks such as navigation, communications, and entertainment.

But the guidelines are "voluntary," right? Well, according to StrategyAnalytics, Tesla Motors (NASDAQ: TSLA  ) might be facing the NHTSA's hot seat, again, because of its 17-inch touch display. Is this something Tesla investors should worry about?

Is it more than a rumor?
StrategyAnalytics states, "The word on the street is that prior to his formal resignation and departure from the National Highway Traffic Safety Administration (NHTSA) three weeks ago, [chief administrator David] Strickland initiated a preliminary investigation regarding Tesla's lack of cooperation regarding NHTSA's revised driver distraction guidelines." 

Tesla Model S interior. Photo: Tesla Motors.

Further, StategyAnalystics, says: "The revised NHTSA guidelines govern everything from the display of images and text, to moving map images, scrolling lists, and manual text entry. The Tesla Model S allows drivers to freely browse the Internet, scroll lists, manually enter information, and view Web pages while driving – all on the vehicle's 17-inch touch display." 

Right now, we're dealing with just rumors, and StrategyAnalytics' attempts to reach the NHTSA for confirmation have gone answered -- as have my own attempts. However, if this rumor turns out to be true, here's what investors could expect.

A look in the crystal ball
In the short term, a new NHTSA investigation into Tesla could have an immediate, and negative, impact on Tesla's stock price. Remember that Tesla's stock price took a dive following the report of two vehicle fires associated with undercarriage strikes, after which the NHTSA opened a "preliminary evaluation to examine the potential risks associated with undercarriage strikes on model year 2013 Tesla Model S vehicles." 

Model S touchscreen. Photo: Wikimedia Commons.

However, if the NHTSA finds that Tesla's touchscreen interface is a serious distraction to drivers, even though the steering wheel also has controls that the driver can use, it's feasible that Tesla could remedy the problem by sending out an over-the-air update that disables the touchscreen while driving. Of course, any such update would depend on the NHTSA's findings, and Tesla's touchscreen technology.

Tesla's future
Based on Tesla's performance and history, it's doubtful that Tesla investors should be overly concerned by an investigation into the touchscreen. However, that's not to say Tesla is an investment without serious risk.

As I recently pointed out, the real risk to Tesla's future is its battery, and the fact that it's not nearly as environmentally friendly as one would initially expect. Plus, hydrogen fuel cell vehicles are getting ready to launch in America, which means BEVs could face increased competition. Consequently, while it's unlikely that a new NHTSA investigation into Tesla's touchscreen will have a lasting impact on Tesla's stock, that's not to say Tesla's bright future is guaranteed. Indeed, there are serious concerns with Tesla in the long term, and Tesla investors would do well to especially keep Tesla's battery problems in mind.

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Read/Post Comments (12) | Recommend This Article (8)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 26, 2014, at 12:19 PM, JackB125 wrote:

    Your previous article on the problems with Tesla's battery has received almost 200 comments -- almost all of which find fault with the article.

    I don't see hydrogen fuel cell vehicles ever competing with BEV's.

    H2 -- the smallest of all molecules is very difficult to contain. The tiniest of pinholes, a connection that is not absolutely 100% perfect & and you have a leak.

    The is almost no infrastructure for Hydrogen while the current electrical grid is the backbone for BEV's.

    Also, have you ever seen a hydrogen fire? The are virtually invisible & this makes them extremely dangerous. Many serious lab accidents with H2 fire have occurred due to people walking right into flames that they could not see.

    On to production...

    The only clean method of producing H2 is electrolysis of water which requires 100% of the theoretical potential energy of resultant "fuel" + inherent inefficiencies of the electrolysis process + a huge energy cost for compression.

    Today, most H2 is made from methane which directly processes CO2.

    I'm disappointed that we are continuing to put R&D into fuel cells. 10 years from now we are probably going to be saying that all that funding was wasted.

  • Report this Comment On January 26, 2014, at 12:31 PM, SteveTG3 wrote:

    @Katie,

    Given that your commentary last week contending that Tesla's batteries are "not nearly as environmentally friendly as one would initially expect," was met in the comments section with a slew of intense criticisms suggesting your interpretation was utterly false, I am surprised you've chosen to write an article this week ON A PROBLEM FOR TESLA BASED SOLEY ON A RUMOR.

    I do not know whether your interpretations about environmental impacts were as wrong-headed as all those posts last week claimed, but it raised a red flag, and much of the criticism of your claims was quite convincing. Any rational person reading last week's comments section has to wonder about your motives. With such doubts, I just can't see why you would choose for your next article a negative rumor about Tesla you were unable to confirm?

    You could have just as easily have written about a positive rumor... such as chatter about a potential giant partner for the battery factory. Yet you choose a negative rumor.

    Actually, everything I've found on Fool from you poses something potentially negative about Tesla. The probability of that simply being chance is getting lower with each article you write... especially with the backdrop of overwhelmingly positive events for Tesla in the time you've written about them.

    FWIW, this week I realized there's a not so little secret about plug-in hybrids that make their adoption substantially less likely than I'd previously thought.

  • Report this Comment On January 26, 2014, at 5:32 PM, drax7 wrote:

    This article is pure FUD. The author is being paid for this propaganda. The SEC should be notified for market manipulation.

  • Report this Comment On January 27, 2014, at 2:04 AM, Pixma25 wrote:

    A common practice by a flim flam artist is to make statements that are pure slander, but pose them as questions in reference to rumor in order to avoid liability.

    For example, I could say - "Is Katie Spence a pedophile? There's evidence that some women are becoming pedophiles. Is it possible that Katie Spence is one of them?"

  • Report this Comment On January 27, 2014, at 8:29 AM, emotion wrote:

    "Since these voluntary NHTSA Guidelines are not a FMVSS, NHTSA’s normal enforcement procedures are not applicable. As part of its continuing research effort on distracted driving, NHTSA does intend to monitor manufacturers’ voluntary adoption of these NHTSA Guidelines."

    http://www.distraction.gov/download/distracted_guidelines-FR...

    So, what's all the story about?

    hs

  • Report this Comment On January 27, 2014, at 10:39 AM, RobertFaheyJr wrote:

    Screen -- Not worried. Tesla could issue an OTA update to disable screen functions while driving. Whoopie.

    Battery -- Not worried. Despite the entire world focused on Tesla and its "battery problems," and despite a video camera in every hand, and despite axe-grinders everywhere, we've seen nothing for quite a while. That bodes well for an all-clear from NHTSA to mirror the German counterpart's all-clear.

  • Report this Comment On January 27, 2014, at 1:26 PM, ThosEM wrote:

    Navigation would seem to be a legitimate and necessary part of single-handed driving. Electronic aids are designed to be easier to use, and therefore safer, than traditional methods involving the use of paper maps, analog watches, and notepads. If single-handed driving comes into question, it would seem that the next step is to require a navigator-passenger to be present at all times when driving in unfamiliar territory. IMHO, screening the driver from navigation tools is inappropriate for personal vehicles. Drivers must be trusted to drive, but should be liable to prosecution for failing to focus on that.

  • Report this Comment On January 27, 2014, at 8:32 PM, huibs wrote:

    Report securities fraud here:

    SEC.gov/complaint/select.shtml

    it's simple, I've done it in the past.

  • Report this Comment On January 27, 2014, at 10:33 PM, Jackl1956 wrote:

    At what price, your soul?

  • Report this Comment On February 02, 2014, at 4:51 PM, mhvf wrote:

    You should emphasize your concern regarding big displays distraction on drivers into the aviation sector where the trend is to fill glass cockpits with huge screens much bigger than the Tesla's model S/X ones. Pilots have constantly to divert attention between the exterior view and the screen information while they fly. And that's why they are so big. You want the information to be readable. Displays are there to offer valuable information which is directly related to safety such as position, distance, range, fuel or power, failures, malfunctions and so on. The bigger the screen the easier it is to read. The only concern for me is that they have to blend with the panel with a good color balance, brightness and contrast in such a way that your vision is not stressed. But size is definitely directly proportionate to safety. Otherwise all new generation aircrafts would be grounded.

  • Report this Comment On February 08, 2014, at 2:35 PM, nixon wrote:

    Hydrogen has zero infrastructure... FCEVs are not going to happen. Consider that we have the electrical grid in places where there isn't even natural gas and people run their home heating off of fuel oil or propane that is delivered by truck.

  • Report this Comment On February 17, 2014, at 1:34 AM, Marklin5 wrote:

    It is almost incomprehensable to me that just a few people have responded to the manipulative and vitriol language of Katie Spence. Is she actually payed by the anti-environmental lobby? Or is she on a personal vandetta against Elon Musk?

    She should read her "favorite" philosopher (Aristotle) in actuality (not just the headlines in a pop-philosophy magazine. Why would someone publish anybody that hypocratically uncool?

    Motely Fool, with Katie Spence

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