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A Deadly Crash
On Saturday, April 17, a Tesla Model S screeched around a bend on a lonely wooded highway about 30 miles north of Houston, Texas.
In the car were two men, age 59 and 69, one having since been identified as local medical director Dr. William Varner.
When the vehicle suddenly lost control, traveling roughly 100 feet off the road, it violently barreled into a nearby tree, exploded into flames, and both men were instantly killed.
What sounded like a tragic but statistically unremarkable automobile accident revealed itself to be a thicker plot once the police were interviewed.
According to the first-responding officers at the scene, “no one was driving the vehicle at the time of the crash.”
Tesla CEO Elon Musk has long touted the emergence of Autopilot as a major end game for his company, claiming that by removing human drivers we can reduce automobile accidents by up to 10 times.
Musk envisions the vertical integration of Tesla insurance, predicting that advanced self-driving technology will remove the need for the overpriced auto plans for which we’ve become so accustomed to paying. He believes the insurance wing of Tesla could one day be profitable enough to account for “30 to 40 percent of the car business.”
However, this is not the first crash potentially linked to Tesla’s Autopilot. Although some 30,000 Americans die annually in auto accidents due to human driver error, the initial incidents involving Autopilot have inevitably drawn more criticism and negative speculation than any of these prior human-operated collisions.
But what actually happened? Is Autopilot safe? And what does it mean for their upcoming earnings call?
It’s unclear so far whether the Autopilot feature was engaged prior to impact.
According to Constable Mark Herman, a first responder at the scene of the accident, no one was found in the driver’s seat but rather “one was in the front passenger seat and one in the rear seat.”
Herman also noted that the wives of the victims reported the two men “discussing the car’s Autopilot feature” just before taking off for their final drive last Saturday evening.
While the latter point is circumstantial evidence, the absence of a driver in a Model S would lead you to believe that the Autopilot feature was being utilized.
But Musk was quick to counter, using a recent Twitter exchange to highlight the fact that standard Autopilot cannot exceed the speed limit, automatically checks for driver weight, senses for hands on the steering wheel, and requires “lane lines to engage, which this street did not have.”
The police are currently seeking internal data from Tesla, and as the investigation continues, traders should be closely following the news leading into the company’s first-quarter earnings call next Thursday, April 26.
This contradictory evidence is certainly intriguing. If Autopilot wasn’t on, how were they piloting the car with no one in the driver’s seat? Did they synthetically weigh the seat down while the man in the passenger seat held the wheel with one hand?
And if Autopilot was engaged, is this incident a crippling setback to the public opinion surrounding the technology?
So far, the answer seems to be: not really.
A Look at the Stock
All things considered, Tesla’s share price has held up remarkably well this week, down only 6 percent since the crash.
On Tuesday, TSLA remained unchanged (+0.2%) while the majority of the stock market was enveloped in a sea of red, signaling traders’ cautious optimism ahead of next week’s earnings report.
Another generally positive indicator lies in Tesla’s option chain, where short-term call volume is outpacing put volume 2 to 1.
Earnings calls always provide volatile trading opportunities, but this one may be particularly juicy considering the unique news backdrop.
Regardless of these facts, traders need to be especially cautious going into this call, as any slip-ups by management or negative tone in the comments could cause expanded selling for the very same reason.
Depending on the earnings print, Musk’s guidance, and the developments in the news cycle, we could see an explosive move in Tesla shares next Thursday.
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