TSLA Stock Holds Flat — Tesla Hit With Wrongful Death Lawsuit, NTSB Probe Over Fatal Texas Crash

• The driver told investigators that the vehicle’s automated driving assistance system was engaged at the time of the crash. 
• Tesla has maintained that FSD was not involved and that the driver manually overrode it. 
• The National Transportation Safety Board (NTSB) said in a post on X on Wednesday that it has opened a safety probe into the incident.

Shares of Tesla Inc (TSLA) traded flat on Wednesday as regulatory scrutiny into a crash in Texas involving one of its vehicles intensified.

The family of Martha Avila, the 76-year-old woman killed when a Tesla Model 3 plowed into their suburban Houston home, has filed a wrongful death lawsuit against Tesla and the driver, alleging negligence and flaws in the vehicle’s driver-assistance technology, NBC News reported.

The crash occurred on the evening of June 19 in Katy, Texas. According to the Harris County Sheriff’s Office, the Tesla Model 3 left the roadway at high speed, smashed through the brick wall of a residential home, and struck Avila inside. She was airlifted to a hospital but pronounced dead. The 44-year-old driver, identified as Michael Butler, suffered only minor injuries and was hospitalized.

Butler told investigators that the vehicle’s automated driving assistance system was engaged at the time of the crash.

TSLA Sued By Family  

On Tuesday, Avila’s family filed suit in Harris County District Court against Tesla and Butler, NBC News reported. The complaint accuses both parties of negligence and alleges wrongful death.

It further claims Tesla engaged in deceptive marketing of its driver-assistance features and that defects in the technology contributed to the crash by failing to detect the end of the roadway and stop the vehicle. The plaintiffs are seeking more than $1 million in damages, the report said.

Tesla Refutes Involvement

Tesla has strongly disputed that its technology was at fault. CEO Elon Musk posted on X that the crash “makes no sense,” noting that Full Self-Driving (FSD) “drives slowly through neighborhood streets and this was a high speed crash!”

Ashok Elluswamy, Tesla’s Vice President of AI Software, stated in a post on X that vehicle data showed the driver manually overrode the system by pressing the accelerator. He emphasized that the driver kept the accelerator pressed even after the crash and reiterated that Tesla’s data shows supervised self-driving is significantly safer than manual driving.

Tesla has further maintained that its systems are driver-assistance features requiring constant driver supervision and do not enable full vehicle autonomy.  

Federal Agencies Respond

The incident has triggered fresh federal attention. The National Highway Traffic Safety Administration (NHTSA) confirmed earlier this week that it is launching a special crash investigation. This adds to NHTSA’s existing probes into Tesla’s Autopilot and FSD systems, including a broader review of roughly 3.2 million vehicles focused on how the systems perform when cameras are impaired by conditions like glare, fog, or dust.

The National Transportation Safety Board (NTSB) also said in a post on X on Wednesday that it has opened a safety probe into the incident.

How Did TSLA Retail Traders React?

On Stocktwits, retail sentiment around TSLA stock rose from ‘extremely bearish’ to ‘bearish’ territory over the past 24 hours, while message volume increased from ‘low’ to ‘normal’ levels.

A Stocktwits user expressed disappointment over Tesla’s FSD, saying it “isn’t working.”

Another user wondered if the news of the crash would aid or harm Lidar companies. “Hurt, because it gives a bad reputation to the general public about autonomous driving in general. Help, because it highlights the benefits of having redundant safety systems, like lidars,” they wrote.

Tesla uses cameras alone for its self-driving features and has often reiterated that it would be enough, unlike other robotaxi companies which also rely on Lidars and radars as additional safety mechanisms if cameras fail.  

TSLA stock has fallen 13% year-to-date. 

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