By Scott Tzu
There has been no shortage of skepticism surrounding Tesla (NASDAQ:TSLA) and, as of just two days ago, potential investors and those following the Tesla saga have something to be a little bit more skeptical about as the Norwegian Motorcyclists' Union has asked the company if its autopilot feature has been properly tested with motorcycles, referencing yet another accident involving autopilot that took place this past summer.
We know that Tesla's autopilot feature has been debated by both bears and bulls alike. It is at the center of a disclosure controversy which raises the question as to whether or not deaths that occurred while autopilot was engaged should have been disclosed in the company's last financing.
The argument has continued over the last few months while regulatory agencies look into the situation and while Tesla issues updates to its autopilot software in order to try and address issues. At the epicenter of this debate, new information has come to light just yesterday that raises a new slew of questions regarding the company's autopilot feature and will likely cause those analyzing the situation to reevaluate some of the work they've done. An accident that occurred over the summer with a Tesla using autopilot and a motorcycle was pointed out in a letter that head of the Norwegian Motorcyclists' Union wrote to CEO Musk,
Tesla is a wonderful car, but an accident on a Norwegian motorway this summer made us very concerned. In the accident, the motorcycle of a young, female rider was hit hard from behind by a Tesla, with its 'autopilot' in the ON position.
The rider survived, but she was severely injured. The accident triggered a very fundamental question: Was the Tesla 'autopilot' unable to detect the motorcycle in front of the car?
This accident in Norway, and news reports of Tesla 'autopilot' accidents from around the globe, made NMCU write a letter of concern to the Norwegian Minister of Transport. The letter says among other things that: "It is worrying if Tesla's 'autopilot' is not able to detect a motorcycle, but it is even more worrying if the driver has been duped into believing that a driver assistance system is an 'autopilot' that allows you to cross your arms and no longer be the driver of your car."
NMCU is certainly not against a future of autonomous vehicles, but we are a bit concerned that manufacturers and politicians are 'over-selling' present technology. NMCU sees many ethical, legal and traffic safety qualms when a driver assist system is marketed as an 'autopilot' that is actually making the car self-driving. No car on the market is self-driving, and probably will not be for many years. It is therefore a bit worrying if key people creates an impression that cars already have a functional "autopilot" and are self-driving. NMCU insists that any system being basis for the term 'self-driving' must be thoroughly tested with motorcyclists, cyclists and pedestrians before being put on the market.
NMCU's demand for ADAS being tested with motorcycles is confirmed in the recent study, "Preliminary Study of the Response of Forward Collision Warning Systems to Motorcycles", by John F. Lenkeit, Terrance Smith PhD Dynamic Research. The study was presented at an international motorcycle safety conference in the city of Cologne in Germany in the beginning of October this year. The study says among other things that: "As drivers become comfortable with, and rely more on Advanced Driver Assistance Systems (ADAS), they may become less attentive to the driving task. So, an unintended consequence of broad ADAS implementation may be an increase in the frequency of car-motorcycle accidents even as car car accidents decrease. It is important therefore that consideration of motorcycles be included in future ADAS test procedure and equipment development, and retroactively introduced into existing ones.
Therefore, NMCU have a simple question to you Mr. Musk: Is the Tesla 'autopilot' properly tested with motorcycles?
Regardless of your reply to the above question, we have a request to Tesla Motors: could you please stop marketing your adaptive cruise control as an autopilot, duping Tesla owners to believe they have a self-driving car that makes it possible for them to lean back, fiddle with their iPad and stop being the responsible driver of the vehicle.
Thank you in advance for your reply and your comments.
This is an issue for a couple of reasons. First and foremost, on the surface, it seems to be another accident that has taken place with Tesla's autopilot engaged. First, we have the standard questions as to whether or not the autopilot could have or should have prevented the accident to begin with.
We also have another organization in addition to Consumer Reports asking that Tesla rethink the name it has given to its autopilot feature, so as to discourage drivers from not paying attention to the road.
Then we have the fact that a motorcycle was involved.
This is an angle that those arguing over Tesla have not yet considered and it is the first time we have seen it being brought out into the public domain due to an accident. Motorcycles, from a programming and safety perspective, likely offer an entirely different challenge for Tesla's autopilot. They are legal everywhere and will no doubt need to be addressed in the company's software.
In terms of the radar that is used to detect other vehicles, we suspect that motorcycles offer a unique challenge as they are not nearly as wide or as large as various types of motor vehicles.
For Tesla, this is one more notch in the column of items that they are going to have to deal with sooner or later. If Tesla was a cash generating company that was consistently profitable and had good margins on it's vehicles, this would be less of an issue. The only reason that it is an issue worth considering at this point is because the company's technology, one of the components at the core of what makes it unique, is once again under fire.
Instead of Tesla being able to fall back on cash, it is constantly under the gun as it burns away at its cash pile, day by day closing in on a merger that will only accelerate its cash burn rate going forward.
This newly filed liquidity statement in yesterday's S-4 doesn't give us any confidence that the company has its cash burn under control,
While Tesla expects that its current sources of liquidity, including cash and cash equivalents, together with its current projections of cash flow from operating and retail financing activities, will provide it with adequate liquidity based on its current plans through at least the end of the current fiscal year, Tesla may raise funds in the future, including through potential equity or debt offerings, subject to market conditions and recognizing that Tesla cannot be certain that additional funds would be available to it on favorable terms or at all. The amount and timing of funds that Tesla may raise is undetermined and would vary based on a number of factors, including Tesla and the Combined Company's liquidity needs as well as access to current and future sources of liquidity.
This new angle that has been uncovered regarding motorcycles will have to be addressed. Tesla will have to potentially address it with regulators, they will have to address the details of the accident, and they will have to be able to provide the market and their consumers evidence that the company's autopilot software is already meant not only to take on the basics of the road, but the intricacies that occur when one actually makes their way out onto the street.
Given the cash burn, the consistent need to raise cash, and continued red flags including vast executive level employee turnover and the company's staggering inability to communicate consistently with itself and the market, we continue to be skeptics on Tesla.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.