Tesla Slides as Regulators Investigate Crashes, Bank of America Downgrades Stock

Key Takeaways

Tesla (

TSLA

) shares dropped Tuesday as federal regulators said they’re looking into crashes related to the company’s automated vehicle summoning features, while analysts at Bank of America downgraded the EV maker’s stock.

The National Highway Traffic Safety Administration (NHTSA) has opened an investigation into the Smart Summon and Actually Smart Summon features, which allow
Tesla
drivers to remotely move their vehicle using a phone app. The agency said it has received complaints that Tesla vehicles have failed to detect obstacles or parked vehicles, resulting in crashes.

Specifically, NHTSA’s Office of Defects Investigation has received 12 complaints related to Smart Summon and one related to Actually Smart Summon, an upgraded version of the feature. The office also has reviewed “at least” three media reports of other Actually Smart Summon incidents.

Meanwhile. Bank of America Securities on Tuesday
downgraded
Tesla to “neutral” from “buy” but raised its
price target
to $490 from $400. That’s about a 25% premium after Tesla shares fell 4.1% Tuesday to close at $394.36.

Despite the higher price target, “execution risk is high and TSLA is trading at a level that captures much of our base case,” the analysts said.

The bank’s analysts are eyeing multiple potential growth catalysts this year, including the introduction of a low-cost Tesla model in the first half of the year, the
launch of a robotaxi
in the middle of the year, and the ramp-up of Megapack commercial energy storage
battery production
at its Shanghai assembly plant.

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