caption The Tesla Model 3 didn’t do well in the test. source Hollis Johnson/Business Insider
Five cars with automatic braking systems were stress-tested by the Insurance Institute for Highway Safety, a research group.
One test found that Tesla’s Model 3 and Model S vehicles performed the worst, behind a BMW, a Volvo, and a Mercedes.
The five cars were required to drive toward a stationary object with adaptive cruise control turned off and only automatic braking on. The two Teslas were the only ones that failed to stop in time and that hit the object, the IIHS said.
In other tests, the Teslas performed better, though the Model 3 was described as overly cautious when braking.
A new test of five cars’ automatic braking systems found some worrying problems with the technology, and two Tesla models were the worst performers.
The tests by the Insurance Institute for Highway Safety, a research group, found that some driver-assist systems might not notice stopped vehicles and could even steer cars into a crash rather than away from it. It published the results in a Tuesday report.
In one test, the five cars drove at 31 mph toward a stationary object with the adaptive cruise control turned off and automatic braking on. The models all had automatic emergency braking systems deemed “superior” by the IIHS. They were:
A 2017 BMW 5 Series with the Driving Assistant Plus function.
A 2017 Mercedes-Benz E-Class with Drive Pilot.
A 2018 Tesla Model 3 with Autopilot.
A 2016 Tesla Model S with Autopilot.
A 2018 Volvo S90 with Pilot Assist.
The IIHS said the Tesla Model 3 and Model S were the only two that didn’t stop in time and that hit the object.
caption The Tesla Model S. source Tesla
In the same test with the adaptive cruise control turned on, the Tesla models decelerated gradually and braked earlier than the other cars to avoid the object, the institute found.
In fact, the IIHS said it also found the Model 3 was prone to “unnecessary or overly cautious braking.”
While traveling a distance of 180 miles, the car unexpectedly slowed down 12 times – seven times after spotting tree shadows on the road and the others after detecting vehicles traveling toward it in another lane or crossing the road far ahead, the institute said.
“The braking events we observed didn’t create unsafe conditions because the decelerations were mild and short enough that the vehicle didn’t slow too much,” said Jessica Jermakian, a senior research engineer at IIHS. “However, unnecessary braking could pose crash risks in heavy traffic, especially if it’s more forceful.
“Plus, drivers who feel that their car brakes erratically may choose not to use adaptive cruise control and would miss out on any safety benefit from the system.”
The IIHS found that the Tesla Model 3 performed the best when it came to staying within the lanes on curves and hills.
caption Results from the Insurance Institute for Highway Safety’s tests of electronic driver-assist systems. source Insurance Institute for Highway Safety
The IIHS highlighted the fatal crash of a Tesla Model X in March as evidence of the shortcomings of driver-assist systems.
The car, which had the Autopilot semiautonomous driver-assist software engaged, crashed into a highway barrier in Mountain View, California, and caught fire. The driver, Walter Huang, died after being taken to the hospital.
Tesla later released a statement saying Huang must not have been paying attention to the road, “despite the car providing multiple warnings to do so.”
The IIHS said the crash “demonstrates the operational limits of advanced driver assistance systems and the perils of trusting them to do all of the driving, even though they can’t.”
Tesla declined to comment.
The following email was sent to Tesla employees today:
Earlier today, I announced that I’m considering taking Tesla private at a price of $420/share. I wanted to let you know my rationale for this, and why I think this is the best path forward.
First, a final decision has not yet been made, but the reason for doing this is all about creating the environment for Tesla to operate best. As a public company, we are subject to wild swings in our stock price that can be a major distraction for everyone working at Tesla, all of whom are shareholders. Being public also subjects us to the quarterly earnings cycle that puts enormous pressure on Tesla to make decisions that may be right for a given quarter, but not necessarily right for the long-term. Finally, as the most shorted stock in the history of the stock market, being public means that there are large numbers of people who have the incentive to attack the company.
I fundamentally believe that we are at our best when everyone is focused on executing, when we can remain focused on our long-term mission, and when there are not perverse incentives for people to try to harm what we’re all trying to achieve.
This is especially true for a company like Tesla that has a long-term, forward-looking mission. SpaceX is a perfect example: it is far more operationally efficient, and that is largely due to the fact that it is privately held. This is not to say that it will make sense for Tesla to be private over the long-term. In the future, once Tesla enters a phase of slower, more predictable growth, it will likely make sense to return to the public markets.
Here’s what I envision being private would mean for all shareholders, including all of our employees.
First, I would like to structure this so that all shareholders have a choice. Either they can stay investors in a private Tesla or they can be bought out at $420 per share, which is a 20% premium over the stock price following our Q2 earnings call (which had already increased by 16%). My hope is for all shareholders to remain, but if they prefer to be bought out, then this would enable that to happen at a nice premium.
Second, my intention is for all Tesla employees to remain shareholders of the company, just as is the case at SpaceX. If we were to go private, employees would still be able to periodically sell their shares and exercise their options. This would enable you to still share in the growing value of the company that you have all worked so hard to build over time.
Third, the intention is not to merge SpaceX and Tesla. They would continue to have separate ownership and governance structures. However, the structure envisioned for Tesla is similar in many ways to the SpaceX structure: external shareholders and employee shareholders have an opportunity to sell or buy approximately every six months.
Finally, this has nothing to do with accumulating control for myself. I own about 20% of the company now, and I don’t envision that being substantially different after any deal is completed.
Basically, I’m trying to accomplish an outcome where Tesla can operate at its best, free from as much distraction and short-term thinking as possible, and where there is as little change for all of our investors, including all of our employees, as possible.
This proposal to go private would ultimately be finalized through a vote of our shareholders. If the process ends the way I expect it will, a private Tesla would ultimately be an enormous opportunity for all of us. Either way, the future is very bright and we’ll keep fighting to achieve our mission.
Thanks,
Elon
Tesla CEO Elon Musk stunned investors Tuesday with a string of tweets saying he is considering taking the company private, in what would be the largest deal of its kind.
"Am considering taking Tesla private at $420. Funding secured," Musk said in a tweet shortly before 1 p.m. Musk discussed the plans further in a blog post later Tuesday.
From there Musk tweeted several times. In responses to questions on Twitter, Musk said he will ensure the prosperity of shareholders "in any scenario." If Tesla went private, current investors could keep their stakes in Tesla through a special fund, or sell their shares at $420, he said.
Shares jumped after Musk's first tweet, trading as high as $371.15 before giving back gains. Later the stock was halted for more than an hour. When it reopened shares surged more than 10 percent.
Tesla shares were already trading higher on a report of a new stake from the Saudi Arabia sovereign wealth fund.
Tesla (NASDAQ:TSLA) shares were halted at 2:08 p.m. today following a series of tweets by Elon Musk on taking the company private. Live updates follow.
4:08 p.m. - Tesla closes with a 10.99% gain after trading as high as $387.46. Volume was 29.8M shares vs. average daily volume on Tesla of 8.71M shares. Several short sellers have gone on CNBC and Bloomberg TV to rail against the lack of clarity on how a go-private deal for Tesla would be financed.
3:48 p.m. - Musk tweets that the only reason the go-private deal is not certain is that it’s contingent on a shareholder vote. It's another indication that funding is in place for the deal at $420 per share.
3:46 p.m. - Tesla resumes trading up 12.82% to $385.07.
3:37 p.m. - Musk's letter also indicates that there is no plan to merge Tesla and SpaceX. Musk envisions keeping his stake in Tesla at around 20%.
3:36 p.m. - Tesla shares will begin trading again at 3:45 p.m. Hang on.
3:32 p.m. - Tesla posts a letter (read full letter) sent to employees. Musk says he's considering taking the company private at $420 per share, although a final decision hasn't been made. "I would like to structure this so that all shareholders have a choice. Either they can stay investors in a private Tesla or they can be bought out at $420 per share, which is a 20% premium over the stock price following our Q2 earnings call (which had already increased by 16%). My hope is for all shareholders to remain, but if they prefer to be bought out, then this would enable that to happen at a nice premium," writes Musk.
3:21 p.m. - CNBC reports that none of the Wall Street banks it contacted were aware of any transaction or had committed to funding a leveraged buyout of Tesla.
3:14 p.m. - An interesting tidbit to consider as investors wait for the Tesla news is that the Saudi sovereign wealth fund invested $3.5B in Uber (UBER) back in 2016 for a stake of around 5%.
2:55 p.m. - Bloomberg Intelligence reports that Tesla's 5.3% notes due in 2025 have a 101% change of control covenant. The notes are trading up $0.0075 at $0.9225.
3:04 p.m. - Musk tweets that under a private Tesla scenario, investors could still buy shares through liquidity events every 6 months or so similar to the set up with SpaceX (SPACE), which has run up to a valuation of around $27B.
2:53 p.m. - The Nasdaq trading halt on Tesla is now at 45 minutes. There's no guarantee shares will resume trading today.
2:39 p.m. - At $420 per share, Tesla would be valued at $71.3B. That amount dwarfs the $53B market cap for General Motors (NYSE:GM) and $40B cap for Ford (NYSE:F).
2:33 p.m. - Circling back to Musk's Twitter replies: "My hope is *all* current investors remain with Tesla even if we’re private. Would create special purpose fund enabling anyone to stay with Tesla. Already do this with Fidelity’s SpaceX investment."
2:30 p.m. - Oppenheimer warns that a Tesla buyout from a foreign entity could draw attention from The Committee on Foreign Investment in the United States.
2:26 p.m. - Ross Gerber of Gerber Kawasaki says the company has confirmed to him the information in the Musk tweets are accurate.
Previously: Tesla jumps on report of Saudi wealth fund stake (Aug. 7)
Previously: Tesla jumps again as Musk floats private offer on Twitter (Aug. 7)
