Elon Musk Takes to Twitter To Deny Claims He Profited From Keeping News of Fatal Autopilot Crash Quiet

Unlike some Silicon Valley executives, Tesla Motors [NASDAQ:TSLA] CEO Elon Musk isn’t afraid to make his feelings known on social media site Twitter, where he’s known to indulge in a little back and forth conversation with both fans and critics alike.

Usually, those twitter sessions — often late at night — offer snippets of information about the next Tesla product to hit the market, hint at upcoming improvements to Tesla’s range of electric cars, or deal with Musk’s other company SpaceX. But yesterday, Musk’s twitter sessions focused on something else: defending against claims that by not disclosing news of the first fatal crash involving Tesla’s Autopilot system ahead of the recent Secondary Public Offering of TSLA stock, Musk and Tesla gained financial benefit.

Should Tesla have told investors about the fatal Autopilot crash?

Should Tesla have told investors about the fatal Autopilot crash?

Last week, we brought you the sad news that Joshua Brown, a well-known Tesla advocate and YouTuber, had become the first person to die as the result of an autonomous vehicle crash when his Tesla Model S slammed into the bottom of a Tractor-Trailer combination crossing his path along a highway in Florida. Brown, who some reports say was watching a movie, was relying on his Model S’ Autopilot feature to take the driving strain at the time of the crash, and failed to see the trailer cross his path ahead. The car meanwhile, interpreted the trailer incorrectly in the bright sunlight and, appearing to think it was an overhead road sign, continued on its way, slamming into the bottom of the trailer at high speed.

Brown died instantly.

Tesla's Autopilot system is an accomplishment, but no replacement for the driver.

Tesla’s Autopilot system is an accomplishment, but no replacement for the driver.

But while news of the collision only became public knowledge last week, the actual collision happened on May 7, nearly two months before it was reported publicly and eleven days before Tesla’s May 18 Secondary Stock Offering. That sale happened to net Elon Musk and TSLA more than $2 billion combined, leading some outlets — including Fortune — to ask if Musk should have disclosed the fatal crash before the big share sale happened.

“To put things badly, Tesla and Musk did not disclose the very material fact that a man had died while using an auto-pilot (sic) technology that Tesla had marketed vigorously as safe and important to its customers” wrote Fortune journalist Carol Loomis. Writing her article after both Tesla had told Reuters that it didn’t need to disclose the crash or investigation before the stock sale and Musk himself had told Fortune that the subject of the crash was “not material” to the company’s bottom line, Loomis attracted the attention of Musk, who then complained bitterly to Fortune editor Alan Murray on Twitter.

Musk then attracted the attention of other automotive writers, including green car specialist Sam Abuelsamid from Fortune and Autobloggreen, who questioned Musk’s math on the 1 million deaths prevented a year claim. Claiming that non-occupant deaths should not be included in his own Forbes piece, it didn’t take long for Abuelsamid to get Musk’s attention.

Of course, while we’re arguing about how many deaths Autopilot may or may not have be able to save — a topic many advocates and Tesla owners are passionate about — we’re avoiding a more painful question aside from asking the more obvious question of “who’s to blame for that fatal crash?”

We’ll tackle that one — and how we make sure it doesn’t happen again — in another article, but right now we need to try and figure out if a crash involving Tesla’s Autopilot is considered a material fact that could impact both the share price of TSLA and its future value. In other words, is it something that could affect the stock price of TSLA in a negative way?

Did Elon Musk benefit from the sale of stock without disclosing the crash?

Did Elon Musk benefit from the sale of stock without disclosing the crash?

In most situations, we’d suggest not. After all, people die in automobile crashes every single day, and very few of them become headline news. But as with any fatal crash in which the car is at least partly culpable (and that’s a frustratingly grey area where Autopilot is concerned), a formal National Highway Traffic Safety Administration investigation into the incident is a matter of course.

Again, usually, that investigation would not necessarily be a material fact. But in the case of Tesla, which followed protocol and informed NHTSA immediately after the crash, the fact that the collision was one of a type never before seen should have at least caused some red flags at Tesla. Even though Tesla puts the legal onus on drivers of its cars to ensure that the road ahead is clear and safe for the Autopilot to operate along, this first-of-its-kind collision could have dire consequences for the entire automotive industry. Moreover, since there are no formally-ratified guidelines yet concerning autonomous vehicles in the U.S., it’s not beyond the bounds of reality that some form of restriction be enacted to ensure similar accidents do not take place. That doesn’t mean that Tesla is to blame: it’s an acknowledgement that computers are only as smart as the people who use them. Autopilot or not, until a car is fully autonomous (and Tesla’s Autopilot system is far from that), humans are the weak link. And to that end, a restriction of Autopilot-like hardware is a distinct possibility to prevent humans — not cars — from screwing up.

We think it fair then to note that TSLA should have at least seen sense to mention the crash before the stock sale, at least in the interests of full disclosure, despite perhaps not being required to.

Either way however, things are bound to be a little difficult for the California automaker for a little while.

Did Tesla act responsibly or irresponsibly? Should investors have been told about the potential damage to their investment of this accident? Or do you think it’s little more than a storm on an otherwise quiet sea?

Leave your thoughts in the Comments below.


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