Tesla crash investigation

Yahoo Finance's Rick Newman joins the Yahoo Finance Live panel with an update on the lastest Tesla crash in Texas.

Video transcript

ZACK GUZMAN: Two riders in a Tesla Model S were killed in a crash that occurred about 30 minutes north of Houston, Texas on Saturday. The car caught fire after colliding with a tree at what authorities said was a high rate of speed and also that neither of the two men in the car were driving, suggesting Tesla's autopilot feature may have played a role.

And for more on that, I want to bring on Yahoo Finance's Rick Newman. Because, Rick, I mean, we've talked about this feature in the past. And Tesla CEO Elon Musk was quick to tweet over the weekend talking about how effective autopilot is in reducing crashes when it's engaged, but obviously, more concerns following this accident.

RICK NEWMAN: Absolutely. So we don't know for a fact that autopilot, the self-driving feature, was activated. But I think we have to assume that if there was nobody in the driver's seat and the two people in the car were in the passenger seat and in the back seat, then what was probably going on was that the owner of that car was showing off how effective autopilot is, except that it drove the car off the road and into a tree.

So there have been deaths in accidents involving Teslas and autopilot before. In the United States, I think there have been so far, as far as we know, 11 crashes involving nine fatalities. And there have been nine crashes involving seven fatalities overseas. So, and by the way, there are no known fatalities in cars equipped with self-driving systems made by other manufacturers.

And there are some other automakers do have self-driving features. General Motors has a system called Super Cruise that is available on some Cadillacs. So these systems are out there in other makes. But they had just not caused any deaths so far, contributed to any deaths. And most other automakers are much more cautious about the way they've rolled out their systems. They have more safeguards in place than Tesla has for auto-pilot. And they also don't describe their systems as fully self-driving systems, as you might think it is, if it's called auto-pilot. It sounds like it drives itself, but it doesn't. And I think Tesla is facing a real regulatory problem here.

ZACK GUZMAN: Yeah, the semantics of Lane Assist versus auto-pilot are pretty clear there. But when you think about how Tesla is rolling this out, too, right, I mean, this is an option that, to your point, they're advertising as auto-pilot. And also, we've heard from Elon Musk talking about how this system works and maybe touting it beyond what the qualifications of the system actually are.

But when you think about that as a business implication, a lot of analysts point to auto-pilot and the revenue coming from that as reasons to be bullish on the stock. But when you think about where the technology's capabilities are right now, where do you square that as a feature Tesla's selling?

RICK NEWMAN: I mean, just to put this in context, Tesla's autopilot system is no better than other systems. In fact, there have been some tests by industry groups that have found that the GM system Super Cruise is actually better than autopilot. Self-driving systems come in six levels, 0 through 5. 5 means complete self-driving. The Tesla autopilot system is only level 2. So level 5 is complete self-driving. You can take a nap in the car. It will safely get you there. And Tesla is only at level 2, and that's where the other most advanced technologies are in this space.

And they're promoting-- the next version of this is going to be called full self-driving, which might move a little bit from level 2 to level 3, but it is not level 5. So, and they have acknowledged this in regulatory filings, where you can't use the marketing brochure, or Elon Musk has to tone down his rhetoric a little bit.

So, there are some safety experts out there who say Tesla is basically using its own customers as guinea pigs and that it's actually killing people because it's not telling people the right way to use this. It gives people a false sense of security that the technology is not as good as they think it is. And again, I think the National Transportation Safety Board has-- is looking into dozens of Tesla crashes at this point. And I think Tesla, they have an image problem. And I think they're going to have a regulatory problem, following on that.

AKIKO FUJITA: And on that front, Rick, we're seeing shares of Tesla coming off of the session lows, but still down more than 3%. Rick Newman, thanks so much for bringing us that story. Coming up, a conversation with Robert Downey Jr., the actor and investor tackling the issue of climate change through his Footprint Coalition. A look at his key investments and how he's looking to narrow the political divide on the issue. Our special segment, Planet Earth in Crisis, is coming up next.