08 / 31 / 2016

Startups and Liability: Tesla's First Auto Accident

tesla_self_driving_car.jpgTesla Motors, Inc., the American automotive and energy storage company, is the powerhouse of electric-powered vehicles and could very well be leading the car industry into autonomous driving a la I, Robot. Inspired by and named after Nikola Tesla, the electrical engineer and physicist, and incorporated in mid-2003, Tesla Motors has the goal of commercializing electric vehicles and providing everyone with the opportunity to own not only the safest automobile on the planet, but also the safest self-driving automobile on the planet.

Are Tesla's vehicles safe?

However, Tesla has run into the very obstacle their program has, with well intentions, hoped to avoid altogether. In May of this year, a Model S driver was killed in an accident while the vehicle was in autonomous driving mode. Considered the first death in a vehicle in self-driving mode, the following likely investigation by the National Highway Traffic Safety Administration and possible lawsuit against Tesla will surely test the company’s ability to respond to such heavy potential liability.

Although there has only been one fatality in a Tesla, reports over the last couple of weeks indicate the self-driving function of Tesla’s vehicles are not as safe as consumers or the company initially expected. Two non-fatal accidents from Tesla vehicles were reported over the last two weeks, both while the vehicles were engaged in autopilot mode.

Exposure to liability

Not every company can claim the global presence and success of Tesla, but these recent events will allow observers of all areas—other startups, investors, agencies—to learn from Tesla’s reactionWill Tesla take the death of the Florida man seriously or will there be a lawsuit over liability? How will Tesla respond if agencies deem autonomous driving unsafe and unfit for highways and roads? 

Learning from those that have become superstars will certainly help those startups who are just picking themselves up and looking down the road. In the legal field, a startup’s exposure to liability will always be of paramount importance, no matter what field or industry. Clearly written contracts and well-defined protocols go a very long way in preparing for those rainy days when it seems like the company just can’t get a break.

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