Tesla Faces a New NHTSA Probe. Wall Street Might Be Missing the Bigger Story.

It appears that Tesla (TSLA) is back in news as yet another government investigation is opened against the company due to a fatal accident involving a Tesla Model 3 in Texas. The accident happened following the collision of the car with the building in Katy, Texas. This resulted in the death of a 76-year-old homeowner.

While such news might cause some volatility in Tesla's stock price in the short term, what looks more important nowadays is whether the company will truly be able to commercialize the driverless technology.

About Tesla Stock

Tesla is one of the largest manufacturers of electric cars and a major player in artificial intelligence, robotics, and energy industries. It operates headquarters in Austin, Texas and develops electric vehicles, autonomous driving technology, battery storage, and humanoid robots. At present, the company has a market cap of around $1.43 trillion.

Although it experienced some recent fluctuations in its share price, TSLA stock is up 31% from its 52-week low of $288.77. However, it is still down 24% from its 52-week high of $498.83. Although the S&P 500 Index ($SPX) has had modest performance in the last year, Tesla significantly outperformed most of its competitors in the automotive industry because of the excitement about autonomy and AI.

One of the key issues surrounding TSLA stock is the company's valuation. Its shares are trading at 340.8 P/E ratio and 16 times revenues, which is substantially higher compared to most traditional automakers and even compared to most technology companies. This means that investors place a very high value on the future cash flows from Full Self-Driving (FSD), Robotaxi, and Optimus.

Tesla Beats on Q1 2026 Earnings

Tesla reported better-than-expected Q1 2026 financial results. The company reported revenues of $22.39 billion, growing 16% year-over-year (YoY) and beating analysts' expectations. Earnings per share came at $0.41 versus the consensus estimate of $0.30.

The company also managed to improve profitability. The GAAP gross margin increased to 21.1%, which is 478 basis points higher compared to the year-ago quarter. Free cash flow doubled YoY to $1.44 billion supported by operating cash flow of $3.94 billion.

Revenue from the automotive division reached $16.23 billion, growing 16% YoY driven by strong sales in Asia Pacific and South American regions. Services and other revenues grew 42% to $3.75 billion. Energy generation and storage revenues decreased 12% to $2.41 billion.

Most importantly, the results from the autonomous division were impressive as the active FSD subscriptions increased 51% YoY to 1.28 million. In addition, the unsupervised Robotaxi testing was initiated in Dallas and Houston. Tesla got some regulatory approval to introduce FSD in Europe, including the Netherlands.

On the growth side, management continued to allocate substantial resources into development. In particular, the company plans to spend more than $25 billion in capital expenditure in FY2026 on expanding its production capacities for Cybercab, Tesla Semi, and Optimus robot programs.

Finally, the recent NHTSA investigation is not expected to change Tesla's long-term plans. Based on comments from Tesla's executives, the Texas accident involved significant accelerator inputs from the driver who was alleged to override the self-driving function before the crash. Although investors will probably pay attention to the ongoing investigation, the main focus is now on autonomy execution and Robotaxi implementation.

What Do Analysts Say About TSLA Stock?

Analysts assign TSLA stock a “Moderate Buy” rating with an average price target at $411.91. Considering the current share price close to $375, this gives the stock a potential upside of around 10% from the current level. The street-high price target is $600, while the street-low target is $123. This shows that analysts' opinions vary greatly regarding the future prospects of the company.

As we can see, the recent safety investigation might cause some short-term volatility, but the main investment case for Tesla is the successful introduction of autonomous transportation and software service powered by artificial intelligence. Thus, the future developments of Robotaxi operations, FSD implementation, and Optimus robot development may have much more effect on the stock than any new regulation.