Washington, D.C. / Palo Alto, CA — October 16, 2025 — Tesla is navigating a storm of legal and regulatory challenges, even as the company celebrates a recent record in vehicle deliveries. The electric vehicle giant is facing an aggressive new federal probe into its Full Self-Driving (FSD) technology, while its CEO Elon Musk's massive compensation package is back in the hands of the Delaware Supreme Court.
The developments come just days ahead of the company's crucial Q3 earnings call on October 22, where investors will be closely scrutinizing profitability and margin contraction.
FSD Under New Scrutiny in Broad Federal Probe
The National Highway Traffic Safety Administration (NHTSA) has launched a new, sweeping investigation into Tesla's FSD system, targeting nearly 2.9 million vehicles equipped with the driver-assistance software.
The probe follows a growing list of complaints, including 58 reported incidents where Teslas allegedly committed serious traffic safety violations while FSD was engaged. These violations include running red lights, making incorrect lane changes into opposing traffic, and failing to stop at railroad crossings. The agency has confirmed at least 14 crashes and 23 injuries are linked to these incidents.
Safety advocates have warned that the investigation could lead to recalls or require Tesla to adjust or scale back its FSD claims and operational parameters if safety concerns are validated. The NHTSA is specifically assessing whether the system provides drivers with adequate warning and time to intervene when the software behaves unexpectedly.
Musk’s $56 Billion Pay Deal Returns to Delaware Court
In a high-stakes legal battle, the Delaware Supreme Court is now hearing arguments on Tesla's appeal to reinstate Elon Musk's controversial $56 billion compensation package. The original 2018 award was invalidated by a lower court judge who found the board approval process "deeply flawed" due to a lack of independence from Musk.
Tesla's legal team is arguing that shareholders were fully informed and overwhelmingly re-approved the compensation plan, which was tied to ambitious performance milestones the company ultimately hit. The outcome of this decision has major implications, not only for Musk's personal fortune—now tied to a proposed $1 trillion future compensation plan—but also for corporate governance and executive compensation standards across Silicon Valley and the nation.
Record Deliveries Boost Hopes Ahead of Earnings
On a positive note, Tesla reported a record 497,099 vehicle deliveries in the third quarter. The surge in sales was reportedly aided by a rush of purchases in the U.S. as consumers scrambled to take advantage of the expiring $7,500 federal EV tax credit.
However, analysts remain cautious. While the volume is strong, the market will be keenly watching the Q3 earnings call for updates on the company's profitability and gross margins, which have been under pressure due to cost inflation and competitive pricing actions.
The company's Shanghai Gigafactory has reportedly entered a new production ramp-up phase for Q4, signaling a push to boost volume, partly driven by the launch of a new six-seat model in the Chinese market.
Tesla's stock is experiencing heightened volatility and is trading near a potential breakout point as the market bets on a strong Q3 report, but the unresolved regulatory and legal issues pose significant downside risks.
Key Date: Tesla's Q3 2025 earnings call is scheduled for October 22.
