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Tesla’s After-the-Fact ‘Recall’ of Software Update Upends Old Rules of the Road

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(Bloomberg) -- Within hours of beaming a software update to some of its cars, Tesla Inc. began hearing complaints from owners whose vehicles were stopping themselves without warning. So the carmaker quickly updated the update and then notified regulators.

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Tesla’s go-it-alone approach raised questions at the National Highway Traffic Safety Administration, which said it would review the matter further with the company.

The episode illustrates both the promise and peril of highly computerized, wired vehicles. A potential hazard was quickly remedied without customers having to visit a repair station. But the after-the-fact recall notice -- cards explaining the fix were being mailed to the vehicle owners a week later -- circumvents the role of safety regulators who traditionally sign off on recalls.

“Over-the-air updates offer incredible upside advantages and huge downside risks,” said Mark Rosekind, a former NHTSA chief during the Obama administration.

“Doing a recall can take a long time and sometimes you may never get to 100%” of all affected autos. An over-the-air update, on the other hand, can fix every car overnight. But, said, “who is providing oversight to ensure the effectiveness?”

Over-the-air updates are revisions to software or firmware delivered wirelessly to electronic devices. They are common in mobile phones and personal computers, and increasingly cars as they become more computerized.

General Motors Co. uses over-the-air updates for some vehicle software systems, its OnStar connected services and Super Cruise driver-assist technology and Ford Motor Co. will initiate its first over-the-air updates in January when it debuts a hands-free driving system called Blue Cruise. Tesla’s over-the-air updates include those to driver-assist systems the company controversially markets as “Autopilot” and “Full-Self Drive,” even though it instructs drivers to keep their hands on the wheel “at all times.”

That raises questions for U.S. auto regulators who oversee vehicle safety. It’s not unusual for carmakers to initiate recalls, but NHTSA traditionally plays a role, such as determining the effectiveness of a proposed remedy in advance.

“The safety potential of recalls made over the air are obvious and significant and as Tesla has demonstrated they can be completed quickly and cover every defective vehicle,” said Jason Levine, executive director of the Center for Auto Safety, which lobbies for more stringent auto safety rules.

Yet, he said, it’s critical that any safety-related, over-the-air update “is subject to vigorous oversight to ensure that it actually repairs the problem while ensuring consumers retain the full promised performance of their purchase.”

In September, Tesla beamed an over-the-air software update to its vehicles aimed at improving how its driver-assistance system Autopilot identifies stopped emergency vehicles at crash scenes. But the company didn’t issue a recall. The move, dubbed by critics a “shadow recall,” came weeks after NHTSA opened an investigation into whether Autopilot was defective after Teslas had crashed into stopped police cars and fire trucks.

In the most recent case, Tesla released on Oct. 23 an over-the-air software update to add a so-called Full Self-Driving system to the cars of volunteers who Tesla monitoring show had high safety records. The owners received an alert on the vehicle’s touchscreen and were given the option to install immediately or schedule for later.

The next morning, the company started receiving reports of unintended emergency brake activations, according to documents posted on NHTSA’s website. So the company pulled back the update for owners who hadn’t installed it and disabled the automatic braking and forward collision warning features that were malfunctioning for those who had. A new update went out Oct. 25.

On Oct. 29, the company announced a recall for about 11,700 cars that had the software and said it would notify them by mail, as the law requires.

NHTSA said in a statement after the recall was announced that it plans to “continue its conversations with Tesla to ensure that any safety defect is promptly acknowledged and addressed according to the National Traffic and Motor Vehicle Safety Act.”

The agency declined to comment further. The carmaker didn’t respond to a request for comment.

Tesla’s decision to launch a recall after its latest software update was pushed out could be a sign the Biden administration’s stepped up oversight of the company is starting to have an effect, said David Friedman, vice president of advocacy for Consumer Reports, who is also a former NHTSA administrator during the Obama administration.

“It looks like Tesla is actually starting to follow the law,” he said, referring to federal rules that require carmakers to notify NHTSA about known defects within five days of when they find out about them.

The company has previously framed its ability to push out over-the-air updates as a potential boon to auto safety.

“Thanks to mass collection of collision data, our team was able to take passive safety to a whole new level - using an OTA update,” Martin Viecha, Tesla’s investor relations chief, said in a tweet that was published on the same day the carmaker received letters from NHTSA questioning its decision to push out an update out for the Autopilot software without issuing a recall.

Levine said it will be important for NHTSA to maintain a role in overseeing recalls that are tied to software updates, even as carmakers such as Tesla continue to refine the ability to push them out quickly.

Federal law requires carmakers to notify drivers of recalls by mail with 60 days of filing a defect report with NHTSA. Tesla said in documents that were posted on the NHTSA website that it planned to notify dealerships and service centers by Nov. 1 and owners by Dec. 28.

Friedman said it would take an act of Congress or a regulatory action to change the rules to allow NHTSA to use a quicker form of communication in the case of over-the-air updates. He said traditional recall notices can still play a role even in the case of instant software updates that are pushed out by carmakers.

“There’s a whole broader question about how you can have a modern recall system in the connected era we live in,” he said.

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