Tesla Reaches Settlement in FSD Collision Case Amid Ongoing Federal Inquiries
Tesla has reached an agreement regarding a legal case stemming from a deadly accident in 2023 involving its Full Self-Driving (FSD) technology.
The details of the settlement were initially reported by Bloomberg, though specific terms remain undisclosed.
The lawsuit was initiated by the daughter of Johna Story, a 71-year-old woman who was tragically killed by a Tesla Model Y. The incident occurred when she exited her own vehicle to manage traffic around a prior accident made hazardous by sun glare.
In response to this and other incidents, the National Highway Traffic Safety Administration (NHTSA) began an investigation into Tesla’s FSD (Supervised) system in 2024 after identifying four crashes in situations with low visibility, including the incident involving Story. At that time, the NHTSA sought to determine whether the driver assistance technology was capable of “detecting and responding appropriately to reduced visibility conditions,” such as “sun glare, fog, or airborne dust.”
This investigation was escalated to an engineering analysis in March 2026. According to that report, the agency noted concerns that Tesla’s degradation detection system, both in its initial form and in subsequent updates, had not been effectively identifying or alerting drivers under poor visibility scenarios like glare and airborne obstructions.
Although the family’s lawsuit has been resolved through the settlement, the enhanced NHTSA investigation remains ongoing. Potential consequences for Tesla from this federal inquiry could include a vehicle recall.
Additionally, in October 2025, the federal agency launched another investigation into the FSD software following reports that it enabled vehicles to run red lights or venture into incorrect lanes.
