Tesla resolves fatal crash case as NHTSA investigations persist

Tesla has settled a lawsuit connected to a fatal 2023 crash involving a vehicle using the company’s advanced driver assistance system, known as Full Self-Driving. Bloomberg was the first to report the settlement, though the specific terms of the agreement were not disclosed. The lawsuit was filed against both Tesla and the driver of the vehicle by the daughter of Johna Story, a 71-year-old woman who was struck by a Tesla Model Y. Story was hit after she had stepped out of her own vehicle to direct traffic around a separate crash that had occurred earlier due to sun glare.

While this specific lawsuit has been resolved, the company remains under federal regulatory scrutiny from the National Highway Traffic Safety Administration (NHTSA), which serves as the US federal regulator for vehicle safety. The NHTSA opened an investigation into Tesla’s FSD (Supervised) automated driving software in 2024. This action followed four reported crashes in low visibility conditions, including the fatal collision involving Story. At the time, the federal agency stated it was investigating the driver assistance system to determine whether the software could detect and respond appropriately to reduced roadway visibility conditions, such as sun glare, fog, or airborne dust.

The NHTSA subsequently upgraded its investigation to an engineering analysis in March 2026. In its report, the agency wrote: “Available incident data raise concerns that Tesla’s degradation detection system, both as originally deployed and later updated, fails to detect and/or warn the driver appropriately under degraded visibility conditions such as glare and airborne obscurants.” While the settlement ends the family’s lawsuit, this upgraded federal investigation has not yet been closed. At stake for Tesla in this ongoing federal investigation is a host of possible outcomes, which could include a vehicle recall.

Beyond the visibility-related investigation, the federal agency also opened a separate investigation into FSD in October 2025. This second inquiry was initiated after the agency received reports that the software caused the vehicles to run red lights or cross into the wrong lane, representing another layer of regulatory scrutiny for the automaker.

Why it matters

While the settlement resolves a specific legal dispute, Tesla remains under federal scrutiny as the NHTSA continues its engineering analysis and a separate investigation into FSD performance.