Tesla Settles Fatal Crash Lawsuit Over FSD as Federal Probes Continue

Tesla has reached a settlement in a lawsuit stemming from a fatal 2023 crash involving a vehicle equipped with its Full Self-Driving (FSD) system. Bloomberg first reported the settlement; terms were not disclosed.

The lawsuit was filed against Tesla and the driver by the daughter of Johna Story, a 71-year-old woman who was struck by a Tesla Model Y. Story was hit after exiting her own vehicle to direct traffic following an earlier crash caused by sun glare.

The National Highway Traffic Safety Administration (NHTSA) opened an investigation into Tesla's FSD (Supervised) software in 2024 following four reported crashes in low-visibility conditions, including the one involving Story. NHTSA stated it was examining whether the system could "detect and respond appropriately to reduced roadway visibility conditions," such as "sun glare, fog, or airborne dust."

In March 2026, the investigation was upgraded to an engineering analysis. The agency noted: "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 resolves the family's lawsuit, the NHTSA investigation remains open. Potential outcomes include a recall. Additionally, in October 2025, NHTSA opened another probe into FSD after reports that the software caused vehicles to run red lights or drift into oncoming lanes.