Tesla Settles Lawsuit Over Fatal FSD Crash, Federal Probe Continues

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 first to report on 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 she stepped out of her own vehicle to direct traffic around a crash that had occurred earlier due to sun glare.

The National Highway Traffic Safety Administration (NHTSA) opened an investigation into Tesla’s FSD (Supervised) automated driving software in 2024 after four reported crashes in low visibility conditions — including the one involving Story. The NHTSA said, at the time, it was investigating the driver assistance system to find out whether it could “detect and respond appropriately to reduced roadway visibility conditions,” such as “sun glare, fog, or airborne dust.”

That investigation was upgraded in March 2026 to an engineering analysis. In that 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 NHTSA investigation has not yet been closed. At stake for Tesla for the federal investigation is a host of possible outcomes, including a recall.