Tesla Settles First FSD Pedestrian Fatality Case as NHTSA Expands Probe to 3.2 Million Vehicles

Tesla has reached a settlement in connection with a fatal crash that occurred on November 28, 2023, on a highway between Flagstaff and Phoenix, Arizona. In the incident, 71-year-old Johanna Story was struck and killed by a Model Y operating with its Full Self-Driving (FSD) feature engaged while she was outside her vehicle directing traffic following an earlier collision. This is the first known pedestrian fatality linked to Tesla’s FSD system. Story’s daughter subsequently filed a lawsuit against both Tesla and the driver involved; her attorney, Dustin Burch, confirmed that a settlement has been reached, though terms were not disclosed. Meanwhile, the National Highway Traffic Safety Administration (NHTSA) continues its federal investigation into Tesla’s FSD system. The agency launched a preliminary evaluation in October 2024, focusing on FSD’s performance under low-visibility conditions. After identifying multiple related crashes—including the one involving Ms. Story—the probe was upgraded to an Engineering Analysis in March 2026, covering approximately 3.2 million Tesla vehicles equipped with FSD across the U.S. NHTSA stated that the FSD system exhibits deficiencies in reduced visibility, failing to adequately detect road conditions that impair camera visibility and not providing drivers with sufficient warning to react in time. Additionally, Tesla’s own data logging and labeling practices may have contributed to underreporting of incidents. Tesla said it has addressed these concerns through hardware upgrades to its cameras and software improvements. Previous NHTSA investigations of this nature have led to two recalls and fleet-wide software updates. Separately, NHTSA disclosed that it initiated another independent investigation into FSD in October 2025 after receiving reports of the system causing vehicles to run red lights or enter incorrect lanes.