Tag Archives: consumer safety

Ford Stock Falls After $1.7 Billion Verdict in Fatal Rollover Case

Ford Motor Co.

’s shares slid nearly 5% in morning trading Monday, following news of a $1.7 billion jury verdict involving a fatal rollover accident in one of its older-model heavy-duty trucks.

A jury in Georgia on Friday reached the verdict after a three-week trial, determining punitive damages should be imposed on

Ford

F -4.98%

for selling 5.2 million Super Duty trucks that the plaintiffs’ lawyers argued had dangerously weak roofs vulnerable to collapsing in a rollover crash.

Ford’s stock, trading at about $15.12 a share Monday morning, fell more sharply than the broader market.

The lawsuit, brought by the children of the victims who died in the crash, centered on a 2014 accident in which a couple driving a 2002 Ford F-250 truck were killed when the right front tire blew out and the pickup rolled over. The victims, Melvin and Voncile Hill, were crushed inside the truck, according to court records.

“While our sympathies go out to the Hill family, we don’t believe the verdict is supported by the evidence, and we plan to appeal,” Ford said Sunday. “In the meantime, we aren’t going to litigate this matter through the news media.”

The verdict is believed to be one of Georgia’s largest and puts a spotlight on other older-model Super Duty trucks sold by Ford over a roughly 17-year period that the plaintiffs’ lawyers have argued have a similar roof design.

In the lawsuit, the plaintiffs’ attorneys allege that Super Duty trucks sold through the 1999-2016 model years had defectively designed roofs and Ford knew of the dangers posed at the time. The lawyers pointed to evidence they said showed that the trucks failed internal company testing and that in 2004, Ford developed a stronger roof but didn’t use it in sellable pickups until the 2017 model year, according to court documents.

Ford has identified 162 lawsuits and 83 similar incidents of roof crush in 1999-2016 Super Duty trucks, according to the pre-trial order.

Ford contends that Mr. Hill, the driver of the F-250 truck involved in the accident, improperly steered the vehicle after the tire ruptured, causing it to leave the roadway at a dangerous angle, the court records show.

Ford also said that the tire on the truck had the incorrect load-carrying capacity, which led it to fail, and the Hills had improperly used their seat belts, according to the court documents.

Often, high-dollar verdicts such as this one are later reduced by judges or the appeals court.

Write to Nora Eckert at nora.eckert@wsj.com

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Ford Faces $1.7 Billion Verdict in Fatal Rollover of F-250 Pickup

Ford Motor Co.

F -1.67%

is facing a potential $1.7 billion in punitive damages after a Georgia jury reached a verdict Friday in a case involving a 2014 rollover of a Ford F-250 pickup truck that left two people dead.

The Gwinnett County jury determined that damages should be imposed on Ford for selling 5.2 million Super Duty trucks with what plaintiffs’ attorneys said were dangerously weak roofs that could crush passengers in a rollover accident, according to James Butler, a lawyer representing the plaintiffs in the case.

The case was brought by the family of a Georgia couple, Melvin and Voncile Hill, who were driving a 2002 Ford F-250 Super Duty truck from their farm when the right front tire blew out and the truck rolled over, Mr. Butler said. The Hills were crushed inside the truck, he added.

Ford Chief Executive Jim Farley said last month that the company continues to be hampered by recalls and customer-satisfaction actions.



Photo:

Nic Antaya/EPA/Shutterstock

“While our sympathies go out to the Hill family, we don’t believe the verdict is supported by the evidence, and we plan to appeal,” a Ford spokesman said Saturday.

The $1.7 billion verdict is believed to be one of Georgia’s biggest in history and is unusually large for an accident-related lawsuit involving an auto manufacturer. Typically, damages in these types of cases run in the millions of dollars, and many are settled out of court. Often, high-dollar  verdicts are later reduced by judges or the appeals courts.

“The Hill family is glad this part of the case is finally over,” Mr. Butler said. “They intend to persevere and make Ford pay.”

On Thursday, the Georgia jury awarded plaintiffs Kim and Adam Hill, the children of the couple who died in the crash, $24 million in compensatory damages, Mr. Butler said. The jury allocated 70% of fault in the case to Ford, Mr. Butler said.

Ford executives have for years worked to tackle costly quality and warranty problems with their vehicles, including making this effort a priority under the current chief executive,

Jim Farley.

The company has issued 49 recalls this year, the most of any auto maker, according to data from the National Highway Traffic Safety Administration.

“We continue to be hampered by recalls and customer-satisfaction actions,” Mr. Farley said on a July earnings call. “This affects our cost but more importantly, it falls short on our most fundamental commitment to our customers.”

Last year, Ford set aside more than $4 billion for warranty costs, up 76% from five years earlier. The car company’s total warranty expenses increased about 17% from 2016 to 2021.

Earlier this year, Mr. Farley brought on a new executive director of quality,

Josh Halliburton.

Before coming to Ford, Mr. Halliburton spent 17 years at J.D. Power, an independent research firm that specializes in assessing and studying vehicle quality.

“We are placing more time and emphasis on ensuring everything is done right upfront to prevent quality issues from manifesting later in the development process,” Mr. Halliburton said.

He added that he expects to see Ford’s warranty problems improve next year, but that it might take two to three years to see results with the most impact.

Write to Nora Eckert at nora.eckert@wsj.com

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Tesla Faces Upgraded U.S. Probe Into Autopilot in Emergency-Scene Crashes

U.S. auto-safety regulators have escalated their investigation into emergency-scene crashes involving

Tesla Inc.’s

TSLA 1.26%

Autopilot, a critical step for determining whether to order a safety recall.

The National Highway Traffic Safety Administration said in a notice published Thursday that it was expanding a probe begun last August into a series of crashes in which Tesla vehicles using Autopilot struck first-responder vehicles stopped for roadway emergencies.

The agency said it was upgrading its earlier investigation to an engineering analysis after identifying new crashes involving Autopilot and emergency-response vehicles.

NHTSA also said it has expanded its examination of Autopilot to include a wider range of crashes, not only those at emergency scenes. The agency said it would further assess how drivers interact with Autopilot and the degree to which it might reduce motorists’ attentiveness.

Forensic data available for 11 of the crashes showed that drivers failed to take evasive action in the two to five seconds before the collision, the agency said.

The investigation covers an estimated 830,000 Tesla vehicles made from 2014 to 2021, including the Model 3, Model S, Model X and Model Y.

NHTSA said in its filing that it has identified 15 injuries and one fatality related to the crashes.

Tesla didn’t immediately respond to a request for comment. The electric-car maker’s stock was up 2.5% in midday trading Thursday, following news of a strong bounceback in production at its plant in China.

Autopilot, Tesla’s name for the advanced driver-assistance technology used in its vehicles, is designed to help drivers with tasks such as steering and keeping a safe distance from other vehicles. Tesla instructs drivers using the system to pay attention to the road and keep their hands on the wheel.

The electric-car maker has long maintained that driving with Autopilot engaged is safer than doing so without it. Tesla points to internal data showing that crashes were less common when drivers were using Autopilot. Some researchers have criticized Tesla’s methodology.

In opening its initial probe last year, NHTSA said that it had identified 11 crashes since early 2018 in which a Tesla vehicle using Autopilot struck one or more vehicles involved in an emergency-response situation. In its latest filing, the agency said it discovered six additional crashes involving Teslas and first-responder vehicles where Autopilot was in use.

U.S. safety regulators are probing crashes involving Teslas, suspecting the company’s Autopilot system might be involved. WSJ’s Robert Wall reports on how some motorists may mistakenly think Autopilot is a self-driving feature that doesn’t require their attention. (Video from 3/18/21)

The expanded probe of Autopilot is the latest sign that U.S. auto-safety regulators are getting more aggressive in scrutinizing advanced vehicle technologies that automate some or all of the driving tasks.

NHTSA is getting ready to release new crash data this month that will give the public its first detailed look at the frequency and severity of incidents involving what are known as automated driving or advanced driver-assistance features, The Wall Street Journal has reported.

More than 100 companies are subject to an agency order requiring them to report crashes in which such systems were in use. Among those included are operators of autonomous-car fleets, like

Alphabet Inc.’s

Waymo and

General Motors Co.

’s Cruise LLC.

The technology under scrutiny includes lane-keeping assistance and cruise-control systems that keep a fixed distance behind a leading car, as well as higher-tech systems such as features that can guide a car along highways with minimal driver input.

Autopilot has become a particular focus for U.S. regulators in recent years, prompted by incidents in which drivers have misused the technology, overriding safety functions to operate a vehicle without their hands on the wheel, for example. Some critics also said the term Autopilot risks giving drivers an inflated sense of the system’s capabilities.

NHTSA said in its latest filing that driver use or misuse of Autopilot doesn’t necessarily preclude the agency from determining whether the technology is defective.

“This is particularly the case if the driver behavior in question is foreseeable in light of the system’s design or operation,” NHTSA said. Auto makers are legally required to initiate a recall if a safety defect is discovered in their vehicles.

Separately, NHTSA has opened a broader investigation into several dozen crashes where advanced driver-assistance features are suspected to have played a role. While the probe covers vehicles made by any car company, incidents involving Teslas represent most of the cases under examination, including several with fatalities.

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Tesla Stock Is Dropping. Here’s What’s Really Behind the Slide.

Tesla shares are dropping. Recalls and uncertainty could be responsible. A third reason, however, is most likely.


Joe Raedle/Getty Images

Text size


Tesla

stock can’t go up forever, and finally turned lower on Tuesday. Reports of recalls and uncertainty about the company’s deal with Hertz are two potential reasons, but a third factor may be the real key.

Tesla (ticker: TSLA) stock was down 1.6% in morning trading, following a slump of as much as 5% before the open. The


S&P 500

and


Dow Jones Industrial Average

were up 0.3% and 0.2%, respectively.

Tesla stock has been on a tear. It has risen eight of the past nine trading sessions, and has gained 70% over the past three months. Its shares have been buoyed by signs that the company really has won the EV race, signing a deal with Hertz (HTZ) for 100,000 electric vehicles. Companies such as


Ford

Motor (F) and


General Motors

(GM) have announced enormous spending plans to try to close the gap.

No surprise, then, that the stock would react badly to potentially negative headlines. First, Musk himself tweeted that Tesla had yet to sign a contract with


Hertz

(HTZZ). Then came the announcement that the company would be recalling 11,700 vehicles.

The Musk tweet, however, was intended as a positive. The Hertz deal is Tesla’s first large fleet sale. Fleet sales tend to be lower-margin. Fleet buyers look for volume discounts and don’t often buy all the high-end options individual consumers do.

Musk has assured investors, on


Twitter

(TWTR), a couple of times that Tesla is selling all the cars it can make and isn’t giving any discounts these days.

Hertz shares initially took a hit because of the tweet, starting off with a loss of about 6% in premarket trading. But nothing happens in a vacuum.

Hertz’s peer


Avis Budget

(CAR) reported better-than-expected results Monday evening, sending the stock up about 1% in premarket trading, despite year-to-date gains of about 360%. Rental-car demand and operating metrics are improving.

In late morning trading, it looked as if meme traders were squeezing short sellers, as they did with


GameStop

stock at the start of the year. Avis stock was up 162% to $450 a share, bringing Hertz is along for the ride with a gain of about 16%.

For Tesla stock, the recall might be a bigger deal than the status of the sale to Hertz. The cars are being recalled because of a software-communication error that can activate automatic emergency braking. The fix is an over-the-air software update. Tesla has faced more regulator scrutiny over driver-assistance features in recent months.

What’s more, Tesla recently introduced a “beta” version of its latest full-self-driving software to Tesla drivers who qualified for the upgrade. Tesla believes its software makes vehicles safer. Regulators, however, still need to adjust to cars being improved by software updates and how to handle changes made to software to fix bugs.

Any news, however, could have sparked a selloff in Tesla stock. The stock is extremely overbought, which is to say that it is rising quickly relative to its own history. When things get extreme, stocks can revert to the mean. Tesla’s relative strength reading is at 94. A reading of 50 is, essentially, normal and levels of above 70 generally have traders looking for a drop.

Coming into Tuesday, Tesla stock has outperformed the S&P 500 by about 77 percentage points over the past 100 days, as Datatrek Research pointed out in a Tuesday note. That’s a lot, but not unheard of for Tesla.

“Crazy as it sounds, the stock’s recent rally is pretty normal action for this name,” the research outfit said. With outperformance like that, investors don’t really need an excuse to take profits.

Tesla stock has a long way to go before it will look ripe for a hit.

Write to Ben Levisohn at ben.levisohn@barrons.com

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Tesla Stock Is Dropping. Here’s What’s Really Behind the Slide.

Text size


Joe Raedle/Getty Images


Tesla

stock can’t go up forever and shares are finally falling in premarket trading Tuesday. Reports of recalls and Hertz-deal uncertainties are two reasons the stock might be down. A third reason, however, might be more responsible for the decline than the other two.

Tesla (ticker: TSLA) stock is down about 4.3% in premarket trading.


S&P 500

and


Dow Jones Industrial Average

futures are both little changed.

Tesla stock has been on a massive tear. It’s up eight of the past nine trading sessions and has gained 70% over the last three months. Its shares have been buoyed by signs that the company really has won the EV race as it signed a deal with Hertz (HTZ) for 100,000 electric vehicles and companies like


Ford

(F) and


General Motors

(GM) announced massive spending plans to try to close the gap.

No surprise, then, that the stock would react badly to headlines. First, Musk himself tweeted that Tesla had yet to sign a contract with


Hertz

(HTZZ). Then came the announcement that the company would be recalling 11,700 vehicles.

The Musk tweet, however, was intended as a positive. The Hertz deal is Tesla’s first large fleet sale. Fleet sales tend to be lower margin. Fleet buyers look for volume discounts and don’t often buy all the high-end options individual consumers do. Musk has assured investors, on


Twitter

(TWTR), a couple of times that Tesla is volume constrained—selling all the cars it can make—and isn’t giving any discounts these days.

The recall might be a bigger deal. The cars are being recalled because of a software communication error that can activate automatic emergency braking. The fix is an over-the-air software update. Tesla has faced higher regulator scrutiny over driver assistance features in recent months.

What’s more, Tesla recently introduced a “beta” version of its latest full self-driving software to Tesla drivers who qualified for the upgrade. Tesla believes its software makes vehicles safer. Regulators, however, still need to adjust to cars being improved by software updates and how to handle changes made to software to fix bugs.

Any news, however, could have sparked a sell of it Tesla stock. The stock is extremely overbought. Overbought is a technical term that looks at how fast a stock is rising or falling relative to its own history. When things get extreme stocks can revert to the mean. Tesla’s relative strength reading is at 94. A reading of 50 is, essentially, normal and a reading above 70 is when traders start looking for a drop.

Coming into Tuesday, shares were up about 18% over the past five days. Investors don’t really need an excuse to take profits. Tesla stock has a long way to go before it really starts to take a hit.

Write to Ben Levisohn at ben.levisohn@barrons.com

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J&J Recalls Aveeno, Neutrogena Spray Sunscreens

Johnson & Johnson said it was recalling some sunscreens from U.S. stores.



Photo:

Mark Lennihan/Associated Press

Johnson & Johnson is recalling Neutrogena and Aveeno spray sunscreens from U.S. stores after detecting benzene, a potentially cancer-causing chemical, in some samples.

J&J said Wednesday that consumers should stop using and discard the spray sunscreens. The company said it also was notifying distributors and retailers to stop selling the products, and arranging for the return of the products.

A company spokesman said the effort would include removing products from shelves.

The New Brunswick, N.J., company said it doesn’t use benzene in the manufacturing of the spray sunscreens and is investigating the cause of the contamination. The company didn’t say whether the recall will also impact other countries.

J&J, one of the world’s biggest sellers of consumer-health products by sales, didn’t say how many bottles were affected and what the exact benzene levels were, though J&J said the levels were low and not expected to cause health issues.

The spray products affected, J&J said, are sold as Neutrogena Beach Defense, Neutrogena Cool Dry Sport, Neutrogena Invisible Daily, Neutrogena Ultra Sheer and Aveeno Protect + Refresh aerosol sunscreens.

“Out of an abundance of caution, we are recalling all lots of these specific aerosol sunscreen products,” the company said.

Benzene is a chemical that can cause cancer after high levels of exposure. High levels of exposure can also have more immediate effects, including dizziness, confusion and rapid or irregular heartbeats.

Write to Felicia Schwartz at felicia.schwartz@wsj.com

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Boeing Faces New Hurdle in Delivering Dreamliners

Federal air-safety regulators have stripped

Boeing Co.

BA 3.28%

’s authority to inspect and sign off on several newly produced 787 Dreamliners, part of heightened scrutiny of production problems that have halted deliveries of the popular wide-body jets.

The Federal Aviation Administration said its inspectors, rather than the plane maker’s, would perform routine pre-delivery safety checks of four Dreamliners that Boeing has been unable for months to hand over to its airline customers while it grapples with various quality lapses.

The agency has long empowered Boeing to perform the final safety signoffs on the FAA’s behalf, allowing it to issue what are known as airworthiness certificates needed to hand over new jets to airlines. The FAA said it has withheld the same authority on some of the planes in previous years to keep inspectors’ skills current.

Now, the FAA said its move to withhold final-approval authority was part of a broader set of actions directed at Boeing’s 787 production issues. A spokesman said the agency could decide to have its own inspectors sign off on more Dreamliners. “We can extend the retention to other 787 aircraft if we see the need,” he said.

A Boeing spokesman said Wednesday that the company has engaged the FAA throughout its efforts to resume Dreamliner deliveries and would follow the agency’s direction on final approvals as it has in the past. The spokesman said Boeing was “encouraged by the progress our team is making” on restarting the deliveries.

After halting deliveries in October, Boeing has built up an inventory of more than 80 newly produced, undelivered Dreamliners, according to aviation consulting firm Ascend by Cirium. Boeing has said it expects to resume deliveries by the end of March.

The wide-body jets have an excellent safety record and are used frequently on international routes. Boeing learned of the FAA’s move in January and has already factored the FAA signoffs into its expected delivery schedule, a person familiar with Boeing’s planning said.

Among specific aircraft slated for final approvals by agency inspectors are two Dreamliners ordered by

United Airlines Holdings Inc.

United expects to receive the planes in late March or early April, a person familiar with the Chicago-based carrier’s plans said this week.

The Boeing spokesman said the manufacturer would adjust its delivery plans if needed so it can take the time to conduct comprehensive 787 inspections “to ensure each meets our rigorous engineering specifications.”

The suspension of deliveries has cut off a significant source of cash paid by customers as the plane maker navigates the Covid-19 pandemic and weak demand in global air travel. Bernstein analyst

Doug Harned

has estimated the Dreamliner delivery slowdown could cost Boeing as much as $8 billion in cash flow through 2020 and 2021. He expects half of that to be recovered next year as airlines take delivery and pay the rest of the cost.

Boeing said in January that it would likely continue burning cash this year but has adequate liquidity after raising billions of dollars in debt last year. Investor optimism about the broader travel recovery helped lift its shares by 21% last week. The stock gained another 3.3% on Wednesday, valuing Boeing at $149 billion.

While limited in scope, the FAA move on the Dreamliner is similar to a step the agency took after two crashes of Boeing 737 MAX jets killed 346 people in 2018 and 2019.

The FAA stripped Boeing of its authority to perform the pre-delivery safety checks on MAX jets in late 2019. At the time, a faulty flight-control system and production-related missteps with that aircraft were under congressional and regulatory scrutiny. The FAA approved the 737 MAX to resume passenger flights last year.

The Dreamliner lapses are among several quality problems Boeing has faced in recent years in its commercial, defense and space programs.

Many of the 787 quality lapses involve tiny gaps where sections of the jet’s fuselage, or body of the plane, join together. Problems have emerged in other places, too, including the vertical fin and horizontal stabilizer at the tail, according to a March 12 FAA summary of the agency’s regulatory actions viewed by The Wall Street Journal.

Boeing has previously disclosed problems with a factory process used to generate small shims—materials used to fill the small gaps where the aircraft sections are joined together. Such gaps could lead to eventual premature fatigue of certain portions of the aircraft, potentially requiring extensive repairs during routine, long-term maintenance.

In its summary, the agency said it would hold on to its Dreamliner approval authority “until it is confirmed all shimming issues are resolved and airplanes conform to the FAA-approved design.”

Write to Andrew Tangel at Andrew.Tangel@wsj.com

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