It's possible because the Tesla self-drive / auto-drive / drive-assist feature DIDN'T SPOT THE OBSTACLE, DIDN'T APPLY THE BRAKES IN TIME and therefore DIDN'T DO WHAT IT CLAIMS.
It did do what it claims. What happened in the accident was exactly the same as a description of a limitation in the manual: "Warning: Traffic-Aware Cruise Control can not detect all objects and may not brake/decelerate for stationary vehicles, especially in situations when you are driving over 50 mph (80 km/h) and a vehicle you are following moves out of your driving path and a stationary vehicle or object, bicycle, or pedestrian is in front of you instead. Always pay attention to the road ahead and stay prepared to take immediate corrective action. Depending on Traffic-Aware Cruise Control to avoid a collision can result in serious injury or death."
"If you can, help others. If you can't, at least don't hurt others." -- the Dalai Lama