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What’s Really Going on With Tesla’s Autopilot?

May 26, 2021 By Jeremy Jones, CFA

Elon Musk, founder of Space Exploration Technologies Corp.- SpaceX, joins President Donald J. Trump at a launch briefing in preparation for the launch of the SpaceX Falcon 9 rocket with the Crew Dragon vehicle Wednesday, May 27, 2020, at the Kennedy Space Center in Cape Canaveral, Fla. (Official White House Photo by Shealah Craighead)

At MarketWatch, Therese Poletti and Jeremy C. Owens say “It’s time for Elon Musk to start telling the truth about autonomous driving.” They write:

Tesla Chief Executive Officer Elon Musk has shown that he has an influential platform by roiling the cryptocurrency market with his tweets. It is time for him to use it for a more important purpose: Telling the truth about autonomous driving.

Tesla Inc. TSLA, +2.39% has been charging customers up to $10,000 for “full self-driving” technology for nearly five years. The problem is that such technology does not exist. The company’s cars are equipped with a driver-assistance system, or ADAS, known as Autopilot, which is free of charge. It’s similar to systems offered by other manufacturers, such as General Motors Co.’s GM, +2.36% Super Cruise.

In that time, Musk has provided overly optimistic timelines to full autonomy and exaggerated the current and near-term capabilities of Autopilot. Tesla’s ADAS system lacks technology that most of the industry considers critical to safety, namely a driver-monitoring system. Musk predicted that a Tesla would be able to drive autonomously from Los Angeles to New York in 2018, a trip that still has not happened, and in 2019, he said all Teslas would be fully functioning robotaxis in the near future, which is unlikely, if not impossible.

Musk’s hyperbole is nothing new, and is not unique to him, but when it comes to autonomous driving, the consequences can be dire. Tesla fans have latched on to Musk’s words instead of the warnings in their owner’s manuals, and publicly performed dangerous stunts like sitting in the back seat of their cars as they operate on Autopilot. Recently, a Tesla owner who had posted videos of himself using Autopilot in an unsafe manner died in an automobile accident in California that is being investigated.

Tesla says its $10,000 computer for “self-driving capabilities” improves with software updates. The fine print on Tesla’s website, however, says its cars come with “features [that] require active driver supervision and do not make the vehicle autonomous.” The disclaimer says further that “[t]he activation and use of these features are dependent on achieving reliability far in excess of human drivers as demonstrated by billions of miles of experience, as well as regulatory approval, which may take longer in some jurisdictions.”

State and federal reviews

The pattern of driver misuse, collisions in which Autopilot may have been involved, and Musk’s blasé approach to autonomy has led to renewed scrutiny. Last week, the Los Angeles Times reported that the state of California’s Department of Motor Vehicles is reviewing Tesla to determine whether the company misleads consumers by advertising that its cars have full self-driving capability. While playing up its potential for Level 5, or full autonomy, Tesla has told the California DMV privately that its system is only level 2, or ADAS. Tesla has already been called out for the practice in Germany, where a court ruled that Tesla has misled consumers about autonomy and banned the company from using certain language.

A DMV spokeswoman confirmed that the matter is under review in California. While she said the DMV does not comment on items under review, she did provide a general statement: “The regulation prohibits a company from advertising vehicles for sale or lease as autonomous unless the vehicle meets the statutory and regulatory definition of an autonomous vehicle and the company holds a deployment permit.”

There are also federal investigations. The National Highway Traffic Safety Administration, or NHTSA, has launched 34 investigations related to advanced driver assistance systems, and 28 of those involve Tesla vehicles, according to an NHTSA spokeswoman. Recent Tesla collisions in Texas, California and China have only increased the scrutiny.

Tesla has even drawn attention in the halls of Congress, with three senators recently introducing legislation to require driver-monitoring systems in cars with ADAS. These systems ensure that the driver is in the driver’s seat and paying attention to the road, and are a feature in most cars with strong ADAS systems — but not Teslas.

Read more here.

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Jeremy Jones, CFA
Jeremy Jones, CFA, CFP® is the Director of Research at Young Research & Publishing Inc., and the Chief Investment Officer at Richard C. Young & Co., Ltd. CNBC has ranked Richard C. Young & Co., Ltd. as one of the Top 100 Financial Advisors in the nation (2019-2022) Disclosure. Jeremy is also a contributing editor of youngresearch.com.
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