Tesla - the path to full self driving value

Tesla are pushing forwards with their autopilot software and autonomous driving with what they call full self driving or FSD. Musk has a number of visions on what this will bring, from being "feature complete" by the end of the year to the Robotaxi where your car can go out and earn you money when you're not using it.

We're sceptical to say the least for the following reasons

So in our opinion, full self driving in the sense of driverless driving, is simply not a plausible with the current cars, the current technology, the current legislation and the current public appetite for accident rates.

So where's the path to value?

The value is the selective targeting of level 4 driving.

Rather than focus on the feature set for all areas of driving and chasing a goal that is thwarted with issues, we believe that Tesla should take a different approach. Their current development road map appears to be trying to enable the car to autonomously drive in an ever increasing percentage of situations, but rather than achieve 95% ability on 100% of roads, with driver intervention when it fails (level 2 autonomy) we believe they would be better by focusing on 100% of the required ability on 50% of the roads.

So what does that look like? If we consider the hardest road conditions to drive on, they're urban situations. Parked cars, pedestrians, turning across traffic, stop signs and lights, merging onto roundabouts, single lane roads where you need to yield for oncoming traffic. The list goes on. These are not trivial issues and the penalty for getting it wrong can be very high.

But there is a class of road where many of these are not present, and they're also roads where drivers spend long hours of time in boredom. Freeways, Motorways, Autobahns, The main trunk roads across countries. Autopilot is already incredibly close to addressing these roads in their entirety, Tesla should divert ALL resources into completing the job and getting approval for level 4 autonomy on such road types. To do so they need to resolve the following challenges, which they need to solve regardless of approach, we#re just changing the priority:

If they crack this scenario such that a driver can drive the first mile or 2 to the interstate and then settle back and work on their laptop for 2 hours while the car drives, and then takes back control, it would be the first truly autonomous, publicly accessible feature. Tesla can then extend their footprint from this base.

This is less about feature complete of all features, but execution poor, its about feature perfected for the subset of features required for a specific road type. Get one road type cracked and the rest will eventually follow. There is a related benefit to this approach too. The human behaviour aspects of driver aids such as the current implementation of autopilot means it is increasingly abused by drivers. Liberties can be taken, and the driver often gets away with them, and the better the system becomes the less prepared many drivers will be to intervene when the need arises. To move to a lower standard of AP on inappropriate roads, and a higher standard on selected roads, together with the development of better understanding and assessment of the drivers ability to resume control will lead to a reduction in the number of accidents from driver abuse.

The approach we believe that will give both motorists and shareholders value is therefore narrow the scope and execute completely, this will be quicker to market and safer for all. As its purely a subset of the overall vision it can't be slower, but the first to market with the approvals to use it in a public setting will set the precedent, take the first mover advantage and in turn boost product sales, the value of FSD, the reputation and, if Musks claims of wanting to the safest, the greatest of all value, fewer road fatalities and serious injurys.

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We are Tesla owners and in general supporters. We don't hold stock in Tesla, nor do we short Tesla stock. Our views are our own, based on data points and research that we conduct ourselves. Our goal is to take an impartial view as far too many organisations are either extremely pro or anti Tesla.
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