Tesla and the path to full self-driving value (2023 update)

Last updated 03-Jan-2023

We first wrote this article in June 2019, now nearly 4 years ago. We updated it 2 years ago. Both times Tesla were on the verge of a breakthrough, Musk was talking up feature complete by the end of the year, full self-driving was just over the horizon, and here we are four years later with a distinct feeling of Deja-vu. Things have changed, the city streets beta is in the US and Canada and up to a point it looks impressive. But it's only city streets. Tesla Vision (TV) is now in all cars barring the earliest Mobileye cars, and even those with Radar no longer use it. Tesla have even doubled down on TV removing parking sensors from cars with the promise that cameras can do it all.

But is it? News broke at the end of 2022 where Tesla seemed to be filing to keep news on a new radar quiet for now, design documents for the Model S seemed to include a new radar housing. So is Radar due to return, and if so, is this for Autopilot or for passive safety?

2022 saw other changes. Tesla stopped reporting safety statistics. They'd previously stopped reporting the passive safety, and now all stats. One can only presume that the trend was not good otherwise why give up on virtuous promotion of the fact? To see our view on the Tesla safety statistics while they produced them, see our report: Tesla safety report and the need for caution which pretty much puts numbers on the improvements or recent lack of. We actually highlighted the reason why they were good was partly linked to the demographic of the early adopters. With the Model 3 and Model Y changing that demographic it wouldn’t be unreasonable to expect the figures to get worse, so we stand by that analysis.

We're still sceptical on progress

Hardware

We've seen the need to change AP hardware a number of times since inception. We're doubtful the current sensor suite is sufficient. Camera resolution is not that high, Tesla are already pixel peeping to get the most out of it, and given the compute power was wrong a number of times, why should we have confidence in the sensor suite being sufficient? It's also not just about the potential capability, it's about failure scenarios.

• The lack of redundancy. The cars currently have a relatively high instance of camera unavailability. There is nothing happening that can improve on a blocked or misted camera view and no real overlapping image to cover if the first camera fails.
• The positioning of the cameras is also flawed. Musk has repeatedly claimed that we can drive using our eyes so a car can self-drive with vision only. The problem with this claim is drivers sit in a position to one side to afford the best look down the road. Anybody that has driven in a car with the steering wheel on the opposite side to normal will tell you how difficult it is to drive, overtake, pull out and make some turns. The centrally placed forward vision cameras are in the single worst position for looking beyond the car in front, something that all good drivers instinctively do.

The combination of these factors makes us think that the obligation for level 3 and above driving which is to be able to predict when it needs to hand back to the driver, and manage that controlled hand back over time is going to be difficult to achieve. Failures in the sensor suite to be able to provide the necessary information could be quick.

What do Tesla actually mean by FSD?

Tesla talk about FSD without particularly explaining what they mean. Is this level 4 driving where the car can drive for significant parts of the journey with the driver being "mind off", or the full level 5 robotaxi version?

Lets also take a look at some of the other challenges before they can achieve any automated driving (as opposed to advanced driver assist where the driver is still responsible):

• The regulators need convincing before they approve commercial self-driving in any meaningful way. The suggestion that a statistical model of only 1 or 2 orders of safety better than humans is sufficient is one we very much doubt. We cannot think of any area of society other than medicine where such calculations are made with such close ratios. Risk calculations are much more conservative with respect to injury and fatalities, humans are allowed to make some mistakes, but machines, especially commercial transport, have much higher expectations. If train crashes then a significant investigation follows, imagine that after every self-driving accident even if the purpose was to confirm the self-driving car was not at fault, and just as importantly, the self-driving car couldn't have done more to avoid the accident. To be approved, we suspect regulators will not just want the cars to make no mistakes, but that they emulate the best drivers who through anticipation and roadcraft are able to significantly reduce their chances of an accident.
• Insurance companies won't underwrite it until they are extremely confident, and after a handful of accidents the world will be bogged down in legal arguments, investigations and so on. The worldwide fleet of Boeing 737 aircraft have been grounded because of a failing in the technology, the first suggestion of a bug in car will result in the feature being disabled across the world causing immense damage to Tesla’s reputation and possible litigation. We already see major investigations after fatal accidents involving a Tesla where there is as suspicion that the autopilot software is engaged and even when it is still clear the driver is responsible, Tesla have been held to account. We suspect that this may be why Tesla are entering the insurance market as it will give them the ability to control this aspect, however most insurers require some form of underwriting in the event of significant loss.
• The ability to autonomously drive in all scenarios (i.e., level 5) increases the complexity vastly. Anybody that has driven in some countries will realise how the laws of the road vary massively from area to area, not an insolvable problem but the models need to be trained and retrained for these constant local differences. We have mentioned above that regulators will look for defensive driving to avoid accidents, but in some countries a degree of assertive driving is required to get out into traffic. You would be stationary for a long time without such an approach in many cities. You could try and limit the use to countries where there driving standards are better, but even in the UK, which has one of the lowest accident rates in the world and driving standards are relatively high, there are still countless situations where you need to show a degree of assertiveness to make progress.
• It is not just about defensive or assertive driving. Sometimes a degree of common sense needs to be applied to deal with an edge case, maybe you need to yield even when you have the theoretical right of way and no accident would occur but a stalemate would arise. If you met a tractor on a country road and you have a car behind you preventing you from reversing, who gives way? What if the car behind you was towing a caravan? Or it was just after a tight bend? What if you heard emergency sirens approaching? There are pragmatic situations where the cars would need to back up as it is unrealistic for the tractor to reverse but the rules of these situations are heavily dependent on the local situation. Maybe the right action is to bump up a curb or onto grass at the side of the road as a temporary measure, sometimes not strictly lawful driving behaviour.
• In urban areas, people would abuse the knowledge that the car would yield and walk out in front of them. The challenge is not just a case of the car doing what we do, it’s about the car doing completely new things. Road design would need to change, society would need retraining, laws would need to be introduced regarding jay walking around the world with the ability to identify the pedestrian and prosecute.

Therefore, in our opinion, level 5 full self-driving (driverless cars), is simply not plausible with the current cars and for many years, at realistically would require level 4 driving to be in place to learn these edge cases and how to deal with them.

So where's the path to value?

The value is the selective targeting of level 3 driving, followed by level 4.

But there is a class of road where many of these risks are not present, and they're also roads where drivers spend several hours in boredom. Freeways, Motorways, Autobahns, The main trunk roads across countries. Autopilot is already incredibly close to addressing these roads in their entirety, Tesla could divert ALL resources into completing the job and getting approval for level 3 or even 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 are just changing the priority:

• They need to work on the process of the driver handing over control to the car and the car handing it back in a controlled and predictable manner. This goes beyond a simple pulling of a control stalk, especially in the handing back to the driver, and the safety protocol in how to deal with the situation where the driver is asleep and isn't ready to resume control
• They need to increase the reliability especially object detection at distance. The accident rate is currently reported as twice as safe, we believe that in itself this is debatable, but the safety margins need to be considerably higher. Current motorway fatality rates are currently 1 in a billion motorway miles driven in the UK. Tesla accident rates (accepting that accidents and fatalities are somewhat different) are 1 in every 3 million miles. In the UK there could be 300 none fatal accidents to every fatal just to maintain parity with the current statistics. Tesla need to be looking at an accident rate probably in excess of 100x better than its current rate to be credible

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 offering "mind off" driving. Tesla can then extend their footprint from this base to other road types.

This is less about feature complete of all features, but execution poor, it’s 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 driver’s 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 Musk’s claims of wanting to the safest, the greatest of all value, fewer road fatalities and serious injuries.