One of Elon Musk’s favourite tactics for boosting Tesla’s stock price has been to claim that Tesla vehicles either can already or will very soon be capable of completely autonomous self-driving. In 2016 Tesla made the bold announcement that, as of then, all Tesla vehicles would leave the factory with the hardware necessary for “full self-driving” (FSD). Catching some sleep in your car or having it drive across the US with nobody inside the vehicle would be possible. As of late 2024, these promises have not materialised and some are taking notice.
LoSavio et al v Tesla – where’s my FSD?
Led by retired lawyer Thomas LoSavio, this lawsuit originated in September 2022. The plaintiffs claimed that Tesla repeatedly and knowingly made false claims that its advanced driver assistance systems (ADAS) were on the verge of producing fully self-driving cars and that Tesla had not delivered what it promised. LoSavio alleged that he paid $8,000 extra to have FSD software on his Tesla Model S. Not only had Tesla not delivered this, LoSavio claimed that Tesla FSD was dangerous and had caused accidents and fatalities.
A similar shareholder lawsuit alleging that Musk and Tesla committed fraud by exaggerating FSD’s capabilities was dismissed in October 2024. The judge in this case ruled that the plaintiffs had not demonstrated how Musk and Tesla were liable for any false promises regarding FSD and that some of Musk’s statements contemplated future technological advances. The Court did however permit the shareholders to file revised allegations by the end of October 2024. The LoSavio case is still pending.
Huang v Tesla – fatal reliance
In March 2018 Apple engineer Walter Huang’s Tesla Model X was being driven by Tesla’s Autopilot ADAS on a highway in Mountain View, California when the system steered directly into a concrete divider at about 70mph. Huang was killed and his family sued Tesla.
In April 2024, Tesla settled the suit on the second day of trial. Huang was partially at fault – his hands were off the steering wheel and he was playing a video game just before the collision. But Tesla claims its ADAS is “full self-driving” and the lawsuit observed that Huang “reasonably believed the… Model X… was safer than a human-operated vehicle” because of the Autopilot feature. Huang had placed his trust in the Autopilot system following claims that Musk and Tesla had often made about the system’s capabilities and safety.
Tesla’s defence was that its small print stated that drivers should continue to pay attention and keep their hands on the wheel. Had the trial continued, Tesla would have faced unwelcome scrutiny over the exact nature of its system including Musk’s public claims regarding the capabilities of the system and how Tesla faked an FSD demonstration video.
Neither the Huang nor LoSavio cases would be the last legal jeopardy for Telsa regarding FSD.
Types of FSD
In order to fully appreciate the background to Musk’s FSD claims, we need to consider the different types of FSD. SAE International (formerly the Society of Automotive Engineers) has defined five levels of FSD from 0 (some automated features but not automatic) to 5 (completely autonomous self-driving vehicles).
Level 0: Driver always fully controls the car, some safety warnings such as lane departure and automatic emergency braking.
Level 1: Driver assistance – control over speed or steering but not simultaneously. Adaptive cruise control and automatic lane changing are examples.
Level 2: As Level 1 but simultaneous control of speed and steering. This level includes parking assistance technology, but the driver must always be alert, supervising the automation and ready to drive manually. Tesla’s FSD is currently at this level.
Level 3: Simultaneous control of speed and steering, with the vehicle able to monitor its surroundings and drive itself in some conditions. The human driver must still be alert but the vehicle will warn when the driver needs to take over control because the automation system has exceeded its capabilities.
Level 4: As Level 3, except that the automation can cope with most normal driving circumstances and will pull over and stop rather than demand human intervention if it cannot, for example in poor weather.
Level 5: The vehicle is completely automated and can drive itself in all conditions and circumstances.
US regulators become involved
Following a slew of complaints about Telsa’s Autopilot FSD software to the US National Highway Traffic Safety Administration (NHTSA), the US federal body responsible for defining motor vehicle safety standards, the agency upgraded an initial 2021 investigation into a full engineering study a year later. This followed a number of incidents in which Tesla cars with Autopilot engaged collided with other road vehicles including stationary emergency vehicles dealing with other incidents. Tesla issued a recall in 2023 to address concerns about Autopilot with major concerns being that its driver monitoring systems were too easily defeated and that Musk/Tesla were overstating the capabilities of the system.
In another case where a Tesla driver died in an Autopilot-driven Tesla, a Florida judge ruled that there was “reasonable evidence”, following testimony from Tesla engineers, that Tesla knew Autopilot was defective but did nothing about it. A further NHTSA probe began in 2024 to assess whether the 2023 recall did actually address the safety issues surrounding Autopilot, with NHTSA having concluded that Tesla’s marketing “lead drivers to believe that the automation has greater capabilities than it does”. Proceedings in the Florida case could prove useful to NHTSA after Tesla allegedly “failed to respond” to demands for information about Autopilot.
To add to Telsa’s Autopilot woes, early in 2023 US financial watchdog the Securities and Exchange Commission opened an investigation into whether Musk may have misled Tesla investors with “inappropriate forward-looking statements”. It also emerged in May 2024 that the US Justice Department was considering whether to charge Tesla with fraud over Musk’s repeated claims regrading FSD.
The shortcomings of Tesla’s systems
Rival car manufacturers offer similar systems to Tesla’s ADAS, such as GM’s Super Cruise and Ford’s BlueCruise. However these systems rely on ultra-high definition mapping of certain roads and will only activate on those roads. They also employ camera monitoring systems to ensure the driver is looking ahead.
Tesla by contrast uses camera and sensor arrays on the car to feed back to its driver assistance systems, essentially trying to mimic a human’s approach to driving via computer systems. This in some ways is a remarkable achievement in that it could be said to be over 95% effective. The only problem is that this isn’t good enough in the real world – it needs to be over 99.999% effective and those ‘edge cases’ where it falls down are the most difficult to write software for.
It has also led to accusations of Tesla using public roads (and the public) for ‘beta testing’. Notably Tesla’s intention to offer FSD in Europe is “pending regulatory approval” (one suspects this is another of Tesla’s “forward-looking statements”) and “lax [to] non-existent US regulations” are what allow Tesla to “treat… public roads as a testing ground”. Tesla removed ultrasonic sensors from its cars in 2022 (probably as a cost-cutting measure) after removing radar in 2021. Musk has always opposed using LiDAR technology when the rest of the auto industry views this as essential for autonomous vehicles since it constructs a 3D map of the surroundings at much higher resolution than cameras.
Tesla admitted in a December 2020 letter to the California Department of Motor Vehicles that its self-driving packages were “SAE Level 2 automation” and not capable of autonomous driving. Rival Waymo is arguably far ahead of Tesla with autonomy approaching or at Level 4, a breakthrough achieved via ‘geofencing’ to pre-mapped areas.
Robotaxis – the next Big Tesla Thing
Musk’s latest hype for Tesla is the ‘robotaxi’, unveiled in October 2024 to a somewhat muted reception. His claims regarding the commercial potential of Tesla robotaxis might have more credence had four Tesla executives, including the “global vehicle automation and policy lead” not left Telsa on the eve of the announcement. The entire concept of the robotaxi of course requires Tesla to be on the verge of achieving Level 5 autonomy – and it is clearer than ever that it is nowhere near doing so.
Musk’s ‘forward-looking statements’ regarding autonomy are on the verge of coming back to bite him. If just one of the many legal challenges discussed here succeeds, his empire might crumble given that Tesla’s share price bears little resemblance to its core business financials, being propped up by Musk’s continued autonomous vehicle puffery.
