Autonomous driving and robotaxis are the future! Right? Well, don’t be so sure. There are a wide variety of problems with these systems, ranging from the fact that they aren’t as safe as they claim to be to the fact that none of them has a clear path to profitability. But possibly the largest issue is that no one seems to want them. That is set to throw a huge spanner in the works for the entire industry, but especially for Tesla.
Some manufacturers have been getting ahead of this curve.
Stellantis has a Level 3 autonomous system called AutoDrive that is “available and ready to be deployed”, which can enable drivers to take their hands off the wheel and eyes off the road at speeds below 37 miles per hour, no matter the lighting or weather conditions. That makes Autodrive one of the most accomplished consumer self-driving systems available and puts it significantly ahead of Tesla’s FSD. It should hopefully turn Stellantis’ currently iffy fortunes around and enable them to become a dominant force in the market, particularly if this system were offered in their more luxurious brands, such as Chrysler or Maserati.
But no, they have chosen not to release it and will instead keep it on hold. Apparently, there is “limited market demand” for autonomous cars.
And it isn’t just Stellantis that has noticed this.
A recent AAA poll discovered that 13% of Americans trust autonomous cars, and 61% of American drivers are “afraid” to ride in a self-driving car. You might say that this is a natural attitude when it comes to new technology, and given time, they will come around. But that isn’t true. Autonomous vehicles have been operating in the US since 2018, yet the rates of people actively afraid of them have actually increased. Indeed, back in 2021, AAA found that 54% of Americans were afraid of autonomous cars. So, what is going on?
According to AAA automotive engineering director Greg Brannon, “Most drivers want automakers to focus on advanced safety technology.” And that is the issue, because no autonomous system is anywhere near as safe as a human driver.
Waymo is the safest so far, with an average critical disengagement every 17,060 miles. In other words, every 17,060 miles, someone has to intervene to prevent an accident, whether that person is a passenger, a remote operator, or similar. By comparison, human drivers have, on average, roughly one incident every 500,000 miles! Even the most pessimistic statistics for the average distance between incidents for human drivers are tens of times larger than that of the safest autonomous car on the market.
Understandably, people value their safety over the mild convenience of not having to drive for a little while. And that is why the demand for these systems, which are less safe than you or me driving, is shrinking even further as more people discover their unreliability.
This is bad news for almost every automaker, as they have all invested countless billions in developing their own self-driving systems, and that money appears to have mainly been a waste.
But it is especially bad news for Tesla.
Musk has bet the company’s entire future on self-driving. He has censored or deprioritised multiple projects, including the supercharger network, upcoming battery innovations, and new models that Tesla desperately needs, all to focus the company on the Full Self-Driving system, which Musk wants to sell as a subscription service in order to make that revenue Tesla’s primary income source.
So, even if Tesla actually offered an impressive self-driving system, polls like the ones conducted by AAA and the wider industry’s decision to move away from automation due to a lack of demand have shot Musk’s business plan for Tesla in the foot. It means that his bet will most definitely backfire.
Still, Tesla and Musk should have known this.
FSD is a woeful self-driving system. If you want to know why, read this article — but suffice it to say that the latest FSD system has an average distance between critical disengagements of just 493 miles. And that is based on public data from people who have purchased FSD and are only using it in situations where they know it will work. Therefore, the real figure is likely significantly worse.
So, it’s not surprising that YipitData found that in 2024, only 2% of customers who participated in a large-scale free trial offer of FSD decided to continue using and pay for the software once the trial ended. That means 98% of people used this system and thought it wasn’t worth the heavily discounted $99 monthly price tag.
Tesla knew that the market demand for FSD was, and still is, tiny. Yet Musk bet the entire company on it anyway! Why? Because being an AI company is more valuable than being a car company, and Musk gets paid in company value, not company profit.
Unfortunately, there is still a wider issue at play because the AI bubble is showing signs of bursting. Over the past few years, we have begun to understand the limitations of technology, as seen with the efficient compute frontier (read more here) and the Floridi conjecture (read more here). Not only that, but we have actively witnessed these limitations play out with Tesla’s FSD and the heavily stalled progress and disappointing recent models from OpenAI. However, there have also been studies that show AI isn’t the magic pill it was originally marketed as, such as the one recently published by MIT, which found that 95% of AI pilots don’t generate measurable financial savings or boost company profits. And, like with Stellantis, many of the major spearheads of the AI world are noticeably pulling back. Sam Altman, who is typically a self-promoting egotistical maniac, recently said people are getting too excited about AI. Mark Zuckerberg, who has a knack for exiting before the building collapses (such as with his Metaverse), is now breaking up Meta’s internal AI apparatus and shrinking it.
It appears that the days of slapping AI on a company to boost its valuation are coming to an end, as poorly informed (or well-informed but manipulative) investors are realising that AI is nowhere near as useful as it was promised to be, and it becomes clear that demand is utterly puny.
So, where does this leave Tesla? A company that has abandoned its lead in the EV world and thrown its business fundamentals to the dirt to chase AI valuation? What about Musk’s xAI, which used the bloated valuation of its terrible Grok AI to pay for Musk’s idiotic purchase of Twitter, which has laboured the company with so much debt that it faced bankruptcy? Musk has amassed eye-watering debts to place these huge bets on AI to save and grow his empire, but the tower of cards on which those bets were made is falling.
I have no crystal ball. I can’t say what will happen. What I can say is that it will certainly not be good for Tesla.
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Sources: Autocar, Electrek, Inside EVs, Business Insider, We Buy Any Car, AI News, Will Lockett, Will Lockett, Will Lockett, Will Lockett
Where does the 500,000 miles number come from? I presume that isn't "a human had to do something", but rather "the human driving the car was about to have an accident that another human in the loop being less stupid could have avoided". But I would like to know...
> Will Lockett: Oh, This Is Bad News for Tesla! <https://www.planetearthandbeyond.co/p/oh-this-is-bad-news-for-tesla>: 'Waymo is the safest so far, with an average critical disengagement every 17,060 miles. In other words, every 17,060 miles, someone has to intervene to prevent an accident, whether that person is a passenger, a remote operator, or similar. By comparison, human drivers have, on average, roughly one incident every 500,000 miles!...
When Apple was selling for a dollar fifteen a share, people who owned iPads and iPods and MacBooks had nothing bad to say about them but only raved about ease of use and intuitive genius. I bought 5000 shares. I never gamble.
I have never heard anyone say “I love my self driving car.” Tesla is for gambling addicts. Apple was not a dream. It was a success story before people invested in it enough to drive up the price.