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Tesla needs to pull back on Autopilot before it's too late (TSLA)

Tesla's Autopilot system simply is not good enough to be worth the distraction from bigger concerns for the carmaker.

  • The NTSB says it kicked Tesla off the investigation, but Tesla says it kicked itself off.
  • Meanwhile,
  • The company has far more important matters to focus than making its vehicles fully autonomous.
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Tesla is in the middle of an unprecedented dispute with the National Transportation Safety Board, the government agency that usually investigates plane crashes and train wrecks but in the past two years has probed four accidents involving Tesla semi-self-driving technology, Autopilot.

Two of these accidents have led to fatalities: the first was in Florida in 2016; and the second occurred last month in Northern California.

Tesla had issued several statements and written two blog posts providing details about the California crash, stressing that the driver, Walter Huang, had ignored warnings to recover full control of his Model X SUV prior to colliding with a freeway divider in Mountain View.

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The NTSB rebuked Tesla for revealing information about the crash; Tesla CEO Elon Musk and the agency's chairman,

pattern of use of the Autopilot system indicated an over-reliance on the automation and a lack of understanding of the system limitations."

The NTSB also concluded that if vehicles don't restrict risky operations, the potential for drivers to misuse them remain; and that the way Autopilot "monitored and responded to the driver’s interaction with the steering wheel was not an effective method of ensuring driver engagement."

Autopilot is actually not Tesla's biggest headache at the moment — sluggish production of the Model 3 sedan is. But Autopilot is turning into both a public-relations nightmare and an opportunity, a dynamic driven by the weak overall market performance of electric vehicles, which make up only about 1% of global sales. Self-driving cars are the cool new thing, and Musk isn't going to miss out on that futuristic adventures, even as he has to yet again take to sleeping in Tesla's factory floor in Fremont, CA to fix the Model 3's problems.

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The battle with the NTSB over the Mountain View crash could ultimately help Tesla.

"They’re not really running a risk," said Kelley Blue Book Executive Publisher Karl Brauer, adding that Tesla has always been "untraditional."

"They have many people out there in their fan base," he said. "They’re scoring points with those people."

It also isn't necessarily a reckless decision for Tesla to oppose an opaque government process, Brauer suggested.

"We don't like the lack of disclosure, especially in today's world. So it's not a bad political move."

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The fracas has, however, awkwardly highlighted Autopilot capabilities relative to its competition. Tesla's system doesn't use laser-radar (Lidar), as does Waymo and General Motor's Cruise division. Nor does it make use of Lidar-mapping, as does Cadillac's Super Cruise, a hands-free, highway only system that also, unlike Autopilot, monitors a driver's eyes and head to ensure that he or she is engaged.

"Their driver monitor system isn’t as good as some other systems in terms of assuring that someone is paying attention," said David Friedman,

doesn’t tell you if driver is paying attention."

After the 2016 Florida crash, Consumers Union and Consumer Reports forcefully objected to Tesla's marketing of Autopilot, but the organization has stopped short of demanding that Tesla recall or deactivate the technology (I have recommended that Tesla do this.)

"The key thing is to fix it," Friedman said. "They have the knowledge and the technology. Tesla and Musk have a reputation as innovators, but they're falling behind GM on driver monitoring."

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Consumers Union doubled down on that position last week when, after I spoke with Friedman, the organization put out a press release calling on Tesla to improve Autopilot safety and release the data behind its existing safety claims.

That's a lot to keep Tesla watchers (and investors) occupied and optimistic, but overall, Autopilot is the least compelling thing the carmaker is currently doing. For one thing, Autopilot is expensive: If you order a Model S, for example, the technology as it now functions is a $6,000 upgrade; a bump to full self-driving capability, with the hardware in place but the software update to arrive in the future, is another $4,000.

If I were buying a Model S, I'd skip it. (My colleague Ben Zhang points out that I'd be damaging the resale value, but I think I rather have the extra six grand.) OK, the additional revenue is certainly helpful for cash-strapped Tesla. But fixating in Autopilot at the expense of other products could actually be pushing off profitability at this point, which is where Tesla has to be aiming the ship if it wants to renounce the endless capital raises and stop larding its balance sheet with debt.

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I'm under no illusion that Tesla is going to pull back from Autopilot. Its actions toward the NTSB prove that it's bristling for a fight. And it could win the battle. But I just don't think that this is a feud that's worth pursuing. Autopilot simply isn't good enough to be worth the distraction.

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