The average person might be forgiven for thinking Tesla Inc. (TSLA, Financial) is a major leader in autonomous vehicle technology. After all, that is what Elon Musk, Tesla’s celebrity CEO, has repeatedly told the media and public.
Musk’s big claims about self-driving cars garner plenty of press attention, but they hold little water with real experts in the field of autonomous driving. In reality, Tesla’s autonomous vehicle claims are little more than hype. As we discussed in a previous research note, Tesla not only has no lead in driverless technology. Indeed, its whole approach to the technology may be fundamentally flawed.
Indeed, according to Navigant’s latest ranking of self-driving programs, Tesla is dead last. Such expert criticism has evidently failed to perturb the company, judging from its decision to host an Autonomy Investor Day on April 22.
Tesla’s aggressive comments and unrealistic promises threaten not only its own credibility, but that of autonomous driving technology as a whole.
Competitors have held their tongues
Industry competitors have largely kept quiet about Tesla’s autonomous driving claims. The reason for keeping mum is pretty clear, as auto journalist E.W. Niedermeyer has explained:
“If serious AV devs wanted to talk down Tesla's approach publicly for competitive reasons they would have by now, and the facade would have crumbled. The only reason we're still debating this topic is that they DON'T want to be seen as attacking Tesla for competitive reasons.”
In other words, other autonomous driving developers have feared that attacking Tesla’s approach, or Musk’s totally unrealistic timeline, would be seen as nothing more than complaining from the competition.
Yet, as Musk’s boasting has escalated to a crescendo in recent weeks, some have started breaking their silence.
More complex than you think
Creating truly autonomous cars has proven to be a more complex problem than many people thought. Bloomberg reported Ford (F, Financial) CEO Jim Hackett recently acknowledged this fact:
“‘We overestimated the arrival of autonomous vehicles,’ Jim Hackett said Tuesday at a Detroit Economic Club event. While Ford’s first self-driving car is still coming in 2021, ‘its applications will be narrow, what we call geo-fenced, because the problem is so complex.’”
While Hackett still declined to address Tesla or Musk by name, his meaning was clear. Other top Ford executives have been less circumspect. Chief Technology Officer Ken Washington, for example, recently offered a scathing rebuke of Tesla’s approach to the technology:
“These vehicles that don’t have LIDAR, that don’t have advanced radar, that haven’t captured a 3-D map, are not self-driving vehicles. Let me just really emphasize that. They’re consumer vehicles with really good driver-assist technology.”
Tesla’s claims, even characterized as merely extreme optimism, could end up sparking governmental and popular backlash. That could threaten the development of all driverless cars, not just Tesla’s. Likewise, unrealistic development timelines could cause public disillusionment when they do not go as planned.
Safety first
Safety is a huge issue for autonomous vehicles, as it should be. Trust in the robustness and safety of the technology will be crucial to its adoption and acceptance, as Daimler recently pointed out:
“How do we establish trust between humans and machines? Autonomous driving is going to be an integral part of our future. When it comes to this topic, Mercedes-Benz regards empathy and trust as central factors for the success and acceptance of the transformation.”
A focus on safety is absolutely critical if self-driving cars ever hope to become road legal. The major automakers are well aware of this fact, as evidenced by recent moves to enhance safety across all programs. Ford, General Motors (GM, Financial), and Toyota (TM, Financial) have been at the forefront of the this effort, agreeing this month to work together to do develop shared self-driving safety standards.
Tesla, meanwhile, has persistently overstated both the capabilities and safety features of its Autopilot and self-driving technologies. It repeatedly cited an NHTSA report claiming that Autopilot improved driver safety, a report that was subsequently debunked. Tesla’s marketing and public relations tactics have cultivated a public perception that overestimates its technological capabilities, while downplaying its safety issues. While it has worked for Tesla so far, it could end up blowing back in its face.
Verdict
While Musk claims self-driving cars are mere months from hitting the road, there is broad agreement among autonomy experts and industry developers that this is essentially impossible. Alphabet’s (GOOG, Financial) Waymo, widely considered the leader in the technology race, believes we are more than a decade from road-legal self-driving cars.
A company that overstates the capabilities of its technology could put lives at risk. That could end up turning public opinion and government policymakers against the whole idea of driverless cars. Companies are pouring billions of dollars into the technology every year, yet one bad actor could slow, or even halt, adoption. Given their big financial and operational commitments, it is unsurprising that Tesla’s competitors have started to call it out for making wildly unrealistic claims.
Tesla should expect a lot more pushback in the months ahead.
Disclosure: Short TSLA via long-dated put options.
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