Weekly Brief: Musk Claims Finger On Button Of ‘Driverless Catastrophe’

Last week produced a dismal earnings report from Tesla. The carmaker lost $702M in the first quarter of 2019.

Investors had expected a first quarter loss but nothing so substantial as nearly three quarters of a billion dollars. Tesla’s CFO Zachary Kirkhorn explained that the loss was due to pricing adjustments, as well as delivery challenges in overseas markets that led to a third fewer Teslas reaching market as compared to Q4 2018. He said those challenges have been addressed and that Q2 2019 should see a return to profitability. Those assurances did little to steady shareholder trust. Tesla’s stock went south and is now down 31% since the start of the year.

How did Elon Musk respond? By making eye-popping promises about the future of self-driving cars, of course! Musk invited investors out to Menlo Park for his company’s inaugural Autonomy Day, where he showed off Tesla’s latest self-driving tech and announced that Tesla plans to have a fleet of one million all-electric robo-taxis on the road by 2020. You heard that correctly. Next year one million Tesla robo-taxis will buzz around cities and highways in the US. Oh, and Musk also announced that every single vehicle that Tesla manufactures from 2019 forward will be capable of full, Level 5 autonomy.

Before you roll your eyes and cast this off as classic Elon Musk bluster, and nothing more, let’s take a moment to unpack how Musk plans to make his promises a reality. For starters, Musk says that every car Tesla manufactures today already comes with the necessary hardware for full self-driving. That includes eight vision cameras, 12 ultrasonic sensors, radar and a “custom-designed beast of a Full Self-Driving Computer”. Noticeably absent from that list is any on-board LiDAR but Musk contends that Tesla’s new self-driving computer, which was designed in-house over the last three years, is so advanced, so proficient at machine learning, that it doesn’t need any help from LiDAR. LiDAR is “lame,” Musk said at Autonomy Day. “In cars, it’s freaking stupid,” he went on. “It’s expensive and unnecessary.”

Waymo, and pretty much every other company pursuing self-driving tech, would have a serious bone to pick with that assertion. Nonetheless, supposedly without the need for LiDAR and already armed with a full self-driving computer and an adequate suite of cameras and sensors, Musk says that all it will take is a snap of his fingers and an over-the-air software update and every Tesla manufactured in 2019 and after will be capable of Level 5 autonomous driving.

From there, Tesla plans to launch a new ride-sharing service called the Tesla Network through its existing Tesla app. Those owners who sign up for the service will grant their Teslas permission to moonlight as robo-taxis, driving themselves around and picking up passengers just like Uber and Lyft operate today, only free of human drivers. Musk estimates that every Tesla owner will be able to earn $30,000 a year of essentially free cash by letting their cars become robo-taxis when they don’t need them for their own personal use. “It’s financially insane to buy anything but a Tesla,” Musk said. All of this will happen by next year.

Now for a reality check. The idea of Tesla getting the necessary regulatory approval to launch a fully self-driving ride-sharing network by 2020 is hard to imagine. Even if it did get approval, the idea of it eating into Lyft’s and Uber’s market domination quickly enough that Tesla can claim one million active robo-taxis in the next 18 months … again, is a stretch. Then there’s the question of if Tesla cars will actually be able to pull off full self-driving in any condition, in any weather and any time of day. Given that industry leader Waymo still has safety drivers behind the wheel, despite logging tens of millions of test miles in full autonomous mode, it’s tough to believe that Tesla will roll out a nationwide robo-taxi fleet before Waymo does. In fact, Waymo’s own data shows it needed human intervention within every 6,000 miles.

There is of course an X factor here, and that X factor is Elon Musk himself. Given the grey area that exists in the regulatory environment around self-driving cars today, and given Musk’s history of rolling out autonomous features prematurely, even if it costs innocent lives, who’s to say that Musk won’t give his Tesla Network a green light anyway?

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