I wrote it in my column Monday; it happened Thursday: The National Highway Traffic Safety Administration said Tesla (TSLA) had agreed to recall 362,735 vehicles replaced with its full-self-driving beta technology. Tesla will fix these with an over-the-air software upgrade, but that is irrelevant. Tesla’s FSD has been one of the “Big Tech” epic fails of our generation.
Elon Musk first promised in October 2016, a Tesla — the Model S at the time — would drive itself coast-to-coast by the end of 2017. He then doubled down in February 2018, and was quoted a saying that within a half year, Tesla cars would be able to autonomously drive themselves coast-to-coast. OK, so even if you give him a little leeway, that leaves 2019, 2020, 2021 and 2022 as full years in which no Tesla has driven itself coast-to-coast. Of course we are in 2023 now … and … the pendulum just swung the other way.
I won’t use all my column space with data from the NHTSA report on “FSD Beta,” but The Verge has a good summation as follows:
… NHTSA’s concerns are listed as focusing on four specific situations that can happen on the road, like navigating intersections during a “stale” yellow light, how long cars stop at a stop sign when the intersection is clear, how they adjust speed while driving in areas where the speed limit is changing based on road signs the car detects and settings put in place by the driver, and how the cars change lanes to get out of a turn-only lane.
So, those are four common driving situations , not the phantom baby stroller rollaway that occurred in Dan O’Dows’ anti-FSD Super Bowl commercial.
The takeaway from NHTSA’s action is clear: FSD is crapware … and always has been.
Musk has somehow convinced gullible consumers to pay $15,000 (the current price for FSD Beta) for a product for which they are being used as human guinea pigs. This is, I believe, a real hornets’ nest — a big liability risk. I see no way that Tesla owners don’t sue for FSD refunds, which, as soon as that litigating cohort is numerous enough, will produce yet another class-action lawsuit against Tesla.
Tesla is valued as a Tech company, not a car company. Yet, its most valuable piece of tech, its AI-play, was just ordered to be recalled by the main regulator in its key market. Musk can squawk all he wants to about semantics, but the fact is that Tesla put an underperforming piece of software in consumers’ hands while charging a ridiculous price for that software. Amends must be made. That will inevitably dent Tesla’s gross margins, which are already being pressured by the massive price cuts the company pushed through in January and early-February.
So, a very analogous CAR company to Tesla, Porsche, is valued at almost exactly 50 billion euros, on a 2023 consensus estimate of about 40 billion euros. So Porsche is accorded 1.25-times revs. (At the time of this writing, one euro was worth about $1.07.)
Tesla, on the other hand, was valued at $633 billion at yesterday’s close, even after yesterday’s post NHTSA-announcement plunge. So more than 6-times the 2023 consensus estimate for TSLA revenues of $102 billion
So, every dollar that Tesla produces is somehow worth 5-times as much as every euro of revenue Porsche produces. Why? Because Tesla vehicles can drive themselves? As NHTSA just reminded the ever-gullible U.S. stock market yesterday, Teslas can’t (safely) drive themselves. Trade accordingly.