Two years ago, Tesla’s Optimus prototype was an underwhelming mess of exposed wires that could only operate in a carefully controlled stage presentation. Last night, Tesla’s “We, Robot” event featured much more advanced Optimus prototypes that could walk around without tethers and interact directly with partygoers.
It was an impressive demonstration of the advancement of a technology Tesla’s Elon Musk said he thinks “will be the biggest product ever of any kind” (way to set reasonable expectations, there). But the live demos have also set off a firestorm of discussion over just how autonomous these Optimus robots currently are.
A robot in every garage
Before the human/robot party could get started, Musk introduced the humanoid Optimus robots as a logical extension of some of the technology that Tesla uses in its cars, from batteries and motors to software. “It’s just a robot with arms and legs instead of a robot with wheels,” Musk said breezily, easily underselling the huge differences between human-like movements and a car’s much more limited input options.
After confirming that the company “started off with someone in a robot suit”—a reference to a somewhat laughable 2021 Tesla presentation—Musk said that “rapid progress” has been made in the Optimus program in recent years. Extrapolating that progress to the “long term” future, Musk said, would lead to a point where you could purchase “your own personal R2-D2, C-3PO” for $20,000 to $30,000 (though he did allow that it could “take us a minute to get to the long term”).
And what will you get for that $30,000 when the “long term” finally comes to pass? Musk grandiosely promised that Optimus will be able to do “anything you want,” including babysitting kids, walking dogs, getting groceries, serving drinks, or “just be[ing] your friend.” Given those promised capabilities, it’s perhaps no wonder that Musk confidently predicted that “every one of the 8 billion people of Earth” will want at least one Optimus, leading to an “age of abundance” where the labor costs for most services “declines dramatically.”
Tesla’s German car factory on the outskirts of Berlin allegedly operates under a “culture of fear,” and its workers take sick leave at more than three times the industry average. The plant, which was targeted by arsonists earlier this year, is now experiencing a degree of discord between workers and management, according to reports in Handelsblatt and the Guardian.
“We will not tolerate some people bending their backs for others who just don’t feel like coming to work. There is no room in this factory for people who don’t get out of bed in the morning,” said André Thierig, manufacturing director of Tesla’s Gigafactory Berlin-Brandenburg.
It seems the company has been taking that directive seriously. Frustrated by a rate of sick leave that reached as high as 17 percent this summer—compared to a German auto industry average of 5.2 percent—Tesla started checking up on some employees at home, sending managers to visit 30 employees while they were on sick leave.
Such home visits were not well-received, and bosses were greeted with slammed doors and threats to call the police. But Thierig claimed checking up on sick workers at home was common practice and that they were appealing to “the employees’ work ethic.”
Thierig also pointed out that sick leave tended to increase on Fridays and late shifts. “That is not an indicator of bad working conditions because the working conditions are the same on all working days and across all shifts. It suggests that the German social system is being exploited to some extent,” he said.
This is not the first time Tesla has appeared less than sympathetic to the health of its workers. During the pandemic, the company had to be pressured into closing its factory in California, setting up a feud between Musk and the state that has since seen him relocate Tesla to Texas.
The IG Metall trade union, which represents some of the workers at the Berlin-Brandenburg factory, expressed its dismay at this move. Workloads at the factory have stressed employees, and those who haven’t called out sick have to pick up the slack for their colleagues who have.
“If the factory’s overseers really want to reduce the level of sickness, they should break this vicious circle,” said Dirk Schulze, a regional director at IG Metall.
Enlarge/ The battery pack of a Volkswagen ID. Buzz electric microbus on the assembly line during a media tour of the Volkswagen AG multipurpose and commercial vehicle plant in Hannover, Germany, on Thursday, June 16, 2022.
Lithium-ion battery fires can be intense and frightening. As someone who used to repair second-hand smartphones, I’ve extinguished my fair share of flaming iPhones with punctured lithium-ion batteries. And the type of smartphone battery in your pocket right now is similar to what’s inside of electric vehicles. Except, the EV battery stores way more energy—so much energy that some firefighters are receiving special training to extinguish the extra-intense EV flames that are emitted by burning EV batteries after road accidents.
If you’ve been reading the news about EVs, you’ve likely encountered plenty of scary articles about battery fires on the rise. Recently, the US National Transportation Safety Board and the California Highway Patrol announced they are investigating a Tesla semi truck fire that ignited after the vehicle struck a tree. The lithium-ion battery burned for around four hours.
Does this mean that you should worry about your personal electric vehicle as a potential fire hazard? Not really. It makes more sense to worry about a gas-powered vehicle going up in flames than an electric vehicle, since EVs are less likely to catch fire than their more traditional transportation counterparts.
“Fires because of battery manufacturing defects are really very rare,” says Matthew McDowell, a codirector of Georgia Tech’s Advanced Battery Center. “Especially in electric vehicles, because they also have battery management systems.” The software keeps tabs on the different cells that comprise an EV’s battery and can help prevent the battery from being pushed beyond its limits.
How do electric vehicle fires happen?
During a crash that damages the EV battery, a fire may start with what’s called thermal runaway. EV batteries aren’t one solid brick. Rather, think of these batteries as a collection of many smaller batteries, called cells, pressed up against each other. With thermal runaway, a chemical reaction located in one of the cells lights an initial fire, and the heat soon spreads to each adjacent cell until the entire EV battery is burning.
Greg Less, director of the University of Michigan’s Battery Lab, breaks down EV battery fires into two distinct categories: accidents and manufacturing defects. He considers accidents to be everything from a collision that punctures the battery to a charging mishap. “Let’s take those off the table,” says Less. “Because, I think people understand that, regardless of the vehicle type, if you’re in an accident, there could be a fire.”
While all EV battery fires are hard to put out, fires from manufacturing defects are likely more concerning to consumers, due to their seeming randomness. (Think back to when all those Samsung phones had to be recalled because battery issues made them fire hazards.) How do these rare issues with EV battery manufacturing cause fires at what may feel like random moments?
It all comes down to how the batteries are engineered. “There’s some level of the engineering that has gone wrong and caused the cell to short, which then starts generating heat,” says Less. “Heat causes the liquid electrolyte to evaporate, creating a gas inside the cell. When the heat gets high enough, it catches fire, explodes, and then propagates to other cells.” These kinds of defects are likely what caused the highly publicized recent EV fires in South Korea, one of which damaged over a hundred vehicles in a parking lot.
How to react if your EV catches fire
According to the National Fire Prevention Agency, if an EV ever catches fire while you’re behind the wheel, immediately find a safe way to pull over and get the car away from the main road. Then, turn off the engine and make sure everyone leaves the vehicle immediately. Don’t delay things by grabbing personal belongings, just get out. Remain over 100 feet away from the burning car as you call 911 and request the fire department.
Also, you shouldn’t attempt to put out the flame yourself. This is a chemical fire, so a couple buckets of water won’t sufficiently smother the flames. EV battery fires can take first responders around 10 times more water to extinguish than a fire in a gas-powered vehicle. Sometimes the firefighters may decide to let the battery just burn itself out, rather than dousing it with water.
Once an EV battery catches fire, it’s possible for the chemical fire to reignite after the initial burn dies down. It’s even possible for the battery to go up in flames again days later. “Both firefighters and secondary responders, such as vehicle recovery or tow companies, also need to be aware of the potential for stranded energy that may remain in the undamaged portions of the battery,” says Thomas Barth, an investigator and biomechanics engineer for the NTSB, in an emailed statement. “This energy can pose risks for electric shock or cause the vehicle to reignite.”
Although it may be tempting to go back into the car and grab your wallet or other important items if the flame grows smaller or goes out for a second, resist the urge. Wait until your local fire department arrives to assess the overall situation and give you the all clear. Staying far away from the car also helps minimize your potential for breathing in unhealthy fumes emitted from the battery fire.
How could EV batteries be safer?
In addition to quick recalls and replacements of potentially faulty lithium-ion batteries, both researchers I spoke with were excited about future possibilities for a different kind of battery, called solid-state, to make EVs even more reliable. “These batteries could potentially show greater thermal stability than lithium-ion batteries,” says McDowell. “When it heats up a lot, it may just remain pretty stable.” With a solid-state battery, the liquid electrolyte is no longer part of battery cells, removing the most flammable aspect of battery design.
These solid-state batteries are already available in some smaller electronics, but producing large versions of the batteries at vast scale continues to be a hurdle that EV manufacturers are working to overcome.
Elon Musk’s fight against Media Matters for America (MMFA)—a watchdog organization that he largely blames for an ad boycott that tanked Twitter/X’s revenue—has raised an interesting question about whether any judge owning Tesla stock might reasonably be considered biased when weighing any lawsuit centered on the tech billionaire.
In a court filing Monday, MMFA lawyers argued that “undisputed facts—including statements from Musk and Tesla—lay bare the interest Tesla shareholders have in this case.” According to the watchdog, any outcome in the litigation will likely impact Tesla’s finances, and that’s a problem because there’s a possibility that the judge in the case, Reed O’Connor, owns Tesla stock.
“X cannot dispute the public association between Musk—his persona, business practices, and public remarks—and the Tesla brand,” MMFA argued. “That association would lead a reasonable observer to ‘harbor doubts’ about whether a judge with a financial interest in Musk could impartially adjudicate this case.”
It’s still unclear if Judge O’Connor actually owns Tesla stock. But after MMFA’s legal team uncovered disclosures showing that he did as of last year, they argued that fact can only be clarified if the court views Tesla as a party with a “financial interest in the outcome of the case” under Texas law—“no matter how small.”
To make those facts clear, MMFA is now arguing that X must be ordered to add Tesla as an interested person in the litigation, which a source familiar with the matter told Ars, would most likely lead to a recusal if O’Connor indeed still owned Tesla stock.
“At most, requiring X to disclose Tesla would suggest that judges owning stock in Tesla—the only publicly traded Musk entity—should recuse from future cases in which Musk himself is demonstrably central to the dispute,” MMFA argued.
Ars could not immediately reach X Corp’s lawyer for comment.
However, in X’s court filing opposing the motion to add Tesla as an interested person, X insisted that “Tesla is not a party to this case and has no interest in the subject matter of the litigation, as the business relationships at issue concern only X Corp.’s contracts with X’s advertisers.”
Calling MMFA’s motion “meritless,” X accused MMFA of strategizing to get Judge O’Connor disqualified in order to go “forum shopping” after MMFA received “adverse rulings” on motions to stay discovery and dismiss the case.
As to the question of whether any judge owning Tesla stock might be considered impartial in weighing Musk-centric cases, X argued that Judge O’Connor was just as duty-bound to reject an improper motion for recusal, should MMFA go that route, as he was to accept a proper motion.
“Courts are ‘reluctant to fashion a rule requiring judges to recuse themselves from all cases that might remotely affect nonparty companies in which they own stock,'” X argued.
Recently, judges have recused themselves from cases involving Musk without explaining why. In November, a prior judge in the very same Media Matters’ suit mysteriously recused himself, with The Hill reporting that it was likely that the judge’s “impartiality might reasonably be questioned” for reasons like a financial interest or personal bias. Then in June, another judge ruled he was disqualified to rule on a severance lawsuit raised by former Twitter executives without giving “a specific reason,” Bloomberg Law reported.
Should another recusal come in the MMFA lawsuit, it would be a rare example of a judge clearly disclosing a financial interest in a Musk case.
“The straightforward question is whether Musk’s statements and behavior relevant to this case affect Tesla’s stock price, not whether they are the only factor that affects it,” MMFA argued. ” At the very least, there is a serious question about whether Musk’s highly unusual management practices mean Tesla must be disclosed as an interested party.”
Parties expect a ruling on MMFA’s motion in the coming weeks.
Enlarge/ Elon Musk, chief executive officer of Tesla Inc., during a fireside discussion on artificial intelligence risks with Rishi Sunak, UK prime minister, in London, UK, on Thursday, Nov. 2, 2023.
On Monday, Elon Musk announced the start of training for what he calls “the world’s most powerful AI training cluster” at xAI’s new supercomputer facility in Memphis, Tennessee. The billionaire entrepreneur and CEO of multiple tech companies took to X (formerly Twitter) to share that the so-called “Memphis Supercluster” began operations at approximately 4: 20 am local time that day.
Musk’s xAI team, in collaboration with X and Nvidia, launched the supercomputer cluster featuring 100,000 liquid-cooled H100 GPUs on a single RDMA fabric. This setup, according to Musk, gives xAI “a significant advantage in training the world’s most powerful AI by every metric by December this year.”
Given issues with xAI’s Grok chatbot throughout the year, skeptics would be justified in questioning whether those claims will match reality, especially given Musk’s tendency for grandiose, off-the-cuff remarks on the social media platform he runs.
Power issues
According to a report by News Channel 3 WREG Memphis, the startup of the massive AI training facility marks a milestone for the city. WREG reports that xAI’s investment represents the largest capital investment by a new company in Memphis’s history. However, the project has raised questions among local residents and officials about its impact on the area’s power grid and infrastructure.
WREG reports that Doug McGowen, president of Memphis Light, Gas and Water (MLGW), previously stated that xAI could consume up to 150 megawatts of power at peak times. This substantial power requirement has prompted discussions with the Tennessee Valley Authority (TVA) regarding the project’s electricity demands and connection to the power system.
The TVA told the local news station, “TVA does not have a contract in place with xAI. We are working with xAI and our partners at MLGW on the details of the proposal and electricity demand needs.”
The local news outlet confirms that MLGW has stated that xAI moved into an existing building with already existing utility services, but the full extent of the company’s power usage and its potential effects on local utilities remain unclear. To address community concerns, WREG reports that MLGW plans to host public forums in the coming days to provide more information about the project and its implications for the city.
For now, Tom’s Hardware reports that Musk is side-stepping power issues by installing a fleet of 14 VoltaGrid natural gas generators that provide supplementary power to the Memphis computer cluster while his company works out an agreement with the local power utility.
As training at the Memphis Supercluster gets underway, all eyes are on xAI and Musk’s ambitious goal of developing the world’s most powerful AI by the end of the year (by which metric, we are uncertain), given the competitive landscape in AI at the moment between OpenAI/Microsoft, Amazon, Apple, Anthropic, and Google. If such an AI model emerges from xAI, we’ll be ready to write about it.
This article was updated on July 24, 2024 at 1: 11 pm to mention Musk installing natural gas generators onsite in Memphis.
Enlarge/ For some time now, Tesla has produced more cars than it has sold. This past quarter, that changed.
Toru Hanai/Bloomberg via Getty Images
Tesla published its quarterly production and delivery numbers yesterday afternoon, and anyone hoping that the last three months have marked a return to growth will be disappointed. For Q2 2024, the automaker built 418,831 electric vehicles, a 14.4 percent decrease on Q2 2023. The drop in sales wasn’t quite as bad—in Q2 2024 Tesla sold 443,956 EVs, a 4.8 percent decline, year on year.
After several boom years, even the hype-generating powers of Tesla CEO Elon Musk weren’t able to stave off the realities of a small and stagnant product line and a brutal price war, particularly in China. The first quarter of 2024 saw Tesla’s deliveries fall by 8.5 percent, the first time this number hadn’t gone up since 2020.
Later in April, we saw the effect on Tesla’s balance sheet. Profits fell by more than half, and profit margins slumped to just 5.5 percent, barely half the industry average.
In fact, there’s evidence that Musk’s vast reach through social media may be directly harming the Tesla brand at this point. A poll of more than 7,500 New York Times readers, collected earlier this year, revealed that many had a problem being associated with Tesla and Musk, with one comparing driving a Tesla to “a giant red MAGA hat.”
There may be a bright spot in the production and delivery numbers. Tesla delivered 422,405 Models 3 and Y between April and June, but it only built 386,576 at its factories in the US, Germany, and China. For many quarters, Tesla has been building more cars than it has delivered, raising questions and inspiring open source satellite image analysts to go looking for inventory from space. Now, perhaps, the automaker is clearing some of that excess inventory and matching production to more realistic expectations of demand.
In a brief text note to investors, Tesla notes that its solar energy and storage division had a bumper quarter, deploying 9.4 GWh of energy storage. This could see the division contribute up to 20 percent of Tesla’s total revenues for the quarter.
Musk’s reaction to the decline in Tesla’s automotive sales business has been to pivot. Perhaps bored of the realities of a low-margin industry surrounded by cutthroat rivals, the erratic CEO now says the future of the company will be humanoid robots, based on annual projections that bear little to no resemblance to objective reality as we know it.
Tesla investors obviously don’t mind; the company’s share price has risen by more than 8 percent since the market opened at 9: 30 am.
Tesla has denied that “any defect in the Autopilot system caused or contributed” to the 2022 death of a Tesla employee, Hans von Ohain, whose Tesla Model 3 burst into flames after the car suddenly veered off a road and crashed into a tree.
“Von Ohain fought to regain control of the vehicle, but, to his surprise and horror, his efforts were prevented by the vehicle’s Autopilot features, leaving him helpless and unable to steer back on course,” a wrongful death lawsuit filed in May by von Ohain’s wife, Nora Bass, alleged.
In Tesla’s response to the lawsuit filed Thursday, the carmaker also denied that the 2021 vehicle had any defects, contradicting Bass’ claims that Tesla knew that the car should have been recalled but chose to “prioritize profits over consumer safety.”
As detailed in her complaint, initially filed in a Colorado state court, Bass believes the Tesla Model 3 was defective in that it “did not perform as safely as an ordinary consumer would have expected it to perform” and “the benefits of the vehicle’s design did not outweigh the risks.”
Instead of acknowledging alleged defects and exploring alternative designs, Tesla marketed the car as being engineered “to be the safest” car “built to date,” Bass’ complaint said.
Von Ohain was particularly susceptible to this marketing, Bass has said, because he considered Tesla CEO Elon Musk to be a “brilliant man,” The Washington Post reported. “We knew the technology had to learn, and we were willing to be part of that,” Bass said, but the couple didn’t realize how allegedly dangerous it could be to help train “futuristic technology,” The Post reported.
In Tesla’s response, the carmaker defended its marketing of the Tesla Model 3, denying that the company “engaged in unfair and deceptive acts or practices.”
“The product in question was not defective or unreasonably dangerous,” Tesla’s filing said.
Insisting in its response that the vehicle was safe when it was sold, Tesla again disputed Bass’ complaint, which claimed that “at no time after the purchase of the 2021 Tesla Model 3 did any person alter, modify, or change any aspect or component of the vehicle’s design or manufacture.” Contradicting this, Tesla suggested that the car “may not have been in the same condition at the time of the crash as it was at the time when it left Tesla’s custody.”
The Washington Post broke the story about von Ohain’s fatal crash, reporting that it may be “the first documented fatality linked to the most advanced driver assistance technology offered” by Tesla. In response to Tesla’s filing, Bass’ attorney, Jonathan Michaels, told The Post that his team is “committed to advocating fiercely for the von Ohain family, ensuring they receive the justice they deserve.”
Michaels told The Post that perhaps as significant as alleged autonomous driving flaws, the Tesla Model 3 was also allegedly defective “because of the intensity of the fire that ensued after von Ohain hit the tree, which ultimately caused his death.” According to the Colorado police officer looking into the crash, Robert Madden, the vehicle fire was among “the most intense” he’d ever investigated, The Post reported.
Lawyers for Bass and Tesla did not immediately respond to Ars’ request for comment.
Have electric vehicles been overhyped? A casual observer might have come to that conclusion after almost a year of stories in the media about EVs languishing on lots and letters to the White House asking for a national electrification mandate to be watered down or rolled back. EVs were even a pain point during last year’s auto worker industrial action. But a look at the sales data paints a different picture, one where Tesla’s outsize role in the market has had a distorting effect.
“EVs are the future. Our numbers bear that out. Current challenges will be overcome by the industry and government, and EVs will regain momentum and will ultimately dominate the automotive market,” said Martin Cardell, head of global mobility solutions at consultancy firm EY.
Public perception hasn’t been helped by recent memories of supply shortages and pandemic price gouging, but the chorus of concerns about EV sales became noticeably louder toward the end of last year and the beginning of 2024. EV sales in 2023 grew by 47 percent year on year, but the first three months of this year failed to show such massive growth. In fact, sales in Q1 2024 were up only 2.6 percent over the same period in 2023.
Tesla doesn’t break out its sales data by region anymore, but its new US registrations were down by as much as 25 percent, month on month, as its overall marketshare of EVs closes in on 50 percent this year; by contrast, Tesla was 80 percent of the US EV market in 2020. (Overall, Tesla’s global deliveries fell by 8.5 percent.)
The other sick patient in addition to Tesla is Volkswagen. Despite local production of the ID.4 crossover in Chattanooga, Tennessee, the brand saw EV sales fall by 37 percent in Q1. It has also abandoned plans to bring the ID.7 electric sedan to North America, and the long-awaited ID. Buzz microbus has yet to reach US showrooms more than eight years after it was first shown here.
But all this noise has been enough to spook executives into action. Both Ford and General Motors took the embarrassing step of rolling back their electrification goals, all but admitting they bet on the wrong horse. Instead of turning away from new internal combustion engine products, we’re set for a new flurry of hybrids—just don’t expect any of them to show up before 2026.
GM’s difficulty in ramping up its new family of EVs built around the UItium battery platform has been well-documented. The end of production of the Chevrolet Bolt, which sold for less than $30,000, didn’t help; with the little electric hatchback (and the slightly stretched Bolt EUV) no longer contributing to the sales charts, GM’s Q1 EV sales fell by 21 percent.
The problems with assembling Ultium cells into battery packs appears to be in GM’s past now. Cadillac Lyriqs are starting to become a common sight on the road, and GM CEO Mary Barra told Bloomberg that GM expects to build between 200,000 and 300,000 Ultium-based EVs this year, a huge increase over the 13,838 it managed to ship last year.
Meanwhile, Ford’s EV “slump” is nothing of the kind. In May, it sold 91 percent more F-150 Lightnings than last year. E-Transit sales were up 77 percent. And the Mustang Mach-E showed growth of 46 percent. In total, Ford’s EV sales for the first five months of this year were up 87.7 percent on 2023, helped no doubt by the company’s price cuts.
High double-digit sales growth (in Q1 2024) has also been occurring at Hyundai and Kia (up 56.1 percent), BMW (up 57.8 percent), Rivian (up 58.8 percent), Mercedes (up 66.9 percent), and Toyota (up 85.9 percent).
“As anticipated, Tesla’s sales took a hit, influencing the overall market dynamics. However, a few brands saw significant EV sales increases, achieving over 50 percent year-over-year growth,” said Stephanie Valdez Streaty, director of industry insights at Cox Automotive. “As noted in January, we are calling 2024 ‘the Year of More.’ More new products, more incentives, more inventory, more leasing and more infrastructure will drive EV sales higher this year. Even so, we’ll continue to see ups and downs as the industry moves toward electrification.”
“We view the current headwinds that EV sales are experiencing in the US and Europe as short-term in nature. The buildup of charging infrastructure, availability of affordable EV models with a fall in battery prices, combined with government regulations, will drive sustainable BEV growth in the long run,” said Cardell.
Enlarge/ Tesla will have to rely on its Dojo supercomputer for a while longer after CEO Elon Musk diverted 12,000 Nvidia GPU clusters to X instead.
Tesla
Elon Musk is yet again being accused of diverting Tesla resources to his other companies. This time, it’s high-end H100 GPU clusters from Nvidia. CNBC’s Lora Kolodny reports that while Tesla ordered these pricey computers, emails from Nvidia staff show that Musk instead redirected 12,000 GPUs to be delivered to his social media company X.
It’s almost unheard of for a profitable automaker to pivot its business into another sector, but that appears to be the plan at Tesla as Musk continues to say that the electric car company is instead destined to be an AI and robotics firm instead.
Does Tesla make cars or AI?
That explains why Musk told investors in April that Tesla had spent $1 billion on GPUs in the first three months of this year, almost as much as it spent on R&D, despite being desperate for new models to add to what is now an old and very limited product lineup that is suffering rapidly declining sales in the US and China.
Despite increasing federal scrutiny here in the US, Tesla has reduced the price of its controversial “full-self driving” assist, and the automaker is said to be close to rolling out the feature in China. (Questions remain about how many Chinese Teslas would be able to utilize this feature given that a critical chip was left out of 1.2 million cars built there during the chip shortage.)
Perfecting this driver assist would be very valuable to Tesla, which offers FSD as a monthly subscription as an alternative to a one-off payment. The profit margins for subscription software services vastly outstrip the margins Tesla can make selling physical cars, which dropped to just 5.5 percent for Q1 2024. And Tesla says that massive GPU clusters are needed to develop FSD’s software.
Isn’t Tesla desperate for Nvidia GPUs?
Tesla has been developing its own in-house supercomputer for AI, called Dojo. But Musk has previously said that computer could be redundant if Tesla could source more H100s. “If they could deliver us enough GPUs, we might not need Dojo, but they can’t because they’ve got so many customers,” Musk said during a July 2023 investor day.
Which makes his decision to have his other companies jump all the more notable. In December, an internal Nvidia memo seen by CNBC said, “Elon prioritizing X H100 GPU cluster deployment at X versus Tesla by redirecting 12k of shipped H100 GPUs originally slated for Tesla to X instead. In exchange, original X orders of 12k H100 slated for Jan and June to be redirected to Tesla.”
X and the affiliated xAi are developing generative AI products like large language models.
Not the first time
This is not the first time that Musk has been accused of diverting resources (and his time) from publicly held Tesla to his other privately owned enterprises. In December 2022, US Sen. Elizabeth Warren (D-Mass.) wrote to Tesla asking Tesla to explain whether Musk was diverting Tesla resources to X (then called Twitter):
This use of Tesla employees raises obvious questions about whether Mr. Musk is appropriating resources from a publicly traded firm, Tesla, to benefit his own private company, Twitter. This, of course, would violate Mr. Musk’s legal duty of loyalty to Tesla and trigger questions about the Tesla Board’s responsibility to prevent such actions, and may also run afoul other “anti-tunneling rules that aim to prevent corporate insiders from extracting resources from their firms.”
These latest accusations of misuse of Tesla resources come at a time when Musk is asking shareholders to reapprove what is now a $46 billion stock compensation plan.
Enlarge/ A Waymo autonomous taxi in San Francisco.
David Paul Morris/Bloomberg via Getty Images
Tesla fans—and CEO Elon Musk himself—are excited about the prospects for Tesla’s Full Self Driving (FSD) software. Tesla released a major upgrade—version 12.3—of the software in March. Then, last month, Musk announced that Tesla would unveil a purpose-built robotaxi on August 8. Last week, Musk announced that a new version of FSD—12.4—will come out in the coming days and will have a “5X to 10X improvement in miles per intervention.”
But I think fans expecting Tesla to launch a driverless taxi service in the near future will be disappointed.
During a late March trip to San Francisco, I had a chance to try the latest self-driving technology from both Tesla and Google’s Waymo.
During a 45-minute test drive in a Tesla Model X, I had to intervene twice to correct mistakes by the FSD software. In contrast, I rode in driverless Waymo vehicles for more than two hours and didn’t notice a single mistake.
So while Tesla’s FSD version 12.3 seems like a significant improvement over previous versions of FSD, it still lags behind Waymo’s technology.
However, Waymo’s impressive performance comes with an asterisk. While no one was behind the wheel during my rides, Waymo has remote operators that sometimes provide guidance to its vehicles (Waymo declined to tell me whether—or how often—remote operators intervened during my rides). And while Tesla’s FSD works on all road types, Waymo’s taxis avoid freeways.
Many Tesla fans see these limitations as signs that Waymo is headed for a technological dead end. They see Tesla’s FSD, with its capacity to operate in all cities and on all road types, as a more general technology that will soon surpass Waymo.
But this fundamentally misunderstands the situation.
Safely operating driverless vehicles on public roads is hard. With no one in the driver’s seat, a single mistake can be deadly—especially at freeway speeds. So Waymo launched its driverless service in 2020 in the easiest environment it could find—residential streets in the Phoenix suburbs—and has been gradually ratcheting up the difficulty level as it gains confidence in its technology.
In contrast, Tesla hasn’t started driverless testing because its software isn’t ready. For now, geographic restrictions and remote assistance aren’t needed because there’s always a human being behind the wheel. But I predict that when Tesla begins its driverless transition, it will realize that safety requires a Waymo-style incremental rollout.
So Tesla hasn’t found a different, better way to bring driverless technology to market. Waymo is just so far ahead that it’s dealing with challenges Tesla hasn’t even started thinking about. Waymo is playing chess while Tesla is still playing checkers.
The current excitement around Tesla’s FSD reminds me of the hype that surrounded Waymo in 2018. Early that year, Waymo announced deals to purchase 20,000 I-Pace sedans from Jaguar and 62,000 Pacifica minivans from Fiat Chrysler.
But the service Waymo launched in December 2018 was a disappointment. There were still safety drivers behind the wheel on most rides, and access was limited to a handpicked group of passengers.
It wasn’t until October 2020 that Waymo finally launched a fully driverless taxi service in the Phoenix area that was open to the general public. And even after that, Waymo expanded slowly.
Waymo began offering commercial service in San Francisco in 2023 and is now expanding to Los Angeles and Austin. Today, the company has only a few hundred vehicles in its commercial fleet—far fewer than the 82,000 vehicles it was planning to purchase six years ago.
What went wrong? In an August 2018 article, journalist Amir Efrati reported on the limitations of Waymo’s technology. Efrati wrote that “Waymo vans have trouble with many unprotected left turns and with merging into heavy traffic in the Phoenix area.” In addition, “the cars have trouble separating people, or cyclists, who are in groups, especially people near shopping centers or in parking lots.”
A federal judge ruled yesterday that Tesla must face a lawsuit alleging that it committed fraud by misrepresenting the self-driving capabilities of its vehicles.
California resident Thomas LoSavio’s lawsuit points to claims made by Tesla and CEO Elon Musk starting in October 2016, a few months before LoSavio bought a 2017 Tesla Model S with “Enhanced Autopilot” and “Full Self-Driving Capability.” US District Judge Rita Lin in the Northern District of California dismissed some of LoSavio’s claims but ruled that the lawsuit can move forward on allegations of fraud:
The remaining claims, which arise out of Tesla’s alleged fraud and related negligence, may go forward to the extent they are based on two alleged representations: (1) representations that Tesla vehicles have the hardware needed for full self-driving capability and, (2) representations that a Tesla car would be able to drive itself cross-country in the coming year. While the Rule 9(b) pleading requirements are less stringent here, where Tesla allegedly engaged in a systematic pattern of fraud over a long period of time, LoSavio alleges, plausibly and with sufficient detail, that he relied on these representations before buying his car.
Tesla previously won a significant ruling in the case when a different judge upheld the carmaker’s arbitration agreement and ruled that four plaintiffs would have to go to arbitration. But LoSavio had opted out of the arbitration agreement and was given the option of filing an amended complaint.
LoSavio’s amended complaint seeks class-action status on behalf of himself “and fellow consumers who purchased or leased a new Tesla vehicle with Tesla’s ADAS [Advanced Driver Assistance System] technology but never received the self-driving car that Tesla promised them.”
Cars not fully autonomous
Lin didn’t rule on the merits of the claims but found that they are adequately alleged. LoSavio points to a Tesla statement in October 2016 that all its cars going forward would have the “hardware needed for full self-driving capability,” and a November 2016 email newsletter stating that “all Tesla vehicles produced in our factory now have full self-driving hardware.”
The ruling said:
Those statements were allegedly false because the cars lacked the combination of sensors, including lidar, needed to achieve SAE Level 4 (“High Automation”) and Level 5 (“Full Automation”), i.e., full autonomy. According to the SAC [Second Amended Complaint], Tesla’s cars have thus stalled at SAE Level 2 (“Partial Driving Automation”), which requires “the human driver’s constant supervision, responsibility, and control.”
If Tesla meant to convey that its hardware was sufficient to reach high or full automation, the SAC plainly alleges sufficient falsity. Even if Tesla meant to convey that its hardware could reach Level 2 only, the SAC still sufficiently alleges that those representations reasonably misled LoSavio.
The complaint also “sufficiently alleges that Musk falsely represented the vehicle’s future ability to self-drive cross-country and that LoSavio relied upon these representations pre-purchase,” Lin concluded. Musk claimed at an October 2016 news conference that a Tesla car would be able to drive from Los Angeles to New York City “by the end of next year without the need for a single touch.”
There’s more bad news for Tesla. On Monday, we learned that CEO Elon Musk is continuing to slash his way through the company payroll as Tesla went through a fourth round of layoffs in four weeks. Yesterday, we discovered exactly what questions the National Highway Traffic Safety Administration wants answered about the safety of Tesla’s Autopilot driver assist. And today, it emerged that the US Department of Justice is investigating whether or not Tesla committed securities or wire fraud by making misleading statements about Autopilot and its so-called “Full Self-Driving” (FSD) option.
Reuters reported that three people familiar with the matter told it about the investigation. One of the sources also told Reuters that the Securities and Exchange Commission is also investigating Tesla’s claims about its driver assists.
Not the first time
This isn’t the first time Tesla has been accused of securities fraud. In 2018, Musk agreed to a settlement with the SEC over his infamous “funding secured” tweet that sent the company’s share price skyrocketing despite the fact that there was never actually a possibility that he would take the company private. As a result, Musk was required to step down as chairman, and both Musk and Tesla were ordered to pay $20 million in penalties, to be distributed to investors who lost money after being misled by Musk.
(However, a federal jury in 2023 sided with the CEO in a class-action lawsuit brought by investors.)
(Authorities in South Korea fined Tesla $2.2 million in January 2023 for misleading customers about range.)
Federal prosecutors first became interested in “whether Tesla misled consumers, investors, and regulators by making unsupported claims about its driver assistance technology’s capabilities” in 2022. Critics have regularly pointed out that even the name “Autopilot” is misleading, and there have been multiple instances of Musk demonstrating the system on camera without keeping his hands on the steering wheel, despite other Tesla literature that states drivers must do so at all times.
The CEO has also regularly claimed that Tesla is far ahead of the rest of the industry in autonomous driving technology, issuing deadlines for full autonomy that, like most of Musk’s deadlines, have come and gone without delivering the product.
