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Transcript

Tesla Drowning in Regulatory Probes · Elon Musk Podcast

• 0:01
  The NHTSA just handed Tesla five more weeks to explain why its
• 0:05
  cars keep running red lights. The federal safety agency
• 0:08
  extended Tesla's deadline to respond to any investigation
• 0:11
  into full self driving traffic violations until February 23rd,
• 0:15
  giving the company time to manually review 8313 records of
• 0:21
  potential incidents. And Tesla says it can only
• 0:23
  process about 300 records per day.
• 0:26
  In the original January 19th deadline landed right in the
• 0:30
  middle of a holiday. But this extension arrives at a
• 0:33
  precarious moment for the automaker.
• 0:35
  Elon Musk announced 2 days ago that Tesla will stop selling FSD
• 0:39
  as a one time purchase after February 14th, forcing all new
• 0:42
  customers between $99 monthly subscription.
• 0:46
  Now, is that date a coincidence, or is Tesla quietly
• 0:49
  repositioning its most controversial product before
• 0:52
  regulators close in? The February 14th deadline is
• 0:56
  the same day California's DMV gave Tesla to fix its misleading
• 1:01
  Autopilot marketing or face a 30 day sales suspension.
• 1:05
  We're going to go and breakdown what NHTSA is actually
• 1:08
  investigating, why Tesla is drowning in regulatory requests,
• 1:12
  and how the subscription pivot might be a legal hedge as much
• 1:15
  as a business strategy. We will also look at why only
• 1:19
  12% of Tesla owners have ever paid for FSD, what that means
• 1:23
  for Musk's robotaxi, and we'll get right into that right after
• 1:27
  this very short break. Now, the federal investigation
• 1:32
  into FSD traffic violations now covers 2.9 million Tesla
• 1:36
  vehicles, essentially every car equipped with a system now.
• 1:40
  NHTSA opened the probe in October after collecting dozens
• 1:43
  of reports of Teslas running red lights, driving in the wrong
• 1:46
  direction, and making illegal lane changes while FSD was
• 1:50
  engaged. The agency has since logged 62
• 1:53
  customer complaints, 14 Tesla submitted reports and four media
• 1:57
  accounts of incidents. Some drivers reported their cars
• 2:00
  gave no warning before behaving erratically.
• 2:04
  Tesla's defense has remained consistent.
• 2:07
  They say that the company argues it has repeatedly told drivers
• 2:11
  the system cannot drive cars by themselves.
• 2:14
  Whoever sits behind the wheel must remain attentive and ready
• 2:17
  to intervene at all times. Now, that language appears in
• 2:20
  Tesla's documentation and owner manuals.
• 2:23
  The company classifieds FSD as an SAE Level 2 partial
• 2:27
  automation system, meaning the driver retains full
• 2:30
  responsibility for operating the vehicle and complying with
• 2:34
  traffic laws at all times. But let's point out that the
• 2:38
  product name is Full Self Driving.
• 2:41
  Calling something Full Self Driving when it requires
• 2:43
  constant given supervision creates a perception gap that
• 2:46
  regulators find increasingly problematic.
• 2:49
  California's DMV ruled last month that Tesla's marketing was
• 2:52
  deceptive under state law, concluding that reasonable
• 2:55
  consumers can mistakenly believe that cars can operate all by
• 2:59
  themselves without human oversight.
• 3:01
  Administrative Judge Juliet Cox found that Tesla's promotional
• 3:05
  language implied levels of autonomous capabilities the cars
• 3:09
  simply cannot do, and they cannot possess this now.
• 3:14
  The investigation centers on specific failure modes that put
• 3:17
  drivers and other road users at risk.
• 3:20
  NHTSA documents describe Tesla's entering turn only lanes and
• 3:24
  proceeding straight through intersections in violation of
• 3:28
  lane markings. Others executed turns from
• 3:32
  through lanes despite clear directional signals and peanut
• 3:35
  arrows. Some vehicles changed lanes
• 3:37
  directly into opposing traffic with minimal notice to drivers,
• 3:40
  creating immediate collision hazards.
• 3:42
  One pattern emerged from a cluster of complaints in Joppa,
• 3:45
  MD, where multiple drivers reported the same intersection
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  triggered erratic behavior. Tesla claims it has since
• 3:52
  addressed the issue at that specific location, but the
• 3:55
  geographic spread of other incidents suggests systemic
• 3:58
  problems rather than isolated bugs.
• 4:01
  The agency is particularly interested in whether FSD
• 4:04
  provides adequate warnings before these maneuvers, and many
• 4:08
  incident reports suggest the system acted without alerting
• 4:10
  the driver to its intended behavior, leaving no time for
• 4:13
  the driver to intervene. Tesla requested the extension on
• 4:18
  January 12th, explaining that the original deadline gave it
• 4:21
  barely over a month to compile comprehensive data.
• 4:24
  The company told regulators that nearly two weeks of that window
• 4:28
  overlapped with major holidays, and keyword searches for traffic
• 4:31
  violations return massive volumes of unrelated records.
• 4:35
  Manually sorting through 8313 remaining items at 300 per day
• 4:41
  requires approximately 28 additional days.
• 4:44
  NHTSA granted the full 5 weeks test that requested.
• 4:48
  Now I've been digging through the analytics of the show and
• 4:51
  noticed about 37 to 38% of you are following the channel.
• 4:55
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• 4:58
  I'm forever grateful for you. You have helped us get to where
• 5:00
  we are, but we need to get to the next level.
• 5:02
  We need to level up. And the other 63% of you that
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  have not hit the follower subscribe button, you can help
• 5:08
  us do that. All you need to do is hit the
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• 5:13
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• 5:15
  years covering SpaceX, Elon Musk, Tesla, Boring Company,
• 5:19
  XXAI, everything Elon has been doing and everything in his
• 5:22
  perimeter. And I'm going to continue doing
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• 5:50
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• 5:54
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• 5:57
  So thank you so much for being part of this.
• 6:00
  This SFSD probe is just one of three major NHTSA investigations
• 6:05
  Tesla is juggling juggling right now.
• 6:07
  The company also faces probes into delayed crash reporting and
• 6:11
  inoperative door handles on Model 3 vehicles.
• 6:14
  Tesla told regulators that responding to three large
• 6:16
  information requests in short order is unduly burdensome and
• 6:21
  affects the quality of responses, and the door handle
• 6:24
  investigation alone covers roughly 179,000 vehicles from
• 6:29
  2022. Now, a separate probe in FS DS
• 6:33
  ability to handle reduced visibility conditions like fog
• 6:36
  and sun glare has been running since October 2024.
• 6:39
  And after multiple crashes, including one fatality that's
• 6:43
  right on the books and the subscription announcement that's
• 6:46
  a new one, that's great. January 14th caught everybody
• 6:50
  off guard. Didn't expect this, but there's
• 6:53
  a pattern here. California's DMV gave Tesla 60
• 6:56
  days to fix its deceptive marketing starting December
• 6:59
  16th. 60 Days Later falls on February 14th, Valentine's Day,
• 7:05
  the exact date the Elon Musk chose to end one time FSD
• 7:09
  purchases. Moving to subscription only
• 7:11
  detaches Tesla from the promise that buyers were purchasing a
• 7:15
  future proof autonomous capability.
• 7:18
  Subscription customers pay for what FSD delivers today, a Level
• 7:22
  2 driving assistance assistance system, nothing more.
• 7:27
  That distinction matters in courtrooms and regulatory
• 7:30
  hearings, where Tesla faces accusations of overselling a
• 7:33
  product that has never matched its name.
• 7:36
  Now the one time purchase option created legal exposure.
• 7:39
  Tesla no longer wants to carry. They don't want that burden.
• 7:43
  And for years, Tesla told buyers, Elon Musk told buyers
• 7:47
  that their cars would eventually become robo taxis worth hundreds
• 7:50
  of thousands of dollars and that FSD prices would keep rising as
• 7:53
  the software improved. Neither prediction is true at
• 7:56
  all. You can't use your car as a robo
• 7:59
  taxi right now. You might not be able to for the
• 8:01
  next 5 years if possible. FSD peaked at $15,000 in late
• 8:05
  2022 before Tesla cut its price to 8000 in 2024.
• 8:10
  The subscription dropped from 199 to $99 monthly during the
• 8:14
  same period. And at current pricing, buying
• 8:17
  FSD outright only made sense if you believed in the autonomy
• 8:20
  promise, since it would take nearly seven years of $99
• 8:24
  monthly payments to break even at 8 grand.
• 8:28
  Some people would prefer the $99, right?
• 8:31
  Most car buyers do not keep their vehicles that long.
• 8:35
  The promise faces existential pressure from straight
• 8:37
  regulators too. Federal investigators and class
• 8:40
  action lawyers who allege Tesla deceived them after the
• 8:44
  technology's capabilities were not realized after years now.
• 8:49
  Musk also admitted on a recent earnings called the hardware 3
• 8:51
  vehicles. A significant portion of its
• 8:54
  existing fleet cannot achieve full autonomy as originally
• 8:57
  promised. Those owners were told their
• 9:00
  cars had all the hardware needed to become full self driving with
• 9:03
  future software updates. Now, Tesla says some will need
• 9:07
  retrofits, though no detailed upgrade plans have been
• 9:10
  announced. Moving to subscription only
• 9:12
  eliminates ongoing commitments to driver and delivery
• 9:16
  capabilities that the company may never achieve on legacy
• 9:20
  hardware. New subscription customers get
• 9:22
  what FSD delivers today without any implied promise about the
• 9:27
  future and tomorrow, and Tesla Score business provides the
• 9:30
  financial context for why FSD performance carries such weight.
• 9:34
  The company delivered 1.64 million vehicles in 2025, down
• 9:39
  9% for the prior year. Chinese rival BYD sold 2.26
• 9:44
  million EVs during the same period, claiming the title Tesla
• 9:47
  held for years. CFO of Tesla disclosed in
• 9:51
  October that only about 12% of Tesla fleets has paid for FSD.
• 9:56
  Boasting that take rate became a key milestone in Musk's new $1
• 10:01
  trillion compensation package, which requires 10 million active
• 10:04
  FSD subscriptions before 2035 for his stock awards to fully
• 10:09
  vest. Lower upfront costs through
• 10:11
  subscription only access could theoretically Dr. adoption,
• 10:14
  though the regulatory scrutiny may offset any marketing
• 10:17
  benefits. Waymo continues pulling ahead in
• 10:21
  the robotaxi race. Tesla once seemed destined to
• 10:24
  dominate. Alpha's autonomous vehicle
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  division now completes over 450,000 paid rides per week
• 10:31
  across Austin, San Francisco, Phoenix, Atlanta and LA.
• 10:35
  Expansion into London and Tokyo is planned for 2026.
• 10:38
  And now Tesla launched supervised robo taxi testing in
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  Austin last year and offers ride hailing with human drivers in
• 10:44
  San Francisco. But the company still lacks the
• 10:47
  permits required to test or operate autonomous vehicles
• 10:49
  without a safety driver in California, the state where
• 10:52
  Tesla builds half a million cars annually, is the same state
• 10:55
  threatening to suspend its sales license over marketing language.
• 10:59
  The NHTSA will likely seek another extension request from
• 11:02
  Tesla after the February 23 deadline passes.
• 11:06
  The company has already signalled it will ask for more
• 11:08
  time to provide detailed information about each
• 11:11
  complaint, including software versions, driver alerts and
• 11:14
  crash outcomes. The agency wants timelines for
• 11:16
  every incident starting 30 seconds before the initial
• 11:19
  violation and ending with a final violation, driver
• 11:22
  disengagement or crash. The level of granularity across
• 11:26
  thousands of records will take months to compile, according to
• 11:29
  Tesla. But they do have access to XAI,
• 11:33
  so that could be a thing they could use to speed up this
• 11:37
  process. The investigation could easily
• 11:39
  stretch through 2026 while Tesla simultaneously fights
• 11:42
  California's marketing requirements and prepares for
• 11:46
  its earnings report next week.