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[128]Business

Tesla says its self-driving technology may be a `failure' -- but not fraud

Elon Musk is seen on a screen.
For years, Elon Musk has made promises about what Tesla markets as Full
Self-Driving technology -- promises that he's failed to deliver, as no
Tesla on the road today is capable of completely autonomous driving.
(Hector Retamal / AFP/Getty Images)
By [129]Russ MitchellStaff Writer
Dec. 8, 2022 1:25 PM PT
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[137]Tesla's Full Self-Driving technology may be a failure, Tesla
lawyers admit -- but it's not a fraud.

The electric car company is facing a class-action lawsuit from
Autopilot and Full Self-Driving (FSD) technology customers. They claim
they were ripped off, duped by statements from co-founder and Chief
Executive Elon Musk and marketing materials from [138]Tesla over the
last six years suggesting full-fledged autonomous driving was imminent.
No Tesla on the road today is capable of full self-driving, and yet
Tesla sells what it calls a Full Self-Driving Capability for $15,000.

In its defense, Tesla lawyers said that "mere failure to realize a
long-term, aspirational goal is not fraud." That argument is contained
in a motion to dismiss the case that was filed last week in U.S.
District Court in San Francisco.
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The main plaintiff is Briggs Matsko, a resident of Rancho Murieta,
Calif. If the case goes forward, it could lead to deposition of Tesla
employees who helped develop the technology and reveal what Musk knew
and didn't know about its true capabilities when he made numerous
forecasts over the years -- including the prediction that there would
be a million Tesla robotaxis on the road by the end of 2020, that
customers could make $30,000 a year hiring them out, and that their
cars would appreciate in value.

Tesla lawyers are attempting to prevent that information from going
public. The motion to dismiss the case rests mainly on Tesla's
contention that the papers customers signed when they bought their cars
obligate them to individually file claims through the private
arbitration system.

A public trial allows for customers to file as a large group, known as
a class; arbitration means each customer would be on his or her own.
While a public trial could reveal testimony from current or former
Tesla employees on the state of Tesla's automated technology
development at any given time, arbitration would keep that testimony
secret.
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Thousands of lawsuits have been filed against Tesla and Musk. The
private arbitration move is often Tesla's first reaction against public
court lawsuits. The case of Cristina Balan, as chronicled by The Times,
is perhaps the most famous example. A former Tesla engineer, she claims
she was defamed by Tesla in 2017, damaging her professional reputation,
but through a series of procedural arguments Tesla lawyers have kept
the case out of public court.
[139]Cristina Balan in front of the federal courthouse in Seattle.

[140]Business

[141]Tesla called her a criminal. Her fight could be a milestone for
employees' rights

Former engineer says Tesla forced her out and then libeled her. Her
lawsuit against the company is testing the limits of the arbitration
agreements that bind millions of American workers.

The FSD fraud suit runs through a litany of claims and promises made by
Musk and Tesla about automated technology that will be familiar to
anyone who closely follows Musk.
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They include a 2016 video that purports to show a Tesla driving itself
through the streets of Palo Alto with complete autonomy. Before the
video rolls, with the Rolling Stones' "Paint It Black" as background
music, a message reads, "The person in the driver's seat is only there
for legal reasons. He is not driving anything. The car is driving
itself."

Tesla workers later revealed that the video was [142]fabricated, done
in multiple takes, with the driving system's failures removed,
including a crash into a fence. The[143] video remains on Tesla's
website.

The lawsuit highlights the multiple revisions of [144]Musk's statements
over the years that full autonomy would be achieved in three months, or
six months, or the end of the year (in any given year) or the next
year.

In its motion to dismiss, Tesla lawyers note that Musk often has said
regulatory approval will be necessary before actual autonomy can be
deployed. But neither Musk nor the lawyers say which regulators they're
talking about.
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"Tesla would need no federal approval to deploy an automated driving
system in its current vehicles," said Bryant Walker Smith, a law
professor who specializes in autonomous vehicles at the University of
South Carolina. "Tesla would need state approval in California and a
small number of other states, but it has not sought that approval.
Tesla would need approval in Europe, but it has not sought that
approval."

Regulatory agencies have been investigating Tesla's automated
technology for years. Several fatalities have been linked to Autopilot
software. The National Highway Traffic Safety Administration has
several investigations open, including a probe into why Teslas seem to
disproportionately crash into emergency vehicles parked on the
roadside. The agency has set no public timeline for a determination.
[145]A Tesla crashed into a police vehicle which turn crashed into an
ambulance in Cochise County, Az., on July 30, 2020.

[146]Business

[147]A Tesla mystery: Why didn't auto-braking stop these crashes?

While regulators investigate a spate of Teslas steering themselves into
parked vehicles, Tesla owners have been reporting faulty
collision-avoidance systems.

Advertisement

The California Department of Motor Vehicles says it's looking into the
matter as well. While Musk was making bold predictions about full
self-driving, the DMV and Tesla were [148]trading emails in 2019 and
2020 that confirm the company's Full Self-Driving mode, also known as
City Streets, was a Level 2 technology. The emails were released under
a public records request by legal document publisher Plainsite. Under
the Level 2 label, Tesla's system is no more capable of autonomous
driving than similar driver-assistance packages sold by General Motors,
Ford and other companies.

With a Level 2 system, a car company isn't required to report crashes
to the DMV. If Tesla were experimenting with fully driverless
technology, the law would require such reports.

A tour of YouTube shows that Tesla is experimenting with technology
that goes beyond mere driver assistance, with untrained customers
behind the wheel. The DMV requires autonomous car developers to use
trained test drivers.
Advertisement

In some videos, the Tesla FSD cars make turns, stop for traffic lights
and avoid pedestrians. In [149]other videos, they drive into oncoming
trucks in the wrong lane, steer toward pedestrians, and in one case,
mistake the moon for a yellow traffic signal.

DMV regulations on autonomous vehicles include rules that bar a company
from marketing a vehicle as autonomous when it's not. The DMV began a
"review" of Tesla's Full Self-Driving Capability under that rule in May
2021. That led to a preliminary complaint filed against Tesla last
July. The agency says the case has been in the "discovery" phase for
the last four months, and declines to state how long that phase will
last.

DMV director Steve Gordon has refused to speak with The Times or any
other media outlet on the subject of autonomous vehicle regulation for
the last two years. Tesla lawyers did not respond to a request for
comment. Musk did not answer a tweet seeking comment. Tesla disbanded
its media relations team several years ago.
__________________________________________________________________

[150]Business[151]Autos
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Russ Mitchell covers the rapidly changing global auto industry, with
special emphasis on California, including Tesla, electric vehicles,
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