Tesla's Midsummer Night's Self-Driving Dream

This week’s tech news cycle was dominated by the spectacular failure of a software update by CrowdStrike.

It was a result of not properly testing before you deploy a new version.

Ironically, since it affected Microsoft Windows, it was first thought that it was a Microsoft problem or that there was a widespread cyber attack.

Neither was correct. It was a self-inflicted wound. The outage impact was magnified by the high profile and highly-visible customers. From airlines to news media and health care.

Were there other outages with millions of people affected? Of course. Who can forget the 2021 Facebook Outage when Facebook and all its apps disappeared from the Internet for 6 hours, or the 2022 Rogers Communications outagewhere 25% of Canada lost Internet connectivity. Both incidents were due to systems misconfiguration.

What barely made the headlines was an announcement by GM that it is stopping the development of its self-driving car, which has no steering wheel or pedals. Instead, it will use its regular car to keep developing the robotaxi platform.

That started an exchange of words between GM and Tesla. Mr. Musk ridiculed GM for not being able to develop the technology and hiding its inability behind the regulatory regime. On the other hand, GM argued that it is Tesla which still doesn't have self-driving technology, unlike GM, which claims over 5 million miles driven autonomously.

One would think that Mr. Musk would be humbled by Tesla's inability to develop self-driving technology. He's been promising it since 2013, and the first self-driving Tesla was supposed to be on the road in 2018, and then every year ever after. Since developing self-driving cars is proving to be very difficult both from a technology and regulatory standpoint, companies now changed the message. They are now focusing on robotaxis.

Robotaxis are a concept which Waymo (Alphabet) deployed within 3 cities in restricted locations. Billions of dollars spent and still billions of dollars and years away.

The latest prediction from Mr. Musk is 'self-driving software would be able to drive Tesla vehicles without human supervision next year' and he would be ‘shocked if that were not the case.'

If there is any pattern, it is constantly promising a self-driving feature and not delivering on it. Now, for good measure, Tesla is going to build robotaxis. As a side note, the robotaxi was promised in 2022 with deployment by 2024.

The self-driving dream is getting more and more expensive with mass deployment still years away. One has to question Tesla's strategy for deploying its resources, especially when the competition in manufacturing electric cars is heating up and forcing Tesla to discount its cars. Other manufacturers, especially from China, are flooding the market with products much cheaper than Tesla.

One can argue about subsidies or quality, but it is a reality of the market. Tesla tried to differentiate itself by building its own network of charging stations, but that team got dismantled when Tesla decided to cut costs.

Rather than building cars (including semis and a pickup truck) as promised, it is trying to build a robot and robotaxi. Tesla is still relying on selling green credits to other car manufacturers, but as they start building their own EV cars, that revenue will disappear and will be replaced with fierce competition.

So far, investors are helping to keep the self-driving dream alive and hoping for a happy ending. The recurrent pattern doesn't support it.