A Tesla Model S with autopilot

David Paul Morris | Bloomberg | Getty Images

A federal agency is calling for stricter requirements for testing autonomous driving, and the proposed changes could eventually force Tesla to change the way it introduces features for customers.

The National Transportation Safety Board is calling for stricter federal requirements for the design and use of automated driving systems on public roads. In an unreported letter to its sister agency, the National Highway Traffic Safety Administration, dated last month, NTSB chief Robert Sumwalt called Tesla 16 times to call for sweeping changes.

“Tesla recently released a beta version of its Level 2 autopilot system, which is described as fully self-driving. With the release of the system, Tesla is testing a highly automated AV technology on public roads, but with limited monitoring or reporting requirements.” wrote Sumwalt. “NHTSA’s hands-off approach to monitoring AV tests carries a potential risk for drivers and other road users.”

While both the NTSB and NHTSA are watchdogs of vehicle safety in the U.S. government, their roles are different.

The NTSB is investigating accidents to determine the underlying causes of harmful incidents, including fatal Tesla autopilot accidents in Mountain View, California in March 2018 and Del Ray Beach, Fla., March 2019. The board also makes safety recommendations to regulators and the auto industry.

It is up to their sister agency, the NHTSA, to initiate recalls of vehicles, systems, or parts that are deemed defective or unsafe for use. It is also the responsibility of the NHTSA to set standards and reporting requirements for the safety and design of vehicles, including standards for fuel economy.

Federal action could affect Tesla’s ability to test its full self-driving systems as they do today – using customers and public roads as test pilots and proving grounds.

In the past, NHTSA has been reluctant to regulate automated driving systems from Tesla, GM, Volvo, and a host of other automakers and tech companies such as Amazon’s Zoox, Alphabet’s Waymo, and a number of startups.

Agency assistant administrator James Owens said he did not want to “hamper” innovation through premature regulation. Instead, the agency left the task mostly to the states.

Tesla’s self-driving contradictions

Today Tesla sells a premium software package for $ 10,000 and markets it as “Full Self Driving” (or FSD). The company said it will soon make FSD available on a subscription basis to those who want it but don’t want to pay the upfront fee.

Tesla is also offering select customers early access to a beta version of FSD – Effectively turn customers into software testers. CEO Elon Musk recently encouraged customers with FSD to sign up for beta access.

In addition to FSD, Tesla vehicles have a standard set of automated driving functions, the so-called autopilot.

Despite those names – which for some drivers mean they can operate Tesla electric vehicles hands-free – the company warns in its owner’s manual that autopilot and FSD require active monitoring.

Musk repeatedly persuades Autopilot and FSD to gain massive following on Twitter and in media interviews, but in accordance with regulators and in the fine print of Tesla’s financial reports, the company’s legal team is referring to these systems in a muted and more precise tone.

On April 22, 2019, at the company’s Autonomy Day presentation, the CEO promised that Tesla’s self-driving technology would be so good that in two years’ time Tesla would be making cars without steering wheels or pedals. At this event, he talked about a customer-specific chip that is supposed to enable self-driving functions.

On May 2, 2019, Musk confidently announced to investors in a fundraiser that autonomous driving would transform its electric vehicle business into a company with a market cap of $ 500 billion. A few days later, Tesla completed an oversubscribed offering of stocks and convertible bonds valued at $ 2.7 billion. At the time, its market cap was under $ 50 billion. Now it’s more than $ 600 billion.

That year, on the Feb.11 episode of the Joe Rogan Experience podcast, Musk said, “I think autopilot gets good enough that you don’t have to drive most of the time unless you really want to.”

And yet, in sharp contrast to Musk’s promises, Tesla calls its autopilot and full self-driving options just “advanced driver assistance systems,” according to the company’s latest financial file. And in accordance with the California Department of Motor Vehicles last year, Tesla rated its fully self-driving option as just “Level 2”.

“Level 2” refers to vehicles with some automated functions, but which require the driver to remain alert and keep their hands on the steering wheel. The highest level, level 5, would be a fully autonomous vehicle that never requires driver intervention.

DMV correspondence was first obtained from the Think Computer Foundation and published by Plainsite, an online database of public records and court documents that are otherwise difficult to access.

CNBC approached Tesla and the company’s acting general counsel, Al Prescott, for comment, but they did not respond immediately.

Clear rules could help the industry

Sumwalt’s inquiries to the NHTSA seem straightforward: he asked the agency to ask the automakers to do so Integrate collision avoidance systems into all vehicles – the NTSB has investigated several Tesla autopilot incidents – to provide robust driver monitoring systems and add protective measures that ensure drivers do not use automated driving systems that go beyond the conditions and areas in which they are safe You this.

For Tesla specifically, he recommended that the NHTSA investigate Tesla autopilot vehicles to determine if the system’s operating limitations, the predictability of driver abuse, and the ability to operate the vehicles outside of the intended ODD [operational design domain] pose an unreasonable security risk. “He added,” To date, NHTSA has shown no indication that it is ready to respond effectively and in a timely manner to potential security flaws from AV. “

Sumwalt also wants the NHTSA to make the safety reports to the federal government more specific and binding. Autonomous vehicle developers can currently provide their data voluntarily, but do not have to report it.

Despite Sumwalt’s criticism of the current processes, he commended the NHTSA for working with his agency and state and local governments to strike the right balance between rules and regulations regarding emerging vehicle technologies.

Having clear rules from a central location could help the autonomous vehicle industry in the US at large, said Taylor Ogan, CEO of Snow Bull Capital. Federal rules, even if strict, could align states and local authorities and reduce the patchwork of separate autonomous vehicle regulations in each region, he said.

Ogan is a longtime Tesla owner and proponent of Tesla and electric vehicles. His company, Snow Bull, is a long-time Tesla hedge fund that doesn’t sell stocks short.

He personally drives a 2020 Model Y Performance Tesla, which is equipped with the full self-driving option. It is his fourth Tesla. The investor said, based on his personal use of the vehicle, that he believes Tesla is the best Level 2 system on the US market today.

However, Ogan said, “My car can’t autonomously navigate a parking lot so I don’t know why people think these are working as a robotic axis. We don’t think Tesla can achieve level 3 or 4 autonomy – which means that there is no robot axis. ” – anytime soon with your current hardware. “

In his view, competitors are already outperforming Tesla in self-driving in China, where the company faces competition from Nio, Xpeng, and a joint venture between Didi Chuxing and BYD that is developing a driving “robotaxi” called the D1.

Here is the full letter from NTSB to NHTSA:

Correction: An earlier version of this article incorrectly stated that the NTSB is part of the US Department of Transportation. It was made independent from the DOT in 1974.