Elon Musk's robotaxi has a serious problem

If it gets robotaxi right, Tesla (TSLA) could be sitting on technology worth trillions of dollars.

CEO Elon Musk first introduced the Tesla robotaxi concept nearly a decade ago. As the company has refined Musk's original vision, Tesla sees a future where every Tesla vehicle on the road has the potential to be a robotaxi.

While that future is still many years away, Tesla took a big first step in that direction when it debuted the Tesla robotaxi on Austin, Texas, city streets in late June.

Tesla's full self-driving tech is not perfect. Despite promises that the technology can perform better than human drivers who are often distracted or tired, FSD tech has made some very “human” errors.

But Tesla super bulls like Webush analyst Dan Ives and Ark Invest hedge fund CEO Cathie Wood see FSD eventually becoming the standard for autonomous driving, adding trillions of dollars to Tesla's market value.

However, Tesla doesn't use the most advanced technology to navigate urban streets.

Most experts consider a light detection and ranging (LiDAR) driver assistance system to be the state-of-the-art tech. Tesla competitors like Toyota offer LiDAR, in addition to the camera-based system that Tesla FSD uses.

But Musk has called LiDAR an “expensive and unnecessary” fool's errand that is just “expensive hardware that’s worthless on the car.”

Tesla robotaxi began operations June 22.

Image source: Bloomberg/Getty Images

Tesla robotaxi causes first ‘traffic incident' during debut week

People wanting to try the Tesla robotaxi out this week had to be invited to download the app to access the service.

Dan Ives and other Tesla backers were among the first to post videos of their inaugural rides, as fans flocked to post (and see) the next tech revolution for themselves.

However, a concerning video has also emerged showing the robotaxi having trouble navigating everyday traffic situations, choosing to drive into the oncoming traffic lanes after missing its turn.

Dan O'Dowd, the CEO of Green Hills Software and an X user who tracks Tesla FSD mistakes and believes it should be banned — pointed out that Austin's AV incidents database shows one incident that was reported during its first week.

The issue occurred at the intersection of East Oltorf St. and Burton Drive. The safety concern didn't involve blocking traffic, a near miss, a nuisance, ignoring law enforcement or a collision — all of which have their own datasets.

“According to Austin's AV incidents database, Waymo has recorded 22 ‘Safety Concern' incidents in the last year. It only took Tesla's Supervised Robotaxi a couple of hours to get its first Safety Concern incident. In just four days, we have already seen 11 Supervised Tesla Robotaxis commit 16 safety-critical and driving errors,” O'Dowd tweeted to his 34.2k followers.

It should be pointed out that the city's database only uses data gathered from official city departments and its 3-1-1 service line. So social media posts aren't counted in the official data, even though they document what the city might consider a “safety concern incident.”

Elon Musk claims Tesla robotaxis operate a more advanced version of FSD not currently available to all Tesla users, so while these incidents are concerning for some, the supervised rides represent a much different experience than the average Tesla user can access.

“Tesla's self-driving software has been involved in 2,185 accidents. That is 19x more crashes than Honda, which has the second highest number of accidents at 112,” O'Dowd said, citing U.S. National Highway Traffic Safety Administration data.

“Waymo has driven 10 million miles and does 250,000 rides a week without a fatality or serious accident. At least 50 people have already been killed in crashes involving Tesla's self-driving software.”

Tesla Cybertruck using FSD drives in the wrong lane in concerning video

Tesla offers users a different suite of driver assistance programs based on their subscription level.

The most advanced supervised FSD features include automatic lane change, navigation, traffic light and stop sign recognition, autoparking, and the ability to “smart summon“ your vehicle to you from miles away.

But a new video circulating on X, which Tesla CEO Elon Musk owns, suggests that the software undergirding the system isn't ready for prime time.

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One user who says he uses FSD for over two hours of travel daily in the Philadelphia area showed a video that should concern any driver who shares the road with these vehicles.

The Cybertruck makes a blind left turn and ends up on the wrong side of a two-lane roadway. The onboard display shows that the vehicle's computer recognizes that it is in the wrong lane.

Still, it drives along anyway for a good 10 seconds before the driver takes control of the vehicle, just seconds before oncoming traffic arrives.