Better Offline - Enron Musk Ft. Ed Niedermeyer

Episode Date: May 8, 2024

On April 26 2024, the NHTSA, the government body responsible for keeping roads safe, found Tesla's Autopilot and Full-Self-Driving software created a "critical safety gap" with drivers, killing and injuring people in the process, in the very same week that Elon Musk fired most of Tesla's team behind their Supercharger electric vehicle charging moment. Ed Zitron brings on E.W. Niedermeyer, author of Ludicrous: The Unvarnished Story of Tesla Motors, to explain exactly what the hell is going on.See omnystudio.com/listener for privacy information.

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Wake up, everybody. I've got a new podcast. This is Better Offline and I'm your host, Ed Zittron. Last week, the National Highway Traffic Safety Administration released a damning report about Tesla's autopilot and its full self-driving systems, which the NHTSA referred to as not adequately ensuring that drivers maintain their attention on the driving task. One second, though, to delineate between the systems, autopilot is more like a sexy version of cruise control, keeping your car in lanes, changing lanes when you hit a thing, hitting the indicator and following the car in front of you on the highway, very basic. Full self-driving is when your car drives itself. It makes turns, you tell it where to go

on the GPS and it goes through intersections, follows lights, and a bunch of other things it appears to not really be capable of doing, with the NHTSA saying that both autopilot and full self-driving created a trend of avoidable crashes involving hazards that would have been visible to an attentive driver. The report, which covers the period between January 2018 and August 2023, described a critical safety gap, to quote CNBC's Laura Kolodny, in the autopilot system, which contributed to at least 467 collisions, resulting in at least 13 fatalities, and 49 injuries. Musk has recently tried to convince investors that Tesla is now all in on AI, and his flimsy dreams of having a robo-taxie company. This somehow also resulted in Musk firing the majority of the

team behind the one Tesla product everybody likes, its supercharger network, leaving the status of the North American charging standard created, with Tesla's help, in jeopardy. To explain what the hell is going on with Tesla, I brought in Ed Niedemeyer, who has been writing and commenting on the auto industry and mobility tech since 2008. He's the author of Ludacris, the unvarnished story of Tesla Motors and the co-host of the Autonicast. He lives in Portland, Oregon. I'm really happy to talk to him. Okay, Ed, so please tell me what has been happening in the world of Elon Musk in the last

two weeks, I want to say? There's a lot, a lot has been happening. And I think, you know, a lot of it has a really deep roots. Like a lot of the things that are happening are sort of dramatic right now, but they've been sort of been building towards us for a really long time. I would say like at a high level, what what appears to be happening is essentially, you know, Tesla as a stock, as a perception, as a set of stories and dreams that Elon Musk has been weaving for many years now, has essentially overtaken Tesla as a as a company, as a real thing. And I think, you know,

from the very beginning of sort of stumbling onto this company, the defining characteristic, of Tesla is this gap between perception and reality. And, you know, I've written a lot about the problems that Tesla has as a company. And yet, you know, for five years, much longer really, five years since my book came out, you know, Elon Musk has been able to sort of use perception to kind of make a lot of those issues not matter through raising money or, you know, sort of creating diversions and all kinds of other things. And I think what's happening now is that, you know, the problems with the car business are so fundamental. And there's nothing in place to sort of solve them.

And in the car business, you know, things take time. Problems take time to solve, especially problems like we don't have good new product that can compete in the market. And so, you know, we've sort of reached this point now where it seems like Elon is not even really trying to save the reality of this business and is sort of all in on on perception, and that's sort of taking a bunch of different forms. So in practice, though, what does it mean that it's escaped reality? So, you know, Tesla's a very nearly a 2 million unit a year car business, and having

built that up from nothing is, is like incredible. Like, it's a historic achievement in the world of cars. The problem is that that seems to have peaked, right? So they did about 1.85 million last year, and essentially sales are going down. and they are slashing prices and slashing margins as fast as they can to keep that decline from getting any worse. But really what happened is that during COVID, they were able to print through a number of sort of unique set of circumstances.

They were able to sort of print really impressive profits that made this business seem very, very real. And it was very, very real. The problem is it's created this complacency. In order to record those profits, they've basically been starving research. insertion development and investment in new product. And so now that sales are declining, they can cut the prices to kind of slow that decline, but the only thing that's going to actually turn it around is actual new product.

And those investments haven't been made. And he had the opportunity on the call to say, you know, we understand the problem. We're taking it seriously. And he sort of vaguely mentioned like new product is coming, but he did not sort of describe it in the kind of credible way that is, you know, sort of. makes it clear that there is actually a plan to solve that problem. And that was the latest investor call, just to be specific. Yeah. And so instead of that, right, he's gone all in on this idea that Tesla's an AI company,

that it's self-driving, they're going to show a robotaxy. And that's pumping the stock, right? That's doing the thing that traditionally happens. The problem is that those things don't make any money. Like they don't even make revenue, let alone profit, right? And doesn't the AI side lose the money? Yeah, yeah. And again, you know, what's really puzzling and troubling about what's going on right now is, is, you know, Tesla has on paper something like $30 billion in cash, a little bit less. Right. Which is enough to really solve, like, a lot of these problems. And if he'd gone on on that call and said, you know, we're going to, we're going to take $10 billion and we're going to use it to really, like, invest in a whole new generation of products and given some detail about what that was, you know, you.

I think things would be, we would be having a very different conversation right now. And instead, they're spending, what are they spending money on? They've been spending on since the pandemic, you know, the cyber truck, you know, and now sort of lots of GPUs. They're in like this race to buy more of an Nvidia's production than, you know, these other big, and by the way, very, very profitable tech companies. Can I just ask a quick question, though? You say these GPUs, so like the ones used to train models and run models like OpenAI,

Are these the same GPUs that Musk bought for XAI, his AI, his AI company attached to Twitter, or are these a completely different set? Presumably they're completely different. You know, Tesla is a publicly traded company and X is private. So, you know, that said, he does also very much, you know, blur these boundaries within his sort of empire and, frankly, you know, in ways that are not always strictly legal. So there may be, it may be that Tesla is using some of XAI's hardware. and vice versa, it's hard to know for sure. So walk me through this NHTSA report. What happened there?

Because it looks bad. Yeah. So some history is kind of important here, right? So first of all, you know, Tesla has admitted that crashes have involved autopilot, including fatal one, since 2016, the very first time. Right. And people don't always know it was a guy in China whose family had the brilliant idea of, you know, what if we like maintain chain of custody? on the vehicle data. And that was the first time that Tesla admitted,

oh, yeah, autopilot was actually involved. And so this may have been going on for even longer than anyone realizes. NTSB, which is, you know, this investigative body, they don't have any regulatory power, but they're really good investigators. They mostly look at air crashes. They were really early in looking at three fatal crashes that happened between 2016 and 2018.

And they concluded essentially that Tesla's system looks sort of self-driving enough, but it operates in areas, you're allowed to use it in places where it's not designed for, and people become complacent, and they stop paying attention. It's not good enough to trust your life to. It's just good enough to kind of make you complacent

and not paying attention when it runs into something it can't handle. And these were the findings of the old report. This is the NTSB, yes, there's a different body. And they recommend it to NHTSA who has maybe less good at investigating stuff like this, especially with human factors, but has all the regulatory power. And they said, look, this is a problem, you know.

And NHTSA had an enforcement guidance at the time that said, you know, if a system like autopilot, you know, is prone to foreseeable misuse, you know, that can be a defect and we can recall it. And yet somehow that was never used from 2016. And it wasn't until 2021 that NHTSA finally said, you know, they did two things essentially in the summer of 2021. They opened an engineering analysis of autopilot, sort of the first step towards identifying a defect and ordering a recall. They also at the same time, and the connection here was not always obvious, they started collecting data from across the industry.

And so now when you have crashes that involve any of the other sort of level two driver assistance systems out there, you have to report that to the government. So they've been simultaneously since the summer of 21 investigating Tesla specifically, but then also collecting data from the rest of the industry to kind of get a sense of, you know, is this a unique problem to Tesla? And pretty clearly the answer to that was yes, because what we've learned is that in December of 2023, you know, they basically took, you know, these findings that showed, you know, a good deal of crashes happening, including fatal ones, and basically forced Tesla to do a recall. They did that in December, over two million vehicles, and they did it with an over-the-air software update. And for me, having watched Nizza sort of drag its heels, frankly, or at least move very, very slowly to address what I think is a, it's been a pretty understandable problem and a recall-worthy problem for a long time now. I kind of thought, you know, okay, they're going to take, let Tesla do a software update, pretend like something has happened, and sort of move on. The thing is, is that we're still seeing crashes happen.

In fact, there was a fatal crash literally the day before, you know, this most recent earnings call. And so now what NTSA is doing is they're actually looking into the remedy to that recall. They're saying, you know, well, because these things keep happening, we think that maybe just updating the software wasn't enough to actually fix this problem. That, to me, is it's a very rare for NTSA to do one of these. It's called a recall query. It's very rare for them to do that.

That strongly suggests that they're really actually going to hold Tesla to account on this. And is the recall query something that happened before this new report, or is that what this current report is? So what's really interesting is that this report is essentially the results of Nitz's investigation over since 2021, essentially. And they go through and they describe sort of how they found out about all these different kinds of crashes and how they sort of analyze them. And basically about half of them, they were able to kind of throw them out right away. And then from the other half, they were able to drill down and identify, you know, a number of kinds of crashes that seem to keep happening that are all indicative of this problem that, you know, and TSB identified, you know, way back in 2018, 2019, 2020.

And so what was interesting is that data is they had taken that to Tesla and basically reading between the lines, strong-armed them into the recall. And that's often how recalls happen, is that either the automaker does it voluntarily or the investigator or the regulator brings a body of evidence to them and says, listen, like, you either do this or we're going to do it for you. So this NHTSA report, is it, does it do anything or is it just, is this something Tesla received before it came out? Like, how was this delivered and what happens as a result of it? So usually this stuff, usually what happens is that, right, they build up this body of evidence, they take it to the automaker, they essentially use it to force them into a recall. And then once the recall happens, usually you never see it. It doesn't become public.

So the fact that this is public is huge. Yeah, that was what confused me. This feels like a strange document for everyone to see. Yeah. And it is, absolutely. I mean, look, everything about this is kind of novel territory. Nizza has not really gotten into this sort of. automated driving, driving assistance stuff before.

So there's no playbook here. But within the context of automotive regulation, it is rare. And what it implies is that they forced this recall. Tesla did the easiest thing possible, which is, oh, we'll just update the software over the air. And NHTSA... What did that update do if you've used it? So it appears there have been a couple of them. And that's one of the things NIST is looking into is exactly what did you do.

But fundamentally, the only thing that they really could do was to essentially create a lot more nags in the system. And nags are when, you know, you have the hands off the wheel or whatever. And the system is like, you know, take control, take control, take control. What people love, what consumers love about autopilot is that it doesn't do that very much, right? It kind of lets you sort of sit back, which is the problem, right? People like the unsafe. Both the feature and the problem, it seems. Exactly.

Yeah. And so, and so, you know, and by the way, Tesla has gotten around that sort of by making a very, very misleading safety claims, statistical safety claims about autopilot. So people, they're getting their cake and they're eating it too, right? The system is designed really to look self-driving. So that kind of helps the stock price. It's designed to enable you to kind of look away and do other things that you shouldn't be doing while you're driving. But it comes with this statistic that is comforting. where it's like, no, this is actually safer than a human too.

So Tesla is kind of, this is why it's so popular. The lack of safety with the veneer of a fake safety statistic is what's made it so popular. And frankly, this is why I've been skeptical that NHTSA would really do anything. But the fact that they forced the recall, Tesla took the easy route. Nitzica could have just said, yeah, okay, we've gone through the motions here. Let's move. Yeah, we've done our job. Yeah, let's move on, right?

But instead, because these crashes are still happening, you know, NHTSA feels the need to not just say, you know, we need to look at what you did to address this recall and make sure that it's actually solving the problem. Implicitly, we don't think it is. But then it also released this data to the public now. So now all of us can go and look and say, okay, like there's a reason that this recall

happen. This isn't just, you know, dark Brandon, you know, cracking down on Elon because he's, because, you know, he can't handle his realness or whatever. Not woke enough. Yeah, yeah. Like, this is not just some politically motivated thing. Like, like, and this is the flip side of NHTSA taking their time on this. As frustrating as it's been, they've built up a lot of data, not just about Tesla, but about the rest of the industry that shows Tesla does have a unique problem here. And I think, you know, what they're going to show is that the update they've done so far isn't going to be enough. And that really leaves Tesla in a pickle

because there's not a lot of other great options for fixing these problems. Another podcast from some SNL late-night comedy guide, not quite. Unhumor me with Robert Smygel and friends. Me and hilarious guests from Jim Gaffigan to Bob Odenkirk to David Letterman help make you funnier. This week, my guest, SNL's Mikey Day and head writer Streeter Seidel, help an Acapella band with their between songs,

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Mm-hmm. from navigating friendships and healing to setting boundaries and prioritizing your mental health. These are real honest conversations. We don't always get to have out loud. Totally unreasonable with different parts of life, right? Like, oh, have all three meals and make sure you're mindful during all of them? Absolutely not. During one meal, I'm standing.

I'm standing and handing my children food. Because healing, empowerment, and resilience aren't just ideas, their practices. and this mental health awareness month, there's no better time to pour back into yourself. Listen to cultivating her space on the IHeart Radio app, Apple Podcasts, or wherever you get your podcast. And it seems also that this report basically gives plaintiffs the ability to sue Tesla on some level. It seems like this will create a bunch of litigation against the company. Yeah, and there already has been. You know, Tesla just right, also right before this most recent call, they settled a lawsuit dating

back to a crash back to 2018. That, you know, that lawsuit had been going on for a really long time. And I'm sure what NHTS has played a role in that. Absolutely, all this data, everything that NHTSA has put out in the public is just like handing sort of loaded ammunition clips to all the lawyers out there. And frankly, that's kind of how regulation in this country works. You know, our regulators will do what they have to, when they have to, when it becomes unfeasible for them to sort of ignore stuff.

But generally speaking, a lot of regulation effectively happens through, you know, lawsuits through civil legal litigation. So do you think that this leads to them actually having to do something with autopilot, or are they just going to hope that they don't get sued too much? It feels like they may, this feels like, a normal company would just pull autopilot entirely. Yeah. So I think that's, it's going to come to something like that.

So because this over there update didn't, so, so they did over there update that that kind of keeps people being nagged more, right? And, and A, it's not stopping the crashes from happening, but B, it's really eroding what people like about the product. And essentially, again, like it gets back to Tesla, you know, is willing to create products that lawyers at other companies would just put the kibosh on. They wouldn't let it happen. So Tesla kind of assuming that NHTSA is going to find that the current fix is insufficient,

there are sort of two basic routes that Tesla can take. One is they can dramatically reduce sort of the, it's called the control authority and the capabilities of the system. Essentially, a system, a driver assistance system, should be designed to assist the driver. And the fundamental flaw of autopilot is that it actually is more designed to look like the car is almost self-driving. And those are two different things.

So instead of the automation assisting you... Yeah, how are they different, actually? Really get into that. Yeah, so, okay, so the feature that has the best proven record of improving safety outcomes is called automated emergency braking. And essentially, people don't even know it's on the car. But if you get yourself into a really sticky situation, someone cuts you off, something like that, the car will, there's forward collision warning, the car will warn you, and then the car will actually break itself. That combination of those two things, and again, people don't even really know they're there for the most part, you know, something like a 40% reduction in frontal crashes.

Okay, so like proven statistical safety advantage. And it's because the critical piece of it is that you don't rely on it. No one sits there and says, oh, it's cool if I just accelerate into, you know, this semi-truck or whatever. I'm just going to crash into various subjects and see what happens. Yeah, you don't get this over-reliance. But when with these level two systems, and it's a combination of how the system is designed, right? It's designed to look as if it's self-driving, convince people it's self-driving, and then puts the driver in what's called a, you know, a vigilance task, which means, you know, and people are constantly talking about what bad drivers, humans are. The reality is we're actually considering we're not evolved to move at these speeds and everything, we're actually pretty darn good at it.

We just drive a lot of miles, and over those miles, bad things happen. What we're worse at than driving are these vigilance tasks. And we know this from research going back 100 years and like, you know, radar operators in World War II. You know, you sit there and you force someone to watch a screen and then when, you know, one little thing happens, you know, you have to respond within a very, very short amount of time. this is called a vigilance task. We're terrible at that. And if you think about, you know, what that can mean, you know, things happen fast on the freeway. If you're even slightly not paying attention and all of a sudden there's a situation,

you have to be able to read what's going on, decide on the right course of action, and then implement it properly. I mean, this is insanely hard for people to do. And it creates, you know, these kinds of safety problems. So, you know, I think fundamentally this is, this is, the challenge that Tesla's up against, right? Is that, is that they're selling this as a safety thing, but there's no safety record. You know, IHS has all of the insurance data, and they say there's no record, there's no evidence

that that any level two system, which is what, what these are called, has any measurable impact on safety. And is level four completely autonomous? Yeah, level four is completely autonomous within a restricted area. So what is level two? Level two is essentially automated assistance of two axes of control. It's kind of confused. But essentially, it's adaptive cruise control.

A lot of cars have adaptive cruise control. And that's where you have cruise control. It holds the speed. And then if there's an obstacle in front of it, it matches speed with that. So that's the longitudinal control. And then you have lane keeping, which essentially keeps you within a lane. And then, you know, they build on that a little bit by having, you know, a navigation. So if you're going to take an exit, it'll start getting you over into the next lane instead of just holding you in one lane.

But essentially, you know, these level two systems exist in other brands. Tesla's is the most popular because they've implemented it in a way that makes it seem more self-driving than others. And again, those, that element is what makes it unsafe. And so it sounds hyperbolic, but there's really a very direct through line between, you know, design decisions that endanger people and, you know, the stock, because that's what it's for, right? It's not to keep people safe. It's to convince people that Tesla's a leader in self-driving car technology, which they actually are. Seems like kind of a sham. Like he's just trying to make it seem autonomous when it's not even good at autonomy because the people who buy stocks don't

seem to pay attention. Yeah. So, I mean, it's a fascinating situation where, yeah, like the word, so then there's the, really, it's a way of building up this, this, frankly, scam of self-driving, right? Because that's, they're getting people to pay 10, 15,000 dollars a car for this full self-driving, you know, add-on. And people wouldn't do that unless they had some reason to think that, that, you know, this is something that is somewhat near. And essentially, again, like, they have to endanger people to create that perception. So a scam is just sort of ripping people off. This does more than that. This endangers people in order to rip them. off. It's almost like we need a new word for how bad this is, you know?

Yeah, it's interesting because any other company, someone would be in prison, someone would be arrested, maybe someone would be sued by the government for like billions of dollars. This feels like it will continue to kill people unless something changes, but it also doesn't sound like Elon Musk will actually change anything. Well, yeah, I mean, he's going all in on self-driving, right? I mean, the- Yeah, but he doesn't seem to be, when he's going all in, it doesn't seem to be doing anything to make it better. Well, yeah, and that's because fundamentally the, you know,

Tesla's approach to this technology, they had to find a way to make self-driving technology work with their existing business model. And they did that by using very cheap hardware, essentially. So if you look at Waymo, Waymo's really the only company that is really actually doing self-driving. They have robo taxis in San Francisco, and like, you may love them or hate them, but, like, it is incredibly impressive to be in a completely driverless vehicle

in somewhere like downtown San Francisco. They're doing it, and they do it through two things, like, fundamentally. One is that they limit the domain it operates in. So it only operates in San Francisco, and then they're, you know, they're expanding to new markets, but it's not a general solution. You create a model that works in a specific area. And then the other thing you have to do, it's sort of like turning it into a board game, right?

Like, like, you beat a human, you have to bound the complexity. Like, in the bounded complexity of Go or chess, an AI can beat us. The other thing AI needs to beat us at a game is perfect intelligence. I'm sorry, perfect information, rather, which means right in chess or go or whatever, you know, everyone knows exactly where each piece is. There's no confusion about it. And Waymo does that with these really, really robust sensor systems to incorporate LiDAR and radar and almost 30 cameras. In where it goes. Yeah, so it's the combination of those two things.

And the problem is that those two things are incompatible with cars. No one is going to spend, maybe someone would spend $300,000 on a car that they didn't have to drive, but not if it only works in San Francisco, right? That cars have to be able to go wherever we want them to go, and they have to have a market, you know, they can't be too expensive. And so the things that you need to make real self-driving work just aren't compatible with self-driving. And so essentially what they've done is just use, you know, cheap hardware. that isn't too expensive and that does just enough to make people think that it's self-driving. And I think, you know, one of the things we've learned is, is, you know, people, we bring forward our ideas about driving from humans.

If you see a human, like, if you see a kid driving and, like, doing a driver's test, right? Like, if you can do a driver's test, that means for a human that you have the basic skills that you can sort of generally apply them everywhere. But the problem is that machine learning doesn't work that way. With machine learning, there's nothing. The generalizability of AI is a huge topic, right? Everyone wants to believe in it. But certainly when it comes to something that is safety critical, where, you know,

it's one thing for a large language model to screw up and hallucinate and everyone laughs and, you know, ha ha, that's funny. When it comes to driving, right, what you're doing is you're reconciling a probabilistic system with the need for 99.99999999% reliability. And that 0.001% is where people die. Yes, because we drive millions and millions and millions of miles, right? And Americans drive too much as well, so that's dangerous too. Yeah, our roads are worse.

Yeah. And so it's not great. Yeah. So what's amazing is that, is that, you know, humans are bad at babysitting. You know, that's essentially what it would force you do, right? you're babysitting like a teenager essentially who's driving. You put a teenager behind the wheel. You babysit them.

We're not necessarily good at that. But from Tesla's perspective, it doesn't matter because what's important is that we get the liability. Right? Except this report is going to potentially change how that is viewed by judges. Well, yes. So, you know, Tesla is not. So a vehicle becomes self-driving when the manufacturer or the owner-operator takes legal liability for it. Right. And so essentially none of what Tesla is doing is, is self-driving because it sticks humans with the consequences. And Madeline and Claire, Alicia, at least had a great paper a number of years back called moral crumple zones. And that's essentially what Tesla is doing, is using humans as moral crumple zones. And that's, you know, the way they've architected the system, it's, it doesn't give us a good chance of catching the system's mistakes. But again, it doesn't matter because we're just there as the crumple zone. We're just, we're just there as the crumple zone.

just there to take the blame for the system's mistake from Tesla's perspective. Taking a step back, what does Tesla actually do now? Will they change? Will they just keep sitting there? And Elon must say it's actually epic that the cars killed people is good. We need more babies, but we need less adults. Yes. Like what is it?

So what's happening right now, right? So sales have peaked and they're cutting into their prices and their margins in order to keep it, you know, sort of from falling even further. The problem is that what's left of those margins depend very heavily and just the demand. So the volume demand and the profit margins depend very heavily on autopilot and full self-driving because these are unique to Tesla. They're unique reasons to buy a Tesla. And frankly, with full self-driving, that's $10,000, $15,000 per car in an industry where, like,

you know, people have massive fights at the development level over pennies per car. To add $10,000 in pure profit on a car, this paper's over a multitude of sins financially, you know. And so if the prospects here is that not only our Tesla sales falling will continue to fall, you know, without, because there's nothing, there's no new product to turn that around, but then also you take away this incredible, you know, advantage in terms of profit margin, right? This 10 to 15,000, even if the take rate is 10%. $10,000, $15,000 per car is you spread that over your whole fleet and it's, it's by auto industry, there's a huge profit margin. But will they have to pull autopilot out? If they do, and I, again, my sense is that this is where Nitz is going.

If they pull autopilot, you know, all of those same problems also apply to full self-driving. All of a sudden, Tesla sees another reason for their volume to go down, right? There's people who are now not going to buy the car because they know it's, it's autopilot isn't safe and it doesn't have those things. But then it turns into negative margins. And the thing is their margins have been compressing, compressing, compressing. And they're at the point now. What turns into negative margins, though?

The auto parts. The car business. The car business. So is there a delineation between full self-driving and autopilot? Or are they the same thing? They're fundamentally the same thing. It's just that autopilot, you're only supposed to use it sort of on freeways. And full self-driving, you use it sort of on city streets and everywhere else.

So the difference is in what's called operational design domain. But also the difference is autopilot is like the price is built into the cost of a Tesla, whereas full self-driving is an optional extra on top of that. So what would get pulled out then? I mean, in theory, both of them, because they both have the same sort of fundamental problem, right? Would Elon actually do this, though? Would he actually do it, is my question? Because he's a dickhead, as we well know, but also this is the one thing.

He spent the last month or so to say, autopilot is the best part of the business we do. we don't even need the car. Like he seems to be selling this hard. Yeah. Yeah. No. So the NHTSA does, you know, they move so slowly. They're so tentative.

They're so, you know, hesitant to confront an Elon Musk type character, which is why this is all taken so long. But they have an immense amount of power. Essentially, they can do, they can order a mandatory recall. And then they can even order a mandatory stop sale. They can say it's illegal to sell Teslas in this country until you. you essentially deactivate the system or implement some kind of fix that we deem is appropriate. And that's probably impossible to fix, though.

So fixing, right. So there's two ways to fix. One is that you dramatically reduce the capability of the system and probably increase the nags even further. And you basically destroy the value that people want. That's one way. And that's probably the most likely way. The other way is to actually implement, like, better hardware for driver monitoring because Tesla uses...

Which would cost Tesla a great deal of money. And it's really hard, if not impossible, to essentially pull your entire fleet in and, like, actually install hardware that, you know, you don't have the wiring harnesses for it. You know, in theory, it could be done, but I think it's basically economically impossible. And so then you have this prospect of all of a sudden, Tesla can no longer do autopilot and full self-driving. And given what's happening with their margins now, Tesla then becomes a negative. margin business, which means you don't make it up on volume, right? Every car you sell, you lose money on. And one of the ways that I'm, you know, I'm sort of along with everyone else, trying to puzzle through sort of some of the decisions that are being made here, but one, one scenario

that kind of potentially makes this all make sense is that Elon kind of gets it that this is going to happen, that Nitz is not screwing around. They don't want more deaths on their hands. they're going to, they're going to force the issue on this and that, that, that the margins will go negative and there's no new product to turn it around. Maybe, you know, Elon really, like, it could explain some of his behavior if he's just sort of come to terms with, with, you know, the core business is going to die. And sort of like with Twitter, right, you know, he thinks, the way his mind works, he thinks he can sort of go and tell Earth like, oh, the regulators or the average, right?

In the case of Twitter, he's like, he's like, he's like, he's like, he's like, like, I'm just going to tell, you know, Earth that the advertisers killed Twitter. I don't know if you remember that, that interview. Yes. Oh, I've got it engraved in my brain. He may pull that, like, that's one of the, you know, we have to like sort of put ourselves in the mind of someone who's obviously not very normal. Of course.

Yeah. I'll say it's my podcast. I don't care. Yeah. So, I mean, that may be one way to explain all of what's going on because otherwise. He would just go out and say that the wokes of. stopped autopilot, but he would actually pull it, you think? Well, I mean, I think he would have no choice.

But like, like, I think he's, I think, right? Because if it gets pulled, if you can't have autopilot and full self-driving, it hits the, right, it hits the volume of sales. It has the, it hits the profit margin on each sale. And it hits the stock. It hits. And it kills the Robotaxy idea, which is already completely stupid. It just kills that.

You can't have that anymore. Yeah. Yeah, no. And, and even that is a weird thing to pivot to as well. because... Oh, it's just a stupid. It's that... Just to be clear,

every single journalist who wrote about the Robotexie thing without rolling their eyes and writing that they were doing so committed some level of malpractice, in my opinion. It's just not going to happen. It's complete bullshit.

Yeah. Yeah, I completely agree. I mean, look, the idea that, you know, you can do sort of level five self-driving, which means fully, you know, automated, no human monitoring or anything, and not in a limited domain, but everywhere. Like, no one else is even selling this.

Tesla's been selling it since 2016. No one else is even selling it. If it were possible, wouldn't one company want to compete on it? Right? Yes. Like, surely this seems very, like, if you're saying that cars are generally thin margin businesses and you suddenly have a way to sell software on it, surely someone else would try.

Someone like Ford, for example, who has tons of cash, government subsidies, tons of brand power. They would also do this, except if it was too dangerous. Yeah, exactly. And so what you do see from Ford and General Motors and others is that they have level two systems like autopilot that are for the freeway, but they have much more robust driver monitoring and things like that. And they're not going around saying, you know, you'll be able to, you can buy a car that will someday drive itself completely by its own anywhere you want to go. Everybody in the business knows that that is not serious and has known for a really long time. And unfortunately, we're in a weird situation where it's like, no. No one has called it out. And so, you know, he's, again, it'll be eight years this fall that they've started, since they've started taking money for, for this just blatant scam.

And I think the reason that people have got, that they've gotten away with it so far, obviously, it's nothing to do with technical plausibility, although it does sort of tie into, you know, the AI hype that we see elsewhere. So people think that AGI is near. You know, it kind of makes sense why they might think that it might be possible. Yeah, because there's shadows on the walls of the cave that suggest it's possible. Yes. But the real reason I think is that, you know, when you say the word self-driving car, what people, what Americans in particular think is a car that drives itself. And what is a car? Well, I mean, that's probably because those are the goddamn words. But that's the thing. No, no. It's misleading in its face.

Yeah, yeah, exactly. But what people don't understand is that where autonomous driving actually does work is in these robotaxies that are fundamentally different than cars, right? A car, you have to be able to buy it and own it, and a car also goes anywhere you want to go, right?

And so where this technology works, the way in which it works is fundamentally different than a car. So that's why no one else is trying to make a self-driving car, right? It's because it's impossible, but Elon's willing to do it

and he gets away with it because it's like he's selling a piece, a puzzle piece that fits into the empty spot in people's brain. He's the only person who's selling the mental model that people have for self-driving car. And this is why, like, Waymo is actually doing it. They have actual driverless vehicles you can get actual rides in. And no one stops and is like, wait a second, how is it that they're able to do this? You know, but every year Elon says this is ready and then it's not. Like, what's the disconnect?

He's been saying it would be ready since like 2019 as well. He has been talking out his asshole about this a minute. Yeah, he has. He's, I mean, even before the official announcement of full self-driving, he had a number of quotes saying he thought it was going to be, you know, within a year or two. And there's just these long, long lists of his quotes. No one has been as wrong about this technology as he has. And yet he continues to get more confidence and faith, you know, certainly from financial

markets than even the companies that are like proving it and doing it the right way. And I think that's a really like troubling commentary on on sort of the relationship between technology and capital in our society these days. Another podcast from some SNL late night comedy guide, not quite. Unhumor me with Robert Smygel and friends. Me and hilarious guests from Jim Gaffigan to Bob Odenkirk to David Letterman help make you funnier. This week, my guest, SNL's Mikey Day and head writer Streeter Seidel.

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So changing subjects slightly, Elon also very recently laid off most of the Supercharger team, which to me is one of the funnier things he's done because the Supercharger network for Tesla appeared to be a completely unregulated monopoly where everyone gave him free money and the entire industry had started, like most of the industry had started buying into his charging standard and then they'd said, you know what, Elon, we'd actually like you to have more power, please just run this whole thing. And then he fired most of them. What the hell happened? Yeah. So at a high level, the weirdest thing about all of this is that, you know, Tesla has money. Like Tesla, on paper at least, it's almost $30 billion in cash.

And so it should be spending its way out of its problems and not cut it. But instead, Elon, and this is why I think this is as much just sort of about him and sort of who he is now, rather than anything to do with the business, is that he just cut stuff. That's his, it's like, oh, you know, we're having trouble. Like, let's get rid of the dead weight. Let's get rid of cost. The problem is that this doesn't solve any of his problems. I think with supercharging, it's a little different. So supercharging, like Tesla itself, was a really critical piece of this sort of going zero to one with the EV business.

Like I think, you know, when Tesla first got started, they had to do something like the supercharger network, right? It was it wasn't really optional. Like, it was a key part of growing their market. Yeah, because no one could charge the cars otherwise. Yes. And as long as it was Tesla exclusive, it was an increasingly. over time, as competition got better, it became sort of the reason to buy Teslas. When he opened it to others, that changed.

Then all of a sudden, it's no longer, well, if you want access to Tesla superchargers, you have to buy a Tesla. No, no, you can buy a Rivian, you can buy a Ford, and you get access to those things. It's no longer a unique selling point for Tesla. And I think that's one of the reasons you've seen demand fall off. There's a lot more competition now, and a lot of that competition can use the same chargers. I think, you know, because it's been so good and so reliable, people assume that it's also a good business.

I'm not sure that that's actually the case. Real estate is very expensive. It ties up a lot of capital. Yes, they're making probably some gross margin on the electricity. They probably sell the electricity for more than they buy it for. So there is some kind of a business there. But whether or not that's paying off the cost of capital, in a way, that would actually be attractive as a standalone business is not clear.

And I think there's reason to suspect it may not because it is essentially a, it's like a feature for Tesla cars. It's like sort of putting cash on the hood or something like that potentially. So the business of supercharging has never really been fully disclosed. And, you know, essentially it seems like maybe this may actually be one of the more rational decisions in that, you know, the business itself may. just not be that good. You know, Tesla, by opening it up, they'll get revenue from other, you know, owners of non-Tesla vehicles. And in order to make that business look good, they simply can't invest more.

There's no incentive in them to grow. There have been estimates that suggest it's worth like $10 to $20 billion. Like it's actually generating real revenue, but we just don't know, do we? Yeah. Like a lot of things with Tesla, the accounting is very opaque, right? And again, like, you know, they supposedly have $30 billion of cash or almost $30 billion of cash on their books. And yet they somehow don't seem able to, like, meaningfully spend their way out of some of these

problems. So, you know, I'm not a forensic accountant. I'm not going to make any allegations about them like cooking their books. But I do know there's been a lot of suspicion about that over the years. And certainly when it comes to superchargers, it's never been broken out in a way that would allow you to say, oh, yeah, this is definitely something that can stand alone. Frankly, if it were, like, if it were a standalone business, it would be something you could spin out right now or sell to a competitor or something. Surely it would be something you would volunteer the information for as well to show how good Tesla was.

But you also wouldn't fire the entire team before doing it. You also would not do that. No. But talking of broken, how about that cyber truck? What the hell is going on there? Yeah. So again, you know, it's a question of priorities, you know. the car business is a capital-intensive business,

and Tesla's been, they've had a lot of things to go well for them, but they've been resting on their laurels. And you have to invest your money in something in order to keep growth going in the car business. Either, right, you keep expanding the superchargers or you invest in new cars or you update your existing cars. Yeah, more ads. Yeah.

And so the super, so the, the cyber truck, like, in some ways, it was a brilliant idea to make a big truck. Because if you can only compete in one car market in the world, the combination of volume and profit margin in full-sized trucks in America is the number one best business, period. Right. That business keeps the Detroit automakers going. They barely make any money on anything other than trucks. The trucks essentially subsidize most of the rest of their businesses. And so, you know, targeting that segment was smart. Targeting with essentially a meme was not smart.

And I think that to me, the cyber truck is a symbol of sort of, you know, Elon's ego sort of hitting escape velocity and essentially reaching a point where he can no longer take advice, like whether it's just in terms of the styling, you know, like, like you could have, you could have done a wedgy truck like that and not made it look like such garbage. if he'd listen to his stylist, Frantz van Hollehausen is certainly talented enough to have made a much better design or version of that concept. It was clear Elon was like, no,

I wanted to be flat and straight lines and I wanted to look like low polygons, like a video game. It looked like the game flashback. Yeah, and I think it's like in his mind, the difference between a rendering and reality is like blurry to him. I think for him, like,

if it looks good in a rendering, well, of course it's going to look good in reality. And the rest of all of Tesla's designs have been, you know, you can definitely tell the quality problems if you know what to look for. But they've got these curves and these different panels and these things going on. There's been a guy other than Elon designing them.

Yeah. Well, I mean, obviously, you know, they have a designer. It's just that Elon won't listen to anybody. I think that's, I don't know of any other way to explain, right? like, like, the product planning team would tell him, listen, Elon, like, we know this full-size truck segment is so huge. We can build our next wave of growth if we get the right product in the segment.

They could, though, right? Yeah. They made like the Model S for trucks, like an 8-E to 100 grand fucking brilliant truck, which they are fully capable of doing, surely. Yeah. Well, except that, except that Elon doesn't believe in market research. Perfect. Sure.

And he goes with his gut. And it's like, if he thinks it's cool, then it's. it's going to work. And I think, right, like, this has been true enough for a long time. But has it? Okay. I actually want to push back on that. Has that actually been true since, like, 2016?

Because what cool idea has Elon Musk had that's worked in that time? Well, since 2016, so I mean, I've always argued that, that, you know, full self-driving was also one of the, it was really the first time where he sort of hit this escapeful. velocity. Like, he's always had these, these hypey kind of things. Yeah, it's a good idea. I'm not saying it's not. It's just the way he manifested it is the problem. Yeah. And, and I mean, you know, I think throughout the history of the company, right, like, so like the Tesla Roadster, you know, like originally it was just going to be, the original one was just going to be like a Lotus Elise with batteries and an electric motor shoved into it. Elon kind of both turned it into

a better product and a product that really established Tesla's brand, but also killed the financial viability of it at the same time. And at that point, right, it was all about building up hype. It didn't have to perform as a business. He could emphasize sort of brand building and looks and feel over the profitability because it was an early stage. It was, you know, their pure play, you know. It's experimental.

Yeah, yeah. So we just use it to raise more money and then we'll get serious, right? The problem is just never released the second roadster. It's just never coming out. No, no. It's fucking insane. Like, there's so many people have written about this thing. Oh, and people put money down on it.

Remember the founder's edition, people put down the entire full price, $250,000 up front. That's completely bonkers. That is, come on. But, but like this is the thing with Tesla too, though, is that, like, once you get away with something for a while, how do you then decide, okay, this is not actually acceptable? I think this is kind of the problem that full self-driving and autopilot are having, right? And I think hopefully NHTSA will take action and that will be it. it's the government, right? Like, they should be the ones who step in.

And frankly, I think, you know, if you want to look at, you know, who's, what, what does this whole story sort of point to in terms of being the underlying problem? It's not Elon, really, in the sense that Elon's just following his incentives. Like, he's come out of a situation where it's okay to kind of lie and exaggerate and in order to make yourself wealthy. And he's been good at that. And so he's just kind of continuing to follow the incentives. there, the real failure is law enforcement and regulators, right? Like, as a society, you know,

you have someone who's endangering what's already a very dangerous activity, making roads even less safe while lying about, you know, claiming that it is safe, and doing it to become wealthy. Like, even if you think it should be okay for Elon to do this because he's magic and special, the example that it sets, right? That it tells everyone else, this is. an okay way to become the richest man in the world is by endangering other people and lying. You know, that is an example that's a society I don't think we can afford to let sort of sit unchallenged. And so I think the real failure there is just, it's the government. So I thought that was a really good point to end the interview, because while Musk has and

continues to be in probably will for a while, he'll continue to be a horrifying man that constantly tests how far a billionaire can go, the failure to hold tests accountable is one that lands at the feet of the government and really the media. For years, the press has given Musk fairly unquestioning press, even to this day, though there are some exceptions, people like Ed Niedemiah, Laura Kolodny, Lynette Lopez, Alan Osman, Kristen Grind, Ryan Mack. If I left you out, I'm really sorry, but this sounds like a lot of people, but there are so many more members of the media who have just huffed Musk's farts. Even last week, Alex Cantowitz of big technology, I really, really respect Alex. I've loved his work since BuzzFeed.

I think he's phenomenal. Except for this. He uncritically published an email from Musk about his plans for GROC, the large language model he's bolted onto Twitter, and how it will interface with Twitter's news feed generating stories, stories from tweets. Now, the big miss here, other than just copy-pasting something Elon Musk said, was leaving out the fact that GROC has been doing stories already. been summarizing the news, including multiple hallucinated stories, like one about basketball player Clay Thompson, allegedly vandalizing places with bricks after Grok misunderstood that people were referring to him bricking shots in a basketball game. Very basic English, and even then, Grock can't get it. Alex, what the hell are you doing, mate? I said this on Twitter and I'll say it on here. What are you doing?

You are smarter than this? I do not know why you're doing this. No one should be doing this. If Elon must send you something, you give it a critique. You look at it through the fair lens, because this man is not trustworthy. Elon Musk, he half-asses everything. He rushes, he tricks, he cheats, he half explains, and moreover, he lies. Elon Musk is not someone to take it his word or to treat with the benefit of the doubt. Every time that we buy into whatever weird narrative or made-up thing he has about how Tesla will work itself out of a jam or how X will be big,

we're helping a man who has acted disingenuously and dangerously, and will continue to do so, a man who platforms actual Nazis, a man that retweets anti-Semitic things. This is who we're dealing with. And as I've said before, though, governments must also take Musk a lot more seriously. And they should cut him out of subsidies and programs, I'd say permanently, but at least as long as he continues to release this buggy, dangerous software. And platforms racists and insane freaks who would kill people like me. I am Jewish and I'm confident that some of the people he's shed would absolutely murder my ass dead. And that's the thing.

This is the guy. This guy has billions of dollars. Elon Musk, he's a liar. He's a scam artist. And it doesn't matter that he's got billions of dollars. One can still be corrupt, selfish and a complete fucking idiot with that many zeros in the bank. While the threat of Elon Musk is something to take very seriously, though, his ideas are most certainly not. So I challenge you as a member of the media.

as a listener, as a consumer, to look at everything he does in the same way you would, a teenager that has been lying to you for months. That's who Musk is, and he's been lying a lot longer than a few months. He's been lying for the best part of a decade. And he manages to make money and spike Tesla stock every single goddamn time. People like Jim Kramer and his ilk. Fuel his murderous, genuinely dangerous ideas. I challenge you, whoever this is listening,

to think very critically about this man. Thank you for listening to Better Offline. The editor and composer of the Better Offline theme song is Matt Rosowski. You can check out more of his music and audio projects at Mattisowski.com. M-A-T-T-T-O-S-O-S-K-I.com. You can email me at E-Z at Better Offline.com or visit Better Offline.com to find more podcast links and, of course, my newsletter. I also really recommend you go to chat.

Where's Your Ed dot at to visit the Discord, and go to our slash better offline to check out our Reddit. Thank you so much for listening. Better Offline is a production of Cool Zone Media. For more from Cool Zone Media, visit our website, coolzonemedia.com, or check us out on the IHeartRadio app, Apple Podcasts, or wherever you get your podcasts.

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