Tesla's FSD: A Liability, Not a Catalyst, for Long-Term Growth?

Tesla’s Full Self-Driving (FSD) technology has long been positioned as a revolutionary leap in automotive innovation. Yet, as the company races to commercialize its vision-based autonomous system, a growing body of evidence suggests that FSD may be more of a liability than a catalyst for long-term growth. Consumer skepticism, safety controversies, and regulatory scrutiny are converging to undermine the commercial viability of Tesla’s most ambitious product.

The Safety Paradox: Statistics vs. Reality

Tesla’s Q2 2025 Vehicle Safety Report claims FSD reduces crash risk by a factor of ten compared to human driving, citing one incident per 6.69 million miles [1]. While these numbers are impressive on paper, they rely on a narrow definition of “crash” that excludes non-airbag-deploying collisions [4]. This methodological gap creates a misleading narrative, as national averages include all types of incidents. Meanwhile, real-world data paints a darker picture: a March 2025 crash in Alabama saw a Model 3 flip while operating in FSD mode, and the NHTSA is investigating 2.4 million FSD-equipped vehicles following a 2023 fatal crash in Arizona [2]. These incidents erode trust, with 83% of consumers demanding more safety statistics before embracing the technology [3].

Consumer Complacency and System Immaturity

Even among early adopters, FSD’s limitations are glaring. A 2025 study of 103 FSD Beta users revealed alarming behaviors: drivers placed weights on steering wheels, slept while the system was active, and reported heightened stress due to erratic lane-keeping and “phantom braking” [5]. Tesla’s Austin robotaxi pilot further exposed the system’s immaturity, requiring frequent human interventions for basic tasks like lane changes [2]. These findings highlight a critical disconnect between Tesla’s marketing and the technology’s readiness for mass adoption.

Brand Perception and Regulatory Hurdles

Tesla’s brand equity is also suffering. The Electric Vehicle Intelligence Report (EVIR) found Tesla to be the only EV brand with a net negative perception, with 39% of respondents viewing it negatively versus 32% positively [6]. This decline spans demographics and political affiliations, reflecting broader concerns about transparency and safety. Compounding this, regulatory delays in Europe and China, coupled with U.S. lawsuits, threaten to stall global deployment [1]. Investors must weigh these risks against Tesla’s AI-driven advancements, which, while impressive, cannot offset reputational damage.

The Investment Dilemma

Tesla’s FSD represents a $60 billion autonomous vehicle market opportunity, but commercial success hinges on resolving trust gaps. Competitors like Waymo and GM’s Super Cruise are adopting radar-lidar hybrid systems, which many consumers perceive as safer [5]. Tesla’s reliance on vision-based AI, while innovative, risks alienating risk-averse buyers. For long-term growth, the company must address three pillars:
1. Transparency: Share unfiltered safety data and clarify FSD’s limitations.
2. Regulatory Alignment: Navigate global approval processes without compromising innovation.
3. Consumer Education: Mitigate complacency through training and clearer user expectations.

Until these challenges are met, FSD remains a double-edged sword—a technological marvel that could either redefine mobility or become a cautionary tale of overpromising.

Source:
[1] Tesla Q2 2025 vehicle safety report proves FSD makes driving almost 10X safer [https://www.teslarati.com/tesla-q2-2025-vehicle-safety-report-fsd-10x-safer/]
[2] Tesla faces declining customer satisfaction, ranking 10th in 2025 APEAL Study despite praise for Model 3/Y performance [https://www.ainvest.com/news/tesla-growing-risks-customer-dissatisfaction-service-gaps-autonomous-driving-concerns-2507/]
[3] To drive positive change, 83% of consumers say they want more safety statistics regarding the technology before riding and 86% say they want the ability to take control of the vehicle if needed [https://headlight.news/2024/10/25/consumers-showing-a-bit-more-confidence-in-self-driving-vehicles/]
[4] How can we trust Tesla's safety statistics? [https://dawnproject.com/how-can-we-trust-teslas-safety-statistics/]
[5] Results from interviews with users of Tesla's FSD Beta [https://www.researchgate.net/publication/367148475_Mis-use_of_standard_Autopilot_and_Full_Self-Driving_FSD_Beta_Results_from_interviews_with_users_of_Tesla's_FSD_Beta]
[6] Tesla faces growing negative perception, latest survey shows [https://www.arenaev.com/tesla_faces_growing_negative_perception-news-4671.php]