Tesla sales may have declined for two consecutive quarters this year in the face of stiff competition and depleting market share, but its stock price is rising regardless.

One reason is that the second quarter deliveries beat Wall Street estimates. The other potential reason is the progress Tesla is making with its Full-Self Driving (Supervised) system, which CEO Elon Musk has said is the key differentiator for the company. The brand rolled out its newest version over the weekend, which beta testers say is the best one so far.

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Tesla's quest to solve autonomy.

CEO Elon Musk believes solving autonomy and robotaxis alone would skyrocket Tesla's market valuation to trillions of dollars, bringing great value to investors. But this fixation on AI and robotaxis has come at Tesla's own peril. Its existing EVs are aging, its market share is quickly depleting and the prospect of the company no longer being a leader in EVs doesn't seem all that unrealistic anymore.

Tesla is betting big on artificial intelligence, solving autonomous driving and deploying robotaxis in the future. CEO Elon Musk claims FSD will someday be better and safer than human drivers.

That day is not today, as "Full-Self Driving" is an inaccurate name for a technology that has to be supervised and is not self-driving. But some beta testers who got the latest FSD 12.4.2 update are impressed. Tesla first rolled this update for employees and on June 30 it began releasing it for select external users. After first impressions, the users said FSD is now smooth with decision-making. Note, however, that since Tesla is selecting individual users to receive the update, the sample of current users may be more pro-FSD in general than the average owner.

The previous version, 12.4.1, was better than the one before it. But many drivers reported problems like the EV switching lanes unnecessarily, phantom braking (slowing for an obstacle that doesn’t exist), crawling for no apparent reason and having trouble reading flashing yellow or red lights.

Most of these issues are solved in the 12.4.2 update, beta testers say. In a first impressions video, YouTuber Black Tesla from New Jersey said the update brings enhancements to the vision-based attention monitoring and the system overall is smoother and more refined.


As he rolled out of his driveway, his Tesla seemed to drive just like an attentive human would; slowing down for pedestrians; speeding back up when they move away from the road; and seeming hyper-aware of the environment.

The previous FSD version drove dangerously close to the curbs. Sometimes the tires even brushed against them or drove over them. This issue was solved in 12.4.1 and has improved further in 12.4.2. FSD now maintains a good distance from the curbs and drives in the center of the lane. It no longer leans on either side like it previously did.

In one instance, another car jumped the red light and made a dangerous left turn, crossing paths with the Tesla which had the right of way thanks to a green light. The EV slowed down to let the intruding driver make his illegal move and wasn’t rattled at all. It also maneuvered smoothly around haphazardly parked cars and slowed down upon seeing incoming vehicles like buses taking wide turns or using multiple lanes to overtake stationary objects.

Another beta tester, Whole Mars Catalog, said, “The car finally can see the same things that I can see.” His EV with the V12.4.2 update drove past roundabouts in California like it was second nature.

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FSD still falters in driving around potholes and relies on friction braking. With the regen in the most aggressive setting, Teslas can be driven with one pedal, but FSD uses the actual brakes more often than needed, according to Black Tesla.

Other areas where it needs improvement include hesitating while merging onto highways and crawling at painfully slow speeds for no apparent reason. YouTuber Dirty Tesla said the driver monitoring kept striking him while recording the FSD video and that the system doesn’t recognize when drivers squeeze their eyelids in direct sunlight. That, in all honesty, seems like too much of an ask.

Despite the misleading branding, FSD isn’t an autonomous driving feature. It’s a driver assistance system that exists to help you, not drive for you. So you cannot take your eyes off the road and doze off. Tesla requires drivers to be fully engaged, and ready to take over at all times. If Autopilot causes a collision, the driver is still legally responsible for it.

FSD is also at the center of multiple investigations by the National Highway Traffic Safety Administration, due to allegations of crashes leading to fatal injuries.

Tesla will likely make more improvements going forward. But until it gets regulatory approval for Level 3 and beyond and showcases promising real-world results, it’s extremely crucial to keep FSD’s limitations in mind for your safety and the safety of others on the road.

Do you own a Tesla with FSD in the NYC or NJ area and have thoughts to share? Contact the author suvrat.kothari@insideevs.com

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