Tesla believes FSD (Supervised) will require regulatory approval in Australia, we just don’t know why

Tesla’s Full Self Driving is improving rapidly since the company moved to Version 12 of their software which is a significant shift in architecture. At a high level, the car’s computer can take video in from the cameras, understand the environment, plot a safe path through it and output the controls to make it happen.

As each point release rolls out (currently 12.3.5), the system improves and this week on the Q1 2024 earnings call, we learned more about the company’s success with FSD (Supervised).

Previously known as FSD Beta, the software now called FSD (Supervised) is available in the US and Canada for purchase or monthly subscription. Having recently offered the software to all compatible cars, all 1.8 million of them, Tesla confirmed the take rate was currently around 50%, meaning around 900,000 Tesla owners have experienced the cars driving themselves.

As the name suggests, the cars still need human supervision, but the vast majority of feedback shared online suggests many drives are now happening without interventions.

So with version FSD 12.4.x in development internally, it raises the question of when Tesla will be ready to roll it out to new countries, like Australia.

This week I confirmed that Tesla believes they will require regulatory approval for FSD (Supervised) to be offered in Australia.

What makes regulatory approval for FSD (Supervised) necessary?

When you buy Tesla’s Full Self-Driving software package, it currently lists just one outstanding item listed under the heading ‘Upcoming‘, which is – Autosteer on city streets.

Included as part of this functionality are the following new capabilities:

• Autopilot can be enabled on roads without lane markings
• Take 90-degree turns on city streets
• Navigate single/dual lane roundabouts
• Accelerate away from a stop (red light or stop sign).
• Navigate around a stopped vehicle (i.e. double parked) or debris
• Automatically indicate for turns
• Driver confirming to proceed through green lights removed

Outside this, the other features of FSD are already available in Australia – Navigate on Autopilot, Auto Lane Change, Autopark, Summon, Smart Summon and Traffic Light and Stop Sign Control.

As far as I can tell, this would still result in the car being rated as a Level 2+ car, as the driver is still responsible for the vehicle. The driver is still required to pay attention (supervise). The driver needs to intervene if the system requires it. Tesla confirms the driver is alert and available through interior camera driver monitoring and torque applied to the wheel.

Today we got a little more information, with Musk replying to a post that FSD 12 is running in Germany, with demonstrations to European regulators.

‘We believe version 12 is ready for supervised FSD in LHD countries. RHD will take a bit longer.’

With Australia being a RHD market, that places us in the ‘a bit longer’ category, which makes the timeline even more challenging to predict.

While Tesla has plenty of RHD data from the many years of driving data in RHD markets, there’s clearly some more to this story before we get FSD (Supervised) in Australia.

We believe version 12 is ready for supervised FSD in LHD countries. RHD will take a bit longer.

— Elon Musk (@elonmusk) April 26, 2024

Assuming Tesla’s data engine can resolve any technical challenges (i.e. more video data to train the model on RHD driving), I want to focus on what potential regulatory approvals are required for FSD (Supervised) to operate in Australia..

Before we do, it’s time for a refresh on how Australia defines the levels of Autonomy (as outlined in the AV Safety Reforms consultation paper).

Driving automation is often described according to the Society of Automotive Engineers (SAE) taxonomy – see the levels here.

Automated vehicles have capabilities at levels 3, 4, and 5 of driving automation. These automation levels are the focus of the automated vehicle safety reforms. For an ADS feature with level 3 driving automation (also called ‘conditional automation’) the ADS can do all of the dynamic driving task, some of the time. The person in the driver’s seat, known as the ‘fallback-ready user’, does not need to monitor the road, but must be ready to take over when the ADS makes a transition demand.

Clearly from this definition, FSD (Supervised) does not fit a level 3 definition as the driver does need to monitor the road, making it a level 2+ system, again suggesting that as it stands today, none of this prevents Tesla from delivery FSD (Supervised).

Ok now let’s dive in.

Federal laws

Australia’s roads are governed by the Department of Infrastructure, Transport, Regional Development and Communications (DITRDC). The DITRDC sets national standards and regulations for vehicle safety, emissions, and roadworthiness through the Australian Design Rules (ADRs).

More information here.

Australian Design Rules (ADRs)

If you’re an automaker and want to sell a car in Australia, that vehicle must meet strict rules known as the ADRs. These dictate a lot about the safety of a vehicle, seatbelts, lights, safety systems etc, but nowhere in the ADRs does it mention something that I believe would prevent it from operation.

From 1 July 2021, the Australian Government began determining ADRs under the Road Vehicle Standards Act 2018 (RVSA) which replaced the Motor Vehicle Standards Act 1989 (MVSA).

More information here.

Road Vehicle Standards Act 2018 (RVSA)

The RVSA provides a regulatory framework for the importation and supply of road vehicles and certain road vehicle components within Australia. Its primary focus is to ensure vehicles on Australian roads meet national safety and environmental standards.

This law does not mention autonomous or driverless vehicles.

More information here.

National Transport Commission (NTC)

The National Transport Commission (NTC) and the Department of Infrastructure, Transport, Regional Development, Communications and the Arts (DITRDCA) have been working alongside state and territory governments to create a set of rules for automated vehicle safety.

The NTC developed a proposed regulatory framework and in 2022 transport ministers agreed on the need to develop a new Automated Vehicle Safety Law (AVSL) that would be delivered at a Commonwealth level.

The NTC is charged with the responsibility of developing and consulting key stakeholders, including the public and in April released a document titled ‘Automated vehicle safety reforms‘ (available here).

Based on available projections, we are preparing for the possibility of small numbers of automated vehicles entering the Australian market from 2026.

That assumption that AVs will arrive from 2026 is flawed. Still 20-32 months away, that does not match the pace of innovation we’re seeing in the sapce. At Tesla specifically, we’re seeing an increased rate of development and improvement to FSD software, with Tesla’s FSD program accelerating the rollout and cadance of the program.

The consultation paper references data from the Bureau of Infrastructure and Transport Research Economics which forecasts the introduction of level 4 vehicles between 2026 and 2031, with 2.6% of new passenger vehicles expected to be highly or fully automated by 2030, increasing to around half of all new vehicles by 2046.

It also references Mercedes and Waymo, but does not mention Tesla.

Automated vehicles are already available in some countries, with the Mercedes-Benz Drive Pilot conditionally automated driving feature available in its S-Class and EQS models in Germany, California and Nevada; and companies like Waymo operating ‘robotaxis’ in San Francisco, California and Phoenix, Arizona.

Public consultation is open until June 11, 2024 and you can learn more and have your say here.

There are also 3 information sessions throughout May (all times are AEST).

• Tuesday, 14 May 2024 – 10am – 11am
• Thursday, 16 May 2024 – 3:30pm – 4:30pm
• Saturday, 18 May – 9:30am – 10:30am

A Microsoft Word document of all papers can also be accessed here.

Automated Vehicle Safety Law (AVSL)

In June 2020, ministers considered how to make sure automated vehicles operate safely once they
are on the roads, or ‘in-service’. They agreed to a regulatory approach with the following elements:

• a national in-service Automated Vehicle Safety Law (AVSL) would be developed
• the AVSL would establish a new automated vehicle in-service safety regulator
• the AVSL would place a general safety duty and prescriptive obligations on ADSEs
• the AVSL would also place due diligence obligations on the executive officers (top-level
• managers) of ADSEs
• the ADSE would be responsible for the driving of a vehicle when its ADS is engaged
• requirements for human users of automated vehicles would be established in state and territory
  laws.

The Department of Infrastructure, Transport, Regional Development, Communications and the Arts (DITRDC) has been working in consultation with state and territory transport agencies and the NTC to adapt the policy framework so it can be implemented in Commonwealth law.

The NTC also released a paper titled ‘Automated Driving System Entity certification’ in April 2024 (available here).

Automated Driving System Entity certification (ADSE)

The proposed AVSL will require that an ADSE take responsibility for the safety of each ADS over its design life (which is how long the ADSE intends to support the ADS). The certification process will ensure an ADSE is in place for each ADS before it is used in Australia, and that ADSEs have the
right structures and capabilities to keep an ADS safe.

When Tesla reaches the point where they believe they can offer FSD (Unsupervised) aka Level 3/4, then they will certainly be required to be certified as an ADSE, but that should not apply now with FSD (Supervised) aka Level 2+.

ADSE certification would be required when:

• a corporation first applies for an approval under the Road Vehicle Standards Act 2018 and Road Vehicle Standards Rules 2019 (together, RVS legislation) to provide a vehicle with an ADS to the Australian market
• an entity with an approval under the RVS legislation first applies to vary that approval to provide new vehicles with an ADS to the Australian market
• an ADSE arranges to transfer responsibility for an ADS to another corporation during the ADS’s design life
• a vehicle that is already in Australia has an ADS installed (an aftermarket installation) which can occur by
  – changes to vehicle software; for example, ‘switching on’ the ADS capability in a vehicle via software
  – changes to vehicle hardware and software to install an ADS; for example, installing new sensors, actuators and software.

Public consultation on AVLS

The department and the National Transport Commission are currently seeking public feedback until June 11th on the proposed automated vehicle regulatory framework. The consultation includes specific policy areas that we are seeking feedback on before we settle a way forward.

The path after this remains unclear, however legislation tends to move slowly and given the context above suggests AVs will arrive in 2026, I think we should expect the AVLS to be a 2025 propsect and would need to be in place to support level 3/4/5 autonomous vehicles in 2026. While we certainly won’t see Tesla deliver a robotaxi before then to Australia, I still don’t see what it preventing FSD (Supervised) from shipping now.

As part of their public consultation, the NTC recently released a video titled ‘What the NTC is doing to prepare for Automated Vehicles in Australia’ 10 days ago. At the time of writing, the video had just 46 views, which suggests the wider public is not paying attention to this.

In the video, it highlights that AVs could save more than 8,000 lives, $152 billion in crash costs, and a further $320 billion in reduced traffic congestion. It also has the chance to save $962 billion in business and freight costs, while also reducing greenhouse gas emissions.

This data comes from a 2021 report titled ‘The Economic Impacts of Connected and Automated Vehicles’, by The Centre for International Economics.

CEO of the NTC, Michael Hopkins says, a 2016 review found there were 700 barriers in state, territory and commonwealth law to the introduction of AVs, so that’s going to have to change.

Managing automated vehicle deployment ahead of the new regulatory framework

One of the documents provided by the NTC talks to the safety risks associated with vehicles controlled by human drivers. The overview suggests that until the regulatory framework is in place, it may be necessary to limit the deployment of vehicles with Automated Driving Systems (ADSs) on public roads to authorised trials.

This paper explores options to limit the use of automated vehicles before the new regulatory
framework is in place, and seeks feedback.

This is a paper, not law and again refers to Automated Driving Systems (ADS) which as flagged earlier, appears to related to Levels 3/4/5 of autonomy. In theory, this would prevent someone like Waymo, that has a levle 4 autonomous vehicle service, from starting operations in Australia while the new AV law is in development. It would also stop Tesla from rolling out a software update to deliver hands-off, eyes-off driving.

This should not prevent a software update from Tesla from increasing the functionality of their cars to new and existing owners with FSD (Supervised) as detailed earlier.

More info here.

On page 4 of the paper, it confirms what I understood, there’s currently nothing in the ADRs preventing this, see the last line of this paragraph.

Vehicle supply to the Australian market is currently managed through the Road Vehicle Standards Act 2018 (the Act). The Act allows for the supply of vehicles that satisfy the requirements of the relevant vehicle approval pathway to Australia.

The main vehicle approval pathway used for commercial deployment requires vehicles to comply, or substantially comply, with the road vehicle standards, including the Australian Design Rules (ADRs) and other applicable eligibility criteria for the vehicle. There are currently no ADRs specific to ADSs, so the Act does not explicitly prevent vehicles with an ADS from entering Australia via this pathway.

The paper proposes a change to introduce a requirement under the Act that an automated driving system (ADS) would only be granted to the certified Automated Driving System Entity (ADSE). The ADSE takes responsibility for ensuring the ongoing safety of the ADS when it is in service. As this requirement will only come into effect once the automated vehicle regulatory framework is in place, we may need an interim measure to prevent unsupported automated vehicles from entering Australia.

Again this is simply closing the loop to prevent any level 3/4/5 systems from arriving before the regulations are ready and should not impact FSD (Supervised). This proposal could also have impacts on something like Comma.AI solutions which use an aftermarket installation. Today they have similar level 2 capabilities, but should they attempt to deliver an update to take it to a higher level of autonomy, that would also be restricted.

Improvements to automated vehicle trials

I am pleased to see an effort to support an increase in the scale of automated vehicle trials in Australia. Currently, approvals are very limited in scope, usually only include one or a few vehicles. On-road safety regulation of trials is currently managed on a jurisdiction-by-jurisdiction basis. This means a car approved as part of a trial in Victoria, could not cross the river to NSW.

Greater national consistency in automated vehicle trial arrangements could provide a clearer pathway for organisations to trial on a larger scale before considering a move to commercial deployment.

Trials are an important part of ensuring that automated vehicles can be used safely and efficiently in Australian conditions. To move towards commercial rollout and its potential benefits, larger-scale trials that involve more extensive use of public roads and public access may be needed to better understand automated vehicle technical capabilities and reliability, develop safety management practices, and test the feasibility of business models.

There is a suggestion of an interim ADSE certification, however, this feels more like an afterthought, given we’ll need to have the actual ADSE certification in place in 2025 to be ready for the 2026 expected wave of AVs.

State and Territory Regulators

Assuming the federal level allows FSD (Supervised) to ship in Australia, each state and territory has its own regulatory body responsible for vehicle registration, driver licensing, road safety, and enforcement of traffic laws.

These bodies include:

• New South Wales (NSW): Roads and Maritime Services (RMS).
• Victoria: VicRoads.
• Queensland: Department of Transport and Main Roads (TMR).
• Western Australia: Department of Transport (DoT).
• South Australia: Department of Planning, Transport, and Infrastructure (DPTI).
• Tasmania: Department of State Growth.
• Northern Territory: Department of Infrastructure, Planning, and Logistics.
• Australian Capital Territory (ACT): Access Canberra.

In Victoria, for example, VicRoads lists the following pieces of legislation that govern our roads, each of which is hundreds of pages long.

• Road Management Act 2004
• Road Safety Act 1986 
• Road Safety Road Rules 2017 
• Road Safety (Vehicles) Regulations 2021 
• Road Safety (Drivers) Regulations 2019 
• Road Safety (General) Regulations 2019 
• Road Safety (Traffic Management) Regulations 2019 

International Collaboration

Australia also participates in international forums and collaborations to share best practices, standards, and regulatory approaches for autonomous vehicles. This includes engagement with organizations such as the United Nations Economic Commission for Europe (UNECE) and the International Organization for Standardization (ISO).

What is the UNECE?
The United Nations Economic Commission for Europe (UNECE) is a key player in setting international standards for vehicle regulations, including those governing autonomous vehicles. The World Forum for Harmonization of Vehicle Regulations (WP.29), a subsidiary body of UNECE, focuses specifically on these technical regulations.

European customers have seen compromises in Tesla software over a number of years to meet local regulations. An example of this is the limitations of Smart Summon, requiring the users to be extremely close to the vehicle, defeating its purpose. We have not seen these limitations in Australia.

UNECE Autonomous Standards
The following is a list of the focus areas under the new regulations.

• Safety: A paramount concern, UNECE standards are built to ensure autonomous vehicles operate safely on public roads.
• Harmonization: The goal is to create consistent regulations across different countries, simplifying the development and deployment of autonomous vehicles internationally.
• Cybersecurity: Robust cybersecurity protocols are integrated into the standards to protect these vehicles from hacking and data breaches.
• Software Updates: Regulations address the need for secure and reliable software updates to maintain the safety and performance of autonomous systems.
• Data Recording: Standards are being developed for the type of driving data to be recorded and stored by autonomous vehicles. This is crucial for investigations in case of incidents.

More information here.

Australia is a party to the 1949 Convention on Road Traffic Safety, actively participating in UNECE’s work on autonomous vehicle standards. As it stands today, Australia is not required to implement standards from UNECE, outside the integration that already exists inside the ADRs.

So after all that, I still can’t find anywhere in regulation that would prevent FSD (Supervised) from being offered in Australia. If you have thoughts or ideas, please leave them in the comments.