Elon Musk has called legacy automakers’ hesitancy to license Tesla’s Full Self-Driving software “crazy,” but a slew of industry moves show that their reluctance is strategic.
In recent weeks, more automakers have released roadmaps to build key pieces of automated driving software rather than outsourcing the technology. Because automakers see vehicle tech as a brand-defining component, a Tesla license can become a hard sell.
Rivian, for example, is going deeper into vertical integration by designing a proprietary chip for the brain behind the company’s autonomous driving computer. CEO RJ Scaringe even broached the idea of pursuing a robotaxi business at Rivian’s Autonomy & AI Day in early December.
Legacy automakers aren’t taking the same ambitious route of designing custom chips, but they have begun to seek in-house solutions.
Ford announced at the Consumer Electronics Show in Las Vegas that it plans to develop eyes-off driving software for public roads by 2028. The company said going in-house cuts costs by 30% and provides more control over how the software is integrated and deployed.
“To integrate, I can’t do this with all these suppliers,” Paul Costa, Ford’s head of electrical engineering, told Business Insider. “We need to bring this stuff in-house, and it allows for this ability to do the trifecta at once: smaller, cheaper, and higher performance.”
Automakers haven’t gone ‘crazy’
Musk said in a X post in November that it was “crazy” that legacy automakers didn’t want to license Tesla FSD, an advanced driver assistance system (ADAS) that the EV maker has said will enable fully autonomous driving.
“When legacy auto does occasionally reach out, they tepidly discuss implementing FSD for a tiny program in 5 years with unworkable requirements for Tesla, so pointless,” Musk said in the post.
Musk didn’t specify what those requirements were. A spokesperson for Tesla did not respond to a request for comment.
Experts who track the software side of the automotive industry told Business Insider there’s a practical reason to go in-house, even if there are near-term challenges.
Chris Ahn, a principal at Deloitte who consults for key automakers, told Business Insider that companies have to decide what level of autonomy their customer base will want and how to achieve it, like using lidar or using a cameras-only system.
“It’s not so much like, ‘I’m taking it in-house because I don’t want to use somebody’s technology.’ But this is a competitive business for them,” Ahn said. “People who own Fords own Fords for certain reasons that are probably different reasons than why people who own Mercedes own Mercedes. And I think each of these automakers are going to have to define what does ADAS mean for the user base of my brand today.”
Steve Man, a senior auto analyst for Bloomberg Intelligence, told Business Insider that the technology stack of autonomous vehicles could be thought of as three interconnected parts: the software, the sensors, and the actuators — the components that control the physical movement of the car.
All three components need to be able to “talk” to each other within a vehicle platform, Man said, which can be challenging and costly to do when an automaker relies on multiple suppliers.
“It’s actually cheaper to bring everything in-house to integrate those three buckets of things,” Man said.
Nvidia lowers the barrier
As automakers seek more control over their technology, the tools to build autonomy are becoming more accessible. That makes a Tesla FSD license a less compelling business case.
At CES, Nvidia introduced Alpamayo, a package of AI reasoning models, simulation tools, and datasets automakers can use to develop self-driving technology.
Mercedes-Benz was revealed to be Nvidia’s first major customer; the automaker plans to launch a Tesla FSD-level ADAS built on Alpamayo by the end of the year.
Alpamayo isn’t a full-stack autonomous driving software that automakers simply plug in. An Nvidia spokesperson told Business Insider it’s a toolset that can “strengthen and speed up an OEM’s own ADAS or autonomy program, whether they’re building end-to-end systems or upgrading existing architectures.”
Automakers still need proprietary data and talent to implement and develop their autonomous systems.
Hugh Nguyen, a KPMG partner who specializes in autonomous driving systems, told Business Insider that Alpamayo “democratizes” AV development by reducing the cost and time for training self-driving systems.
During a Q&A session at CES, Nvidia CEO Jensen Huang called Tesla FSD “completely world-class,” before drawing a distinction between Tesla’s goals and Nvidia’s.
“We’re not a self-driving car company,” he said. “We just want to enable the world’s autonomous industry. Everything that moves should be autonomous.”
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