This was an email about a conversation that the California DMV had with the engineers who are creating the software for Full Self Driving at Tesla. The email was dated March 9th about a phone conversation that had just been held.
Tesla said that there were currently 824 vehicles in the program, 753 employees and 71 nonemployees. The plan was to expand the number of beta testers to approximately 1600 people.
The DMV asked about how Tesla communicated with each potential beta tester. For the first 824 people, they called each one individually and discussed the capabilities and limitations of the system, and they got informed consent. Tesla said they were working on a video for new participants, and they promised to share the video with the DMV.
The DMV asked about the “Button” that Musk promised in a tweet. The engineers couldn’t comment on the “Button.” DMV asked about how additional participants would be selected, and the engineers said they would include referrals from current beta testers, and that they’d be vetted by checking on the auto insurance claims of potential new beta testers.
So when Elon Musk tweeted that FSD had no accidents yet, he was referring to a group of drivers that had been selected for safe driving histories.
DMV asked how beta testers sent feedback to Tesla, and, no surprise, they sent feedback by email or snail mail. Instances, when the FSD was overridden by the driver, were sent back to Tesla along with a video feed so that software engineers and the neural network could make improvements in the next iteration of the beta FSD software.
Then DMV asked Tesla about Elon Musk’s tweet that FSD would be at level 5 by the end of the calendar year. The engineers really tried to be supportive of their boss. They said he was extrapolating based on the amount of improvement they’d seen so far. But they said that the beta FSD is still firmly in level 2. The driver must be constantly involved in the driving process and must be ready at any second to take control. Their criterion for going to level five, full vehicle autonomy, would be one driver interaction with the system every one to two million miles. The engineers that are actually working on the system are not as confident about achieving level five autonomy this year as Elon is.
The engineers told DMV that they test the software by driving with it. They would know when a new release is going up a level. Right now, even the beta FSD is still in level 2. That means that the car can steer, accelerate and decelerate, start and stop, but human control could be required at any time.
Level 3 would mean that the car could drive itself most of the time, but the human would have to be alert for needed intervention. Level 4 would mean that the car drives itself all the time within certain areas and on certain types of roads.
Level 5 would mean that there would be no need for human controls because the car could go anywhere safely without any human supervision. Presumably, a level 5 autonomous car could drop its passengers off at their destination and then find a place to legally park. It would have to be able to read parking rule signs, and it would have to be able to pay for parking if paid parking was all that was available.
So my assessment of this information is that we can’t expect level five autonomy this year, but we can expect a wider availability of the beta version of FSD. But not everyone will get the “Button.” Tesla will check your driving record because, sadly, there are people who drive Teslas without paying attention even now, when even the beta FSD is still in level 2, not autonomous at all.
In this article, we’ll cover Tesla’s updates on Optimus, batteries, and Tesla Energy.
Optimus
Tesla has been working away on their humanoid robot and continues to make progress in software and hardware.
First, Tesla is preparing the Fremont factory for the Optimus pilot production line, which is scheduled for completion later this year. Once it is, wider deployments of Optimus for internal use within Tesla’s facilities are expected as well. Tesla aims to have several thousand Optimus units working in its North American factories by the end of the year once the pilot production line is operational.
Tesla’s goals for production remain extremely lofty - 1 million units per year by 2030. However, they could face some challenges when ramping production.
Key components like the shoulder actuators use specialized permanent and rare-earth magnets, which are currently sourced from China. Due to recent Chinese restrictions on the overseas sale of these magnets, Tesla is seeking an exemption or alternative suppliers. They have not yet looked into modifying the shoulder actuator but will likely do so if they cannot obtain the necessary materials.
Batteries
Batteries are another item that Tesla’s teams have been working on behind the scenes for years now. The second generation of the 4680 - the Cybercell - has been IRA-compliant for some time now. This means that the Cybertruck is eligible for the US Federal EV rebate.
Tesla also achieved the lowest cost-per-kWh of any of its cells with the 4680 battery - and it is potentially one of the cheapest cells being manufactured by any vehicle battery manufacturer at this point. With dry-cathode still being worked on, Tesla may be able to squeeze more optimizations and cost efficiencies from the 4680 cells.
Additionally, Tesla is progressing with its plans for lithium refining and cathode production in the US, both of which are scheduled to commence in 2025. While the company says they’re no longer supply-constrained for non-LFP vehicle batteries, on-shoring production and sourcing critical minerals from nations outside of China will be key.
LFP batteries continue to be supply-constrained, namely for the Tesla Energy division. LFP batteries and their materials are sourced from China. Due to tariffs and limited exports, Tesla can’t obtain enough and is considering potentially building an LFP production facility in North America.
Energy
Tesla’s energy division is still experiencing some of the highest growth of any of its divisions. Year over year, Tesla saw a 154% increase in energy storage deployments, including both Megapack and Powerwall - for a total of 10.4 GWh deployed in just Q1 2025. While deliveries in energy storage remain volatile due to the nature of Megapack installations, Tesla expects growth to continue rapidly in this segment.
Tesla also deployed 1GWh of Powerwall 3 residential storage this quarter, marking its strongest quarter. Powerwall 3 has received positive feedback from customers, many of whom appreciate its new capabilities with its built-in inverter for solar.
Megapack is continuing to see demand increases, currently highlighted by utility-scale Megapack systems, as well as data centers requiring stable power delivery. Megafactory Shanghai is also online now and producing Megapacks - with an annual production capacity of 20GWh today and up to 40GWh in the future. The site has also produced over 100 Megapacks this quarter, which are all awaiting delivery.
There was a lot of interesting news from Tesla’s Q1 2025 Earnings Call, covering everything from FSD and Robotaxi - to the less glamorous but equally important Megapack and Powerwall.
Tesla is heavily leaning into artificial intelligence, and its insurance offering is just another example of how it’s improving its product or lowering costs by leveraging AI.
Tesla recently started offering an insurance discount in select states when drivers use FSD for at least 50% of their drives and now it’s introducing an AI to help handle customer claims.
Tesla has developed an in-house voiced AI agent that can assist customers in handling simple support requests for Tesla Insurance.
For customers calling in from those states, the new AI agent provides a unique way to address the most common support calls. And it’s not just answering common questions but actually making requested changes to the owner’s account.
Policy Changes
The first key item is that it automates policy changes. Simple policy updates, including adjusting your deductible or coverage limits, are now done via AI. For policyholders who are simply looking to make quick changes and don’t have any questions, this makes the process a lot quicker by not having to wait for a representative. Tesla isn’t eliminating representatives, but this could reduce the number of representatives required or reduce wait times.
Continue Where You Left Off
The second item here, highlighted by Raj Jegannathan from Tesla’s internal IT team, is that Tesla’s AI agent is able to offer summaries of the user’s last interaction with Tesla Insurance. It will summarize your last interaction and provide assistance on that particular topic if you need to continue it. That means that you don’t have to wait for a human to review your file - the AI will kick off right where you left off.
Tesla appears to be focused on improving efficiency and making support more accessible. While actual items like claims are left up to humans due to their inherently complex nature, this helps free up employees to handle more complex items. While there’s no doubt Tesla will continue to develop this AI like they do everything else, we may soon see it take on even more tasks.
More AI
This isn’t the first AI agent that Tesla has demoed - there is now a chat-based AI sales agent available on the front page of Tesla’s website, which is able to answer common questions on Tesla vehicles.
Tesla has also been improving their AI support tool available in the Tesla App is able to provide feedback on common issues and also guide users towards either solving the problem or placing a support request.
Tesla’s strategy here is to influence the cost-heavy areas associated with having humans address simple requests and instead leverage AI, which can offer instant answers and reduce support costs.
Roll Out to More States
While this new AI is currently limited to just 12 states, it is likely to follow Tesla Insurance’s expansion. Insurance seems to have been at a bit of a standstill lately. Tesla continues to improve features such as the improvements to Safety Score V2.2, but we haven’t seen Tesla roll out support to new states since it added Minnesota in November of 2022.
![Tesla’s B-Pillar Recording Requires HW4 [Update: New Dashcam Viewer Included on HW3 / Ryzen Vehicles]](https://www.notateslaapp.com/img/containers/article_images/tesla-screen/dashcam-viewer-hw3.jpg/ba8281c93679d2cf4a405a771e96b167/dashcam-viewer-hw3.jpg)
![Tesla Semi Keynote: New Features, 46 Charging Sites, Upgraded Battery & More [VIDEO]](https://www.notateslaapp.com/img/containers/article_images/semi/semi-new-features.jpg/c7df4e0d32f8cb0beee080ad201e943b/semi-new-features.jpg)
