Level 5 autonomy is the Holy Grail of modern driving technology. It is essentially the point at which autonomous vehicle will be wholly self-sufficient on the roads â€" to the point that they may not even have steering wheels or pedals for drivers. And while this level of self-driving technology still seems like science fiction to many, we may also be closer to it than we think.
As was noted in our recap of Tesla discussions with the DMV, Elon Musk has even suggested that FSD will be at level 5 by the end of this year. Tesla's own engineers are dubious of this prediction, but it still speaks to the rapid progress some industry leaders are aiming for.
This begs the most interesting question of all, which is not when we'll see level 5 autonomous vehicles, but rather what a future with such vehicles will be like. Even if we reach this level at some time in the next five years it will represent a massive leap forward into an era that would once have seemed virtually impossible. So what exactly will it look like?
Public Transport Will Change
For a while now people have predicted that fully autonomous vehicles will ultimately replace taxis, Uber, and Lyft, such that whole fleets of robotic cars will be available to pick us up and drop us off as needed. Last year, we got an interesting look at a concept car that could serve this purpose when an Observer article on a GM unveiling showed us a self-driving vehicle that almost resembled a tiny bus or tram car. And for that matter, there is also the distinct possibility (if not inevitability) that autonomous tech will be used in city buses as well.
Add all of these possibilities up, and you quickly come to recognize a wholly evolved form of public transportation. This is one aspect of the transition to level 5 that is troubling to some, because unfortunately it will almost certainly mean a lot of job (and "gig") loss. Nevertheless, in time we'll almost certainly be summoning autonomous vehicles to move around town.
Vehicle Interiors Will Be Unrecognizable
It seems likely enough that the very first level 5 cars will resemble what we're used to. They may not have steering wheels or pedals, but for the most part they'll look like nice, modern cars â€" because they will probably be ordinary modern cars adapted to level 5. Over time though, the fact that humans aren't needed to drive will likely result in completely changed interiors. We could see video screens for entertainment, chairs that swivel around to face the rear, lounge-style seating in ordinary sedans, and all kinds of other changes.
We'll Have Cyber Support for Cars
This is an interesting point to consider because it actually represents intersecting trends: that of progression toward autonomous vehicles, and that of general cybersecurity needs. Regarding the latter, our world already revolves so much around digital practices and automated systems that cybersecurity has become one of the busiest fields of work. Young people are studying the subject on their way up through school with the hopes of finding strong jobs in the field. And many working adults are pursuing cybersecurity via online courses, so as to qualify for what Maryville University's online bachelors in cybersecurity brochure describes as a "booming industry," with significant growth and six-figure salary positions.
In short, the digitization of our world is already giving rise to an army of cybersecurity experts, and it's a virtual certainty that they'll be needed in support of vast new networks of level 5 autonomous vehicles. We'll likely be replacing much of what we think of now as car service with software updates, security patches, and general cyber support. Maintaining a vehicle may well be more like maintaining a computer than a present-day gas car.
Gas & Service Stations Will Vanish
As mentioned just above, a lot of the regular maintenance for level 5 vehicles will concern digital adjustments. We'll download system updates and check in with cyber experts now and then, perhaps through entirely digital means. We won't, however, conduct ordinary maintenance as we think of it today, from loading up on gas to pulling into a station for an oil change or engine tune-up. Accordingly, gas and traditional service stations will begin to vanish, and perhaps one day completely disappear.
A New World of Regulations & Rules Will Emerge
One of the more pessimistic assessments of self-driving progress we've seen of late came via an article by Swinburne University of Technology professor, who argued that for several reasons we're still pretty far off. We could quibble with the tech argument to no end, but the interesting point made by said professor was that regulations are not yet in place to manage a society full of level 5 autonomous vehicles. This is indeed a large problem that will take time to solve, and which may delay the transition to self-driving vehicles even if and when the tech is all in place.Eventually though, it will be worked out, and a whole new world of road regulations and rules will emerge. The hope is that vehicles will seamlessly follow these rules and we won't have too much to worry about. But there will still be adjustments to make.
Throw in the fact that autonomous vehicles will be significantly more efficient and thus drastically better for our environment, and this all sounds pretty exciting! Here's hoping the self-driving future arrives sooner rather than later.
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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.
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