Tesla had a very particular rollout strategy for its new Robotaxi service in Austin: make it invitation-only at the outset, and then only invite the investors, influencers and content creators generally regarded as friendly to the brand to try it out. 

Unfortunately for Tesla, that also means extensive documentation of the autonomous cars’ various mishaps, and now America’s automotive safety regulator is stepping in. (Yes, again.) 

That kicks off this midweek edition of Critical Materials, our morning roundup of industry and technology news. Also on deck today: Chinese auto giant BYD starts to slow down after years of explosive production growth, and why even tariffs won’t stop Mexico’s rising-star status in the automotive world. Let’s dig in.

30%: NHTSA To Investigate Tesla After Erratic Robotaxi Driving

So far, I’m not surprised by the videos I’ve seen of Tesla’s Robotaxis driving around Austin. Basically, the cars are just running a version of Tesla’s Full Self-Driving software; this is to say, it works, but it’s often erratic, unpredictable and inconsistent. None of this is what you want in a full-blown autonomous vehicle service.

Case in point: YouTuber Kim Java’s test of a LIDAR-equipped Waymo and a Robotaxi, posted above. They have a “scary moment” in a Waymo where it’s unable to find a parking spot, makes an uncertain turn into a parking lot and appears to whack something. It also drops them off about a half-mile from their destination. 

Arguably the scarier moment is when the Tesla just slams on the brakes about 10 minutes into her video, launching her smartphone onto the floor. “The car thought it saw something,” she said. “This is something that happens with Full Self-Driving.”

It’s no surprise, then, that the National Highway Traffic Safety Administration (NHTSA) is looking into the service. For now, NHTSA is merely looking for more information about the incidents and the vehicles, which could lead to larger and more formal investigation down the line. Via The Guardian: 

The main transportation safety regulator in the US is requesting information from Tesla after videos showed the company’s self-driving Robotaxis exceeding the speed limit or veering into the wrong lane.

One video—posted by a Tesla investor who formerly hosted a podcast about the company— showed the Robotaxi wobbling as it misjudged a left turn, then going into a lane meant for oncoming traffic before driving across a double yellow line back into the correct lane. No cars were in the lane intended for oncoming traffic at the time.

In another video, a pro-Tesla YouTuber praised how the car was going several miles per hour over the speed limit.

The NHTSA does not pre-approve new technologies or driving systems, it said in a statement. Instead, manufacturers certify their vehicles meet agency standards, then investigators look into potential safety defects. The NHTSA assesses reports and relevant information then decides on how to address road safety issues.

“NHTSA will continue to enforce the law on all manufacturers of motor vehicles and equipment, in accordance with the Vehicle Safety Act and our data-driven, risk-based investigative process,” the agency stated.

Many Tesla apologists have since pointed out that this is less of a “launch” and more of a “beta test.” However, it’s not a beta test that thousands of drivers, pedestrians and cyclists in Austin all signed up to take part in. 

60%: BYD Slows Production And Factory Expansion In China

Photo by: BYD

BYD has turned into an absolute juggernaut in the automotive sector, now outpacing Tesla in EV production and expanding quickly into Europe and Latin America. (Anti-China tariffs keep it out of the U.S. market, for now at least.)

But BYD is also at the heart of a brutal sales war in its home country, slashing new car prices as part of an apparent effort to be the last man standing. And even China’s government isn’t happy about this.

Yet as Reuters reports today, inventory is still rising and China’s overall auto market is slowing down after years of growth. Now, even BYD is cooling off on the production front too, and it’s been at this for months: 

Chinese electric vehicle champion BYD has slowed its production and expansion pace in recent months by reducing shifts at some factories in China and delaying plans to add new production lines, said two people with knowledge of the matter.

BYD has cancelled night shifts and reduced output by at least a third of the capacity at some of its factories, said the sources who declined to be named because the matter is private.

These previously unreported measures were imposed on at least four factories and BYD had also suspended some plans to set up new production lines, one of the people said. 

As inventory levels increase, the China Auto Dealers Chamber of Commerce in early June called on automakers to stop offloading too many cars on dealerships and to set “reasonable” production targets based on sales performance. The group said intense price wars were pressuring cash flow and driving down profitability.

So what does this mean? Well, as we’ve reported before, China’s car companies are not invincible, and no industry can have permanent up-and-to-the-right growth forever. And it also means BYD will look to exports and local production in other countries more and more if China slows down. 

90%: Tariffs Are No Big Deal For Mexico’s Increasingly High-Tech Auto Industry

BMW Neue Klasse prototype

Photo by: BMW

President Donald Trump’s aggressive automotive tariffs aim to re-shore most car production in the U.S., and he often has a special ire for Mexico in particular. But don’t think that tariffs will cut into Mexico’s rise as a high-tech hub for next-generation cars, Automotive News reports. One example of many: some of BMW’s Neue Klasse EVs will be made in Mexico soon, as will many other future electric and hybrid models. 

From that story:

The country’s access to skilled labor, proximity to the U.S. market and its relative policy and regulatory stability could enable Mexico to come out ahead despite the tariffs, according to modeling conducted by global consultancy Roland Berger. Many new-vehicle models will remain cheaper to produce in Mexico because of those factors, it said.

It’s a finding that underscores just how complex the North American auto supply chain has become and how vital Mexico is to automakers and suppliers, even as the Trump administration looks to increase U.S. manufacturing.

“The entire supply chain, from OEMs to suppliers, have built their manufacturing strategies around Mexico,” said Stephan Keese, a senior partner at Roland Berger.

The Trump administration in April implemented 25 percent duties on vehicle imports, followed the next month by tariffs on auto parts.

Why is that? The obvious reason: labor costs. 

Labor cost is the top advantage. Despite some increases, Mexico maintains a significant cost advantage over the U.S. and Canada. According to an analysis by Oliver Wyman, the Mexican labor cost per vehicle last year was $305 compared with $968 for Canadian vehicles and $1,341 for the U.S.

The point is, even if tariffs stick around, Mexico’s auto sector isn’t going anywhere.

100%: What’s A Safer Way To Roll Out Tesla Robotaxis?

Photo by: Tesla

Let’s say you’re in charge of NHTSA’s rules for self-driving cars. What would you order Tesla to do here? Or rather, what should the rules be for deploying these kinds of vehicles on U.S. roads? We know that a national framework for autonomous cars is finally coming. What do you want it to do, and how should that impact the Robotaxi rollout?

Contact the author: patrick.george@insideevs.com