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Autopilot malfunction

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It would be hard to call it a “malfunction” when it is being used in an area it isn’t designed for. Until Tesla officially endorses city Autopilot, I would say using it in your scenario is going to be highly variable and subject to who knows what software changes they make. You could bug report it so they have the data once they do release city street AP, but I wouldn’t expect any fixes.
 
...Does anyone have any thoughts on this?...

Owners kept buying a beta product and expect it to work like a perfect product.

Imagine a new house construction company says the house is not finished yet and an owner still fully bought it then moved in and complains that it's all wet inside when it rains and ignoring the fact that the roof is not even built just yet!

Autopilot will get better but you just have to continue to babysit it in the mean time.
 
It kinda makes sense for the AI to follow that trajectory, you can't really tell what ques it uses to make its decisions but it clearly needs more time to handle such rare situations and poor road design.
This is by no means a malfunction, it's a very atypical situation and rather difficult to deal with. Even the most basic intersections are hard for even the most advanced autonomous prototypes.
 
This is a training defect which I see quite often, too. It appeared about two software versions back. The left turn lane should be ignored while the vehicle travels straight on. Most of this time, this is the behavior. However, if there is a vertical curve or horizontal curve in the vicinity of the left tun lane then vehicle follows the strong line marking -- in your case the double yellow line -- and goes incorrectly into the turn lane. Hopefully they will fix this in the next version by training with all the video snips they must be gathering via the triggers of incorrect behavior, such as your example. In the meantime be extra careful!
 
The AP software still gets confused sometimes when there is a break in the lane dividing lines and a left or right exit/turn lane is present. The software is correctly tracking the lane lines - and hasn't been trained to handle every situation.

This is still beta software - and should be closely monitored, with the driver ready to take over whenever the software gets confused - just like a driving instructor is ready to take over from a student driver.

Over time, the software is doing a better job in handling these cases. But without any standardization on how lane lines are drawn, intersections/turn lanes are marked or where traffic/speed limit signs are placed, it shouldn't be surprising for it to take a while before the software is able to drive in most conditions at least as safe as a human...