Very few people can tell the difference between original uncompressed audio at CD specifications (sampling and bits per sample) and MP3, and only on very few audio tracks played on very high quality equipment (which Tesla audio isn't) in controlled environments (which a car on the road also isn't). This has been tested extensively at MP3 bitrates well below the standard maximum (320 kbps). Most people achieve audio transparency (inability to detect the difference between the original and the MP3) well below that bitrate (usually around 200kbps). Some people insist on being able to detect the difference with ease, but those claims are unsupported until a proper ABX test (ABX - Hydrogenaudio Knowledgebase) is performed (which, conveniently, such people never seem to perform). Now, at lower bitrates and/or with poor MP3 encoders, compression artifacts can be more frequently detected by many listeners (see: Slacker audio). This can be easily avoided by using a good encoder (LAME being the de facto standard) and a proper bitrate (feel free to use the maximum of 320kbps if you want to err on the safe side).
I'm not saying you should have to convert your FLAC library to MP3 to work around Tesla's poor software development practices, but rather that you can relax the concern of using MP3 audio for fear of quality loss.
I am not disagreeing with anything you say but I'm sure we can both agree that the genre of music has a lot to do with how lossless/high-resolution music sounds compared to compressed MP3s. I've spent a considerable amount of time and effort putting my music collection together often seeking out better quality tracks of songs I already own.
Since 2009, I have listened to lossless music in my car with a direct connection to the audio system. This is the reason I'm against the notion that in the world's finest car made by the world's most technologically sophisticated car company, that you need to compress and degrade the quality of the audio you listen to.
This is not a matter of processing resources because a $49 Amazon Fire can flawlessly plays a 200GB+ lossless music collection. I bet they can get the media player issues in short order if they make the effort This is why whenever I hear of them adding frivolous features, as much as I like frivolous features, I wonder... "Yes, but what about fixing the media player?"