Watching the video, it looks like there's more to this than the driver being an idiot. The car appears to turn sharply left toward an oncoming car. So while it's undisputed the driver should have had his hands on the wheel, why the car veered toward oncoming traffic at all is still concerning. What would the car have done if his hands were on the wheel? The inevitable comparison is cruise control. When I use cruise control, I'm expected to still be in control of my speed because conditions may change such that my set speed is no longer appropriate. With that analogy and the car set to stay in the lane, the driver expects the car to stay in the lane but may need to take over when such a simplified command is no longer sufficient. The car veering toward oncoming traffic seems analogous to cruise control speeding up uncontrollably.
Do you know what the beeping was in the video? Was it a simple "hands off the wheel too long" alarm or was it indicating autopilot was lost (i.e. your number 3)?
From looking at other videos, it seems to be the alarm to tell the user to take back control. I'm wondering whether it tried to follow the approaching car for a millisecond, immediately realized its mistake and decided to give full control back - at the worst moment imaginable.
I'm willing to bet whatever Tesla's telemetry says about that road, it's less than you or I can see. Also probably wrong. Probably nothing. That's a pretty simple force-feedback control.So while it's undisputed the driver should have had his hands on the wheel, why the car veered toward oncoming traffic at all is still concerning.
What would the car have done if his hands were on the wheel?