The argument is being taken out of context. Not saying that FSD is flawless. But Tesla isn't calling it a failure. They are saying it's not yet achieved. And it's a perfectly sane legal argument. Again, this does not mean Tesla is right here, just that the title is a misrepresentation of their argument.
FSD was first sold 6 years ago. The FSD hardware has a warranty of 4 years. The average car lasts about 11 years.
Tesla no longer guarantees the functionality of the hardware, yet has failed to deliver the software. They are inching towards failing to deliver during the car's economic lifespan. Legally, would it be acceptable for them to deliver in 2032, when the first cars sold with FSD have long been scrapped?