October 28, 2016 4:00 PM, EDT

NHTSA Scared This Self-Driving Entrepreneur Off the Road

Self-driving cars are getting closer by the day, but they won’t be coming from hacking phenomenon George Hotz.

Hotz, the first person to jailbreak an iPhone and a vagabond of the world’s top tech companies, has scrapped his self-driving project after receiving a stern letter from the National Highway Traffic Safety Administration. Hotz said via Twitter that he would be exploring other products and other markets.

“I would much rather spend my life building amazing tech than dealing with regulators and lawyers,” he wrote. “It isn’t worth it.”

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While Google, Uber and a crowd of automakers pour billions of dollars into self-driving technology, Hotz took the Best Buy route, cobbling his system together with cheap, off-the-shelf cameras and GPS units paired with artificial intelligence software that “learns” en route.

He had been at it about a year. When Businessweek went on a ride-along in December, Hotz’s white Acura had a joystick where a gear shift knob would be and a 21.5-inch Dell computer screen mounted vertically on the center console. He said his prototype cost about $20,000, about what Google pays its interns over the course of a summer.

“Don’t touch any buttons, or we’ll die,” he said at the time.

Over time, Hotz, who has worked briefly at Google, SpaceX and Facebook, essentially trained the system as if it were a 15-year-old, driving manually for hours while the computers recorded what he was doing. Over time, it got better and better. His plan was to sell the system, dubbed “Comma One,” as an aftermarket kit for $999. The slogan: “Ghostriding for the masses.”

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The NHTSA letter, penned Oct. 27 by the agency's top attorney, reminded Hotz that his venture would be considered a manufacturer of motor vehicle equipment and, as such, is subject to federal oversight. “As you are undoubtedly aware, there is a high likelihood that some drivers will use your product in a manner that exceeds its intended purpose,” it read.

Among other things, the agency asked for a copy of Comma One installation steps, user instructions and a description of what might happen if the system were put in a car that doesn’t support it. If Hotz didn’t respond by Nov. 10, he risked penalties of up to $20,000 a day.

“Mr. Hotz’s decision to cancel the product is his own,” NHTSA spokesman Bryan Thomas said in an e-mail. Hotz didn’t immediately respond to a request for comment.

The magic and wonder of self-driving dreams have taken a dark turn in recent months. In May, an Ohio man was killed when his 2015 Tesla drove itself under the trailer of an 18-wheeler in Florida. The white side of the rig didn’t stand out against the bright sky, according to the automaker.

A few weeks later, NHTSA released data showing the largest increase in U.S. traffic fatalities in almost five decades. While some have said the grisly metrics make a case for fast-tracking robot cars, others argue that automated driving systems are exacerbating accidents by inciting driver distraction.

Regulators, traditionally laissez fare about self-driving technology, jumped into action and opened a probe into the fatal Tesla accident. Meanwhile, the Transportation Department unveiled in mid-September a set of 15 rules outlining how driverless cars should be tested and programmed.

In recent weeks, Apple and Alphabet’s Google have vastly scaled back their auto ambitions. Meanwhile, Hotz has been dialing back the promise of his creation. In an Oct. 20 blog post, he warned the system “will not turn your car into an autonomous vehicle.” Hotz said it is essentially a much better version of features , such as lane-keep assistance and adaptive cruise control, which are increasingly common on contemporary vehicles.

It’s hard to imagine that there aren’t a number of other code jockeys out there running systems similar to Hotz’s, perhaps they aren’t as well known or facile with publicity. As long as there have been cars, grassroots engineers have hacked them. They used to do it with wrenches and duct tape; now they turn to processing chips and lines of code. NHTSA won’t find them all, though the Hotzs of the world are beginning to bump up against similar technology coming out of Detroit. The giants of the auto industry have been investing heavily in hackers of their own and fine-tuning automated systems.

“The old conversation I used to have was, ‘You guys are going to end up being the handset, you’re going to be low-margin assemblers of other people’s cool technology,’” Ford Executive Chairman Bill Ford told Bloomberg last week. “We don’t want to be the handset. And we won’t be.”

As for Hotz, it appears that today’s news will cost him a bet against Tesla CEO Elon Musk. Hotz had promised that he would best Mobileeye, the driver-assist package that went into Teslas. “Frankly, I think you should just work at Tesla,” Musk wrote to Hotz in an e-mail. Perhaps, the offer is still good.