The goal really is to be level 4/5, otherwise there wouldn't be so many serious plans about the robotaxi service.
But they have to get very, very good at level 2 with driver supervision first, so they decided to try to develop it without doing the reporting. To me it looks like they have found a bit of a technicality with the DMV's rules.
So the lawyer just keeps saying "don't worry, we are just working on a really good driver assist".
Personally I think that the DMV should start requiring the FSD Beta program drivers' disengagement data . Doesn't the law say that about test programs?
Tesla actually can build in an automated reporting system fairly easily. It's already set up with the reporting systems for the beta program.
What leverage does the DMV have? I mean, it's not like Musk can just tell the California DMV "fine, anyone who wants a Tesla can just move to Texas like everyone else.". Or something.