Required for Level 5 automation. Tesla claims to be selling the required hardware, waiting only on the software and legislation allowing it. All other players in this field are focusing on a combination of cameras, radar and LIDAR.
Since LIDAR is expensive and the self-driving hype is real, Tesla have a strong short term financial incentive to forgo the former while claiming to sell the later. Combine that with virtually every other expert in the field saying they're full of BS, and I think the picture becomes crystal clear. Elon covers for himself by promoting conspiracy theories about grand industry-wide plots to keep an underdog down, and that has worked very well for him so far. But like most conspiracy theories, this is one you should think critically about.
I am not opposed to LIDAR. I just think it is unnecessary and that computer vision is likely to get good enough before LIDAR gets cheap enough.
LIDAR currently being very expensive (and a bit bulky) is obviously the reason Tesla hasn't put LIDAR in their cars. I don't really fault them for that, I fault them for their deceptive advertising. The LIDAR industry has not yet progressed to the point where it makes sense to bring a car to market with hardware ready for Level 5 automation, so Tesla should stop claiming they've done so.
Assuming the current Level 5 automation hype doesn't fizzle then smoulder for decades like the AI craze of the 60s, then it's success will coincide with rapid advances in size and price of LIDAR.
Tesla's Autopilot / GM's Supercruise (only available on Cadillac CTS and certain highways) / Comma AI's Openpilot.
You also misconstrued my point. I said best commercially available self driving. Seemingly Waymo has better tech but I can't buy or use a Waymo.