It's just Level 2, not Level 5.
According to a letter from Tesla to California's Department Of Motor Vehicles (DMV) published on Twitter, Tesla's habit of overpromising and underperforming has hit a new height. Tesla, of course, doesn't put it like that, but the California EV maker has been forced to disclose that "Full Self Driving (FSD) Capability is an additional suite of features that builds from Autopilot and is also representative of SAE L2."
SAE International's On-Road Automated Vehicle Standards Committee considers Level 2 ability to be the vehicle either handling acceleration and deceleration, steering, or both, with the expectation of the driver handling every other aspect of driving and being ready to take over full control. That is not what the system name "Full Self Driving" suggests.
A further letter explains that Tesla's "City Streets" capability is also not ready for primetime. Tesla admits that event detection and response sub-tasks are limited. It's also still Level 2 and "does not make it autonomous under the DMV's definition."
Tesla says events that "City Streets" capability is not capable of dealing with "include static objects and road debris, emergency vehicles, construction zones, large uncontrolled intersections with multiple incoming ways, occlusions, adverse weather, complicated or adversarial vehicles in the driving path, unmapped roads." It's also made clear that "City Streets" capability will be refined but remain a Level 2 feature when it's released.
It is worth remembering Tesla's approach to autonomous driving is iterative in its release to the public. Tesla also avoids California as a testing ground; hence it reports it didn't test vehicles on California highways in 2020. The company has been promising those who buy the "Full Self Driving" package that it will eventually do as it suggests and reach Level 5 capability.
How long that will take is anybody's guess, and we'll take anything Tesla says with a bucket of salt. Right now, though, it appears Honda is going to beat Tesla to releasing Level 3 driving. Honda is already putting its Honda Sensing Elite package on the Japanese version of the Acura RLX.