FSD itself is not a failed bet as a driver-assist system. When it started Tesla was cash poor and often on the verge of collapse, so cutting costs made sense. They will never do as well as a mature Lidar-based solution, but over the years FSD added some value to some people, and might turn out to be a slight competitive advantage in selling cars.

I also think Tesla and their robotaxis are egregiously overhyped, but cutting Lidar was not a terrible business decision at the time. Though it's a terrible decision to have still stuck to vision-only (and using low-quality cameras apparently) when they could have at least got Radar and cheap Lidars.