There's a big risk with only testing with virtual environments. You are only testing with what the environment was programed to do/the data you have.
Yes, exactly. The analogy is life saving drugs. You can do computer simulations, you can test on animals, but the only way to know if it works on humans is by testing it on them. And you have the same dilemma, do you want to test it for a decade to be sure or if it is promising, do an accelerated testing. Here is a great article from the Wired magazine on this very subject.
https://www.wired.com/story/lose-lose-ethics-self-driving-public/
......The unfortunate truth is that there will always be tradeoffs. A functioning society should probably create space—even beyond the metaphorical sense—to research and then develop potentially life-saving technology. If you’re interested in humanity’s long-term health and survival, this is a good thing. (Even failure can be instructive here. What didn’t work, and why?) But a functioning society should also strive to guarantee that its citizens aren’t killed in the midst of beta testing. We’ve made this work for experimental drugs, finding an agreeable balance between risking lives today and saving them tomorrow.
An analysis from the Rand Corporation published last year suggests the living lab will be worth it, finding that more than half a million lives might be saved by putting imperfect tech on the road instead of waiting for it to be flawless before deployment.
Still, it's uncomfortable. “Society tolerates a significant amount of human error on our roads,” Gil Pratt, who heads up Toyota’s research institute, said last year. “We are, after all, only human. On the other hand, we expect machines to perform much better.”
Maybe that’s a fair thing to expect—but only if we’re willing to let the things learn, alongside and among us.
One thing I will add is that there is a certain ethical path that the developers need to do. And I live in the place where a lot of this testing is done. Our Governor decided to loosen regulations and many companies moved their testing from California to Arizona. I have seen Waymo testing for years on the roads I drive on everyday and it is sometimes annoying to be stuck behind a Waymo vehicle: they follow every traffic rule

. They seem to be doing it right. Uber on the other hand decided that they would not comply with California regulations, moved their testing to Arizona even though their technology was not as advanced as Waymo. What was worse is that they rushed things trying to catch up with Waymo. An unfortunate women was killed in my town of Tempe due to this recklessness.
So yes, we need to advance real-life testing, but we still need to make sure that reasonable precautions are being taken. And while I think Telsa is doing it right, some of Elon's comments may give an impression that he is jumping the gun. You never hear pronouncements from Waymo. (For the record, I have no interest in Waymo, but if you live in the Tempe, Chandler, Mesa, Gilbert suburbs of Phoenix, you cannot miss these vehicles. They are there on the streets 24 hours a day.)
And, while I am hearing about Hyundai testing in these forums, I cannot imagine that they are ahead of Waymo, Tesla, Cruise, Mobileye and even possibly Uber, who got their technology from Carnegie Mellon. If you notice, the companies that I mentioned have a very strong software pedigree rather than long automotive tradition. I guess that it makes sense that software companies lead the charge (as they know more about AI development and testing) before auto manufacturers either buy or absorb their technology. And yes, I consider Tesla as a Software company that manufactures cars, then the other way around.