It's supposed to stop if objects appear in its path. For sure you're an idiot if you trust Tesla's autopilot, but I think it's reasonable to partially fault Tesla for setting the consumer's expectation that the car stops when obstacles get in the way even if the vehicle isn't being operated exactly as suggested by the manufacturer.

Maybe system should sound alarm and slow down immediately when there is no hands on wheel and eyes not on the road. Would have avoided this accident, so it seems Tesla was at fault for not doing that.

"Somehow?" We're literally discussing a court case where culpability was proven and accepted by a judge.