An escape pod is an unguided, self-contained system for safely exiting a spaceship in distress. Once escape has been accomplished, the pod functions as a lifeboat by providing life support until its occupant is rescued.
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Using an Escape Pod will dump you back into the basic shuttle (or whatever is ship 128 should it be different due to a plug). You will also have all your legal status reset to "No Record", aka zero, as if you just bought a Fake I.D. for every single government.
Never use an escape pod if you have Vell-os powers. You'll lose them and won't be able to gain them back without a plug.
In fact, if you're not playing strict play, don't use it at all. Waste of time, money, and space since it takes a ton and you can simply reload your pilot if you die.
Always get the Auto-Eject system if you buy an escape pod. Why worry about desperately finding the "eject" button when you're breaking apart. In fact, some ships like the Viper, explode way too fast to manually eject.
Some fighters can act as an escape pod, allowing you to keep fighting even if you lose your main ship. The advantage is you get something better than a Shuttle. On the other hand, you're still vulnerable to stray crossfire.