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CEO Elon Musk said that Tesla will launch its robotaxi service in California and Texas in 2025. He made this announcement to Tesla's quarterly earnings call on October 23, 2024.
Tesla already operates an app-based ride-hailing service for employees in the San Francisco Bay Area. This is exempt from needing a permit since employees under California law cannot be considered as passengers.
Things are not going to be smooth for Tesla in California as they try to gain the permits for fully-autonomous rides.
In California, ride-hailing companies are regulated by the Public Utilities Commission, or CPUC. Competitor Waymo had to pay millions for testing, to get the permits for providing paid autonomous rides in Bay Area, Los Angeles, and Phoenix.
Tesla last used its autonomous vehicle test permit to in 2019, which mandated the assistance of a safety driver. The California Department of Motor Vehicles said that Tesla currently neither holds nor has applied for a testing permit to operate driverless. This does evoke questions about whether Musk can quite finish in the timeline he set out.
Musk himself admitted that Tesla is struggling in California. He acknowledged, "It's not something we totally control," while expressing optimism that approval is not so far down the road.
"Trying to deal with regulators is a very tough process," said Ross Gerber, Tesla’s shareholder and the CEO of Gerber Kawasaki Wealth and Investment Management. He further insisted that Tesla should not expect things to just fall into place.
On the other hand, Texas appears much friendlier for self-driving cars. Musk noted that the state has fewer requirements than California. However, most companies normally conduct extensive testing before launching paid services in Texas.
The heart of the visions of Tesla's robotaxis remains in its Full Self-Driving system which has been at odds with certain regulatory agencies.
One example was the recent issuance of an investigation of 2.4 million Tesla vehicles fitted with FSD by the US National Highway Traffic Safety Administration (NHTSA). This probe came after reports of four accidents, one of which killed someone in 2023. Such accidents may sway decisions to deploy fully autonomous cars.
The news of Tesla's introduction to the robotaxi service sent shares for established ride-hailing firms like Uber and Lyft downward 2.3% in after-market trading. The possibility that Tesla potentially is ready to enter the personal transportation market is likely to dramatically disrupt the status quo. Thus, making a mockery of the old paradigm of generating revenue.
The road may well be long and complex, but for Musk, the ambitions to get to a driverless future remain unchanged.
