At the end of January, Tesla CEO Elon Musk told investors that the company would launch a "profit-oriented driverless taxi service" in Austin, Texas, by June this year. Tesla has few regulatory restrictions in Texas, raising questions about the safety and legal risks it will take by deploying unproven driverless technology on public roads.
Tesla has long blamed customers for accidents involving driver-assistance systems Autopilot and "full Autopilot" (FSD), and has reminded Tesla owners to be ready to take over the vehicle when the system is activated. Now Musk has promised to launch true driverless taxis, a move that legal experts say would make Tesla fully liable in the event of a traffic accident.
For a decade, Musk has promised to launch a fully self-driving Tesla car, but has never been able to deliver. Those promises have become more frequent and the timeline tighter in recent months as Musk has shifted Tesla's focus from selling affordable electric cars to developing and deploying self-driving vehicles.
However, Musk's vague rhetoric has left investors wondering when Tesla will actually launch fully autonomous driving technology, how big and what the business model will be. To date, Tesla has never demonstrated this technology on public roads.
Tesla and Musk did not respond to requests for comment.
Current Texas law does not prohibit Tesla from launching a driverless taxi service. The hands-off approach to regulation is in line with Musk's growing opposition to government intervention as an adviser to US President Donald Trump.
Under Texas law, self-driving companies are free to operate on public roads as long as they are registered and insured like human-driven cars, but they must be equipped with technology that can record data on any potential accidents. There is no state agency that licenses or regulates driverless taxi services, and state law prohibits cities and counties from setting their own regulations for driverless cars.
Texas Senator Kelly Hancock is the sponsor of the Texas Autonomous Driving Act of 2017. He said the Texas legislature wanted to promote the industry in a competitive market and avoid creating barriers with too many restrictions.
"As a conservative, I want to minimize government intervention," he said. "We can't kill an industry by having different regulations in every place."
In contrast, California has strict regulations on the operation of self-driving cars, and Musk moved Tesla's headquarters from California to Austin, Texas, in late 2021. So far, only two companies have been approved to operate paid driverless taxi services in California: General Motors' Cruise and Alphabet's Waymo. Both companies completed millions of miles of testing under strict supervision before they were allowed to carry passengers. Cruise has suspended its driverless taxis.
In an earnings call held on January 29, Musk said he expected to release an "unsupervised" version of the FSD system in California this year. However, two California agencies that oversee the industry say Tesla has not applied for the permits required to operate driverless cars or carry passengers, and has not submitted test data to the state since 2019.
California does not specify how much testing self-driving technology must undergo before it is approved, but other companies that have gone through the process have completed millions of miles of self-driving car testing under state supervision. State records show that since 2016, Tesla has submitted just 562 miles for testing.
Musk's challenge
Mr Musk announced his latest plans for driverless taxis on the same day that Tesla reported disappointing earnings that failed to meet analysts' expectations. This follows news that Tesla suffered its first sales decline in 2024. Still, Tesla shares rose 3% the next day.
Musk has promised that Tesla will launch a "driverless taxi service" in Austin in June.
Musk said he expects to roll out an "unsupervised" version of the FSD system later this year in California and "many areas across the United States." But he did not explain whether that meant a driverless taxi service, a feature that Tesla owners could buy, or some other service.
Musk did say that the "unsupervised" version of the FSD system would be able to drive "without a human driver." Musk did not say how many cars would be deployed, how customers would use them or whether the service would be open to everyone.
Brian Mulberry, client portfolio manager at Zacks Investment Management, a Tesla investor, said the rhetoric often leaves investors guessing about exactly what Tesla will launch and when it will be delivered.
"That's the challenge for Musk: you're sort of playing divination with tea leaves, trying to figure out from a few words what's going to happen," he said. Musan also said he's not particularly worried about the promises and timelines Musk has made this year, as long as Tesla can show progress: "I think the blueprint is there."
Bryant Walker Smith, a law professor at the University of South Carolina who studies autonomous driving, said Texas does not require "pre-approval" before Tesla can deploy driverless cars. However, after Tesla's Cybercab demonstration at a Los Angeles movie studio in October failed to live up to expectations, Smith expressed doubt that Tesla would deploy self-driving technology on a large scale in Texas or elsewhere.
"Tesla is not going to make all its vehicles autonomous overnight in any environment," he said.
According to Smith, Tesla is more likely to try a small scale test of the technology in an area of Austin, Texas, perhaps in good weather or through manual remote control to avoid crashes. "There should be many ways to operate," he said.
"We have no power."
Adam Hammons, a spokesman for the Texas Department of Transportation, said the state allows self-driving cars to be tested and operated on public roads "as long as they meet the same safety and insurance requirements as other vehicles."
The proliferation of driverless cars on Austin's streets over the past two years has raised concerns among residents and authorities after a series of near-fatal accidents involving pedestrians, cyclists and other vehicles. In 2023, more than 20 Cruise driverless taxis caused a traffic jam near the University of Texas campus when the vehicles failed to meet and blocked an entire street.
Gm declined to comment.
Since July 2023, the city of Austin has received 78 formal complaints from law enforcement, first responders and residents. City officials said the complaints may not have fully documented all incidents involving the vehicles. A resident complaint in December said a Waymo vehicle blocked a lane for half an hour, causing "at least three incidents."
"I cannot believe that you would allow potentially lethal technology to be tested on the citizens of this city," the complaint added.
A Waymo spokesperson said the company has been working with local leaders and first responders to "earn the trust of the Austin community" and is constantly working to improve service.
A spokesman for the Austin Department of Transportation and Public Works said police have also run into difficulties, with driverless cars unable to recognize traffic officers' command gestures and the city unable to issue tickets to the cars. Recently, the city proposed a way for police officers to file a complaint in municipal court when they spot a traffic violation.
The spokeswoman said Tesla contacted Austin officials in May, and city officials provided information about local fire and police procedures, maps of areas around schools and school districts, and traffic rules during special events.
Austin City Council member Zo Qadri is frustrated with the city government's inability to set rules against "private companies occupying public roads for testing," especially in downtown areas where driverless taxis are common.
"The bottom line is we have no power.
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