Tesla moved one step closer to its goal of operating a fleet of autonomous robotaxis on Tuesday when California regulators granted Elon Musk’s electric car maker a license to begin offering rides in the state.
The permit is a prerequisite for applying to operate an autonomous ride-hailing service in California, but a CPUC spokesperson said the current permit “does not authorize them to provide rides” in autonomous vehicles, and does not allow Tesla to operate a ride-hailing service to the public.
Instead, the limited license issued by the California Public Utilities Commission grants Tesla permission to transport its employees using Tesla-owned vehicles on a prearranged basis.
Tesla’s stock — which has been hammered with weeks of punishing losses that have slashed its value by nearly half — rose by nearly 4% as of 1:30 p.m. ET on Wednesday.
While this authorization is an initial move toward Tesla’s long-term goal of deploying a fleet of self-driving cars, it is just one of many approvals the company will need before the technology will be available to the public in California.
Waymo, a subsidiary of Google’s parent company Alphabet, remains the only company offering autonomous rides to the public in California.
Its erstwhile competitor, Cruise, previously offered self-driving taxi services primarily in the San Francisco Bay Area, but a series of accidents involving the vehicles prompted state regulators to suspend its permit in late 2023.
More than a year later, Cruise’s parent company General Motors decided to discontinue its investment in the robotaxi program after spending over $10 billion since acquiring it in 2016.
Tesla has long been seen as a potential major contender in the autonomous vehicle industry.
Musk has expressed confidence in the financial impact of robot taxis, stating that they could add trillions of dollars to Tesla’s market valuation.
Despite optimism over the company’s autonomous driving ambitions, Tesla’s stock has faced recent struggles.
Tesla was the beneficiary of a post-election “Trump bump” when its stock price soared to an all-time high of almost $480 per share in mid-December.
But Musk’s active role in slashing the federal bureaucracy and his proximity to President Trump as well as his touting of far-right parties in Europe have put a dent in the company’s sales.
Since mid-December, Tesla’s stock has lost nearly 60% of its value. As of Wednesday afternoon, it was trading at around $235 per share.
Musk’s embrace of MAGA politics has also sparked a rash of vandalism and arson attacks against Tesla vehicles and car dealerships nationwide in recent weeks.
In October, the company unveiled a prototype of its anticipated autonomous vehicle, which Musk refers to as a “Cybercab.”
Just a month later, Tesla submitted an application for the newly granted ride service permit.
However, the company has not yet applied for the additional regulatory approvals necessary to operate a commercial robot taxi service in the state.
Musk has suggested that Texas could be the first location where Tesla deploys its robot taxis — with a potential launch as early as June.
Unlike California, Texas has relatively relaxed regulations surrounding autonomous vehicles, making it a more favorable environment for initial testing.
In December 2021, Tesla officially moved its corporate headquarters from Palo Alto, Calif., to Austin, Texas, after Musk bitterly criticized California regulators for imposing closures on factories during the pandemic.
Waymo has already introduced its own self-driving taxis to the public in Austin this month, signaling increasing competition in the sector.
For Tesla to legally operate autonomous taxis on public roads in California, the company must obtain additional approvals from both the CPUC and the state’s Department of Motor Vehicles.
The CPUC oversees ride-for-hire services like Uber and Lyft while the DMV is responsible for evaluating vehicle safety — a significant regulatory hurdle for any company seeking to introduce self-driving technology.
Tesla has been the subject of regulatory scrutiny over its safety record — particularly as it pertains to its Full Self-Driving (FSD) technology.
Last fall, the National Highway Traffic Safety Administration launched an investigation after an incident in which a Tesla driver who had been using FSD — the advanced driver assistance system that enables semi-autonomous driving on highways and city streets — struck and killed a pedestrian.
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