Tesla, Inc. (TSLA.US) Robotaxi to hit the road in June? Musk chooses Texas to "take a gamble"

Musk revealed to investors at the end of January that Tesla, Inc. (TSLA.US) plans to launch a "paid self-driving rental car service" in Austin, Texas in June. However, because Texas has almost no regulations for such services, this has raised questions about how much safety and legal risks Tesla, Inc. is willing to take by deploying unverified autonomous driving technology on public roads. For a long time, Tesla, Inc. has always blamed users for accidents related to its driving assistance system Autopilot and fully automated driving (FSD), emphasizing that it has reminded owners to be ready to take over the vehicle at any time. However, Musk now vows to launch truly fully self-driving rental cars, legal experts point out that this move will shift all accident liability to Tesla, Inc. Tesla, Inc. has promised to launch fully autonomous driving technology for about ten years now, but has never delivered. As he shifts Tesla, Inc.'s focus from mass market electric vehicle sales to autonomous vehicles, these promises have become more frequent and urgent in recent months. Nevertheless, Musk's ambiguous statements continue to leave investors guessing about when, on what scale, and using what business model Tesla, Inc. will ultimately deploy fully autonomous driving technology. So far, Tesla, Inc. has not demonstrated this technology on public roads. Tesla, Inc. and Musk have not responded to requests for comment. Texas law does not prevent Tesla, Inc. from launching a self-driving rental car service. The state adopts a non-intervention regulatory approach, which aligns with Musk's increasingly anti-government political stance as an advisor to former U.S. President Trump. State law allows autonomous vehicle companies to operate freely on public streets as long as they are registered and insured like any human-driven car, and equipped with technology to record potential collision data. Currently, no state agency issues licenses or oversees unmanned driving taxi services, and state law also prohibits municipalities from making their own regulations for unmanned driving vehicles. In 2017, the sponsor of the autonomous driving legislation, State Senator Kelly Hancock, said that lawmakers hope to promote the industry's development in a competitive market and avoid setting barriers to entry. "As a conservative, I hope to minimize government influence as much as possible," he said in an interview. "We cannot have thousands of different regulations, that would stifle an industry." At the end of 2021, Musk moved Tesla, Inc.'s headquarters from California to Austin. In California, regulatory agencies strictly control where and how companies operate autonomous vehicles. To date, the only two companies that have received licenses for paid unmanned driving taxi services-Cruise from General Motors Company (GM.US) and Waymo from Alphabet Inc. Class C (GOOGL.US)-have accumulated millions of miles of testing under stricter permits before receiving passenger approval. (Cruise has currently suspended operations of its Siasun Robot&Automation taxi.) During a earnings conference call on January 29, Musk said he expects to release a "unsupervised" version of the full self-driving system in California this year. Two regulatory agencies in California indicated that Tesla, Inc. has not applied for the permits required to operate unmanned driving vehicles or carry passengers, and has not reported testing data to the state government since 2019. California does not have specific testing mileage standards, but other companies that have completed the approval process have accumulated millions of miles of automatic driving test mileage under state regulation. State records show that since 2016, Tesla, Inc. has recorded only 562 miles of test mileage. "Musk's Challenge" As Musk made his latest promise of a self-driving rental car service on the same day Tesla, Inc. announced lower-than-expected financial results, the stock price rose 3% the next day. He promised that Tesla, Inc. would launch a "paid self-driving rental car service" in Austin in June. Musk did not reveal the specific number of vehicles, how users would access the service, or if the service would be open to everyone. Musk said that later this year, he will launch an "unsupervised" full self-driving system in California and "many areas across the country." He did not specify whether this meant unmanned driving taxi services, features that Tesla, Inc. owners could purchase, or other service forms. Musk did say that the "unsupervised" full self-driving system will be able to operate without anyone in the car. Brian Mulberry, a portfolio manager at Zacks Investment Management, said that such comments often leave investors guessing what Tesla, Inc. will actually deliver and when. "This is Musk's challenge: you're trying to interpret some clues here, trying to deduce what might happen from some fragments," Mulberry said, as long as Tesla, Inc. makes progress, he is not particularly concerned about the specific details of Musk's promises and timetables for this year, "I think the blueprint is there." Bryant Walker Smith, a law professor at the University of South Carolina specializing in autonomous driving, said that Texas does not require "pre-launch approval" before Tesla, Inc. deploys self-driving vehicles. However, he doubts whether Tesla, Inc. will attempt to deploy autonomous driving technology widely-whether in Texas or elsewhere-because last October, Tesla, Inc.'s unmanned driving taxi concept car Cybercab displayed mediocre performance at a movie studio in the Los Angeles area. He said, "Tesla, Inc. won't be able to suddenly have all vehicles driving automatically under any conditions."Mith indicates that the company is more likely to attempt small-scale technology tests, possibly in a limited area in Austin, in good weather conditions, or through remote control interventions to prevent collisions."Powerless" Texas Department of Transportation spokesperson Adam Hammons stated that as long as the testing and operation of autonomous vehicles "meet the same safety and insurance requirements as other vehicles on the road", they are allowed to operate on Texas roads. Over the past two years, the number of unmanned vehicles on Austin streets has increased significantly, sparking concerns among residents and the government. There have been a series of incidents involving pedestrians, cyclists, and other vehicles. In 2023, over 20 Cruise autonomous taxis caused traffic jams near the University of Texas campus as they blocked the streets while yielding to each other. General Motors Company refused to comment. Since July 2023, the city has recorded 78 formal complaints from law enforcement, emergency personnel, and residents, with officials stating that this may not cover all incidents involving these vehicles. A resident complaint from December described a Waymo vehicle blocking a lane for half an hour, causing "at least three near-accidents". The complaint also stated: "I can't believe you allow this potentially deadly technology to be tested on the citizens of this city." A Waymo spokesperson stated that the company has been working with local leaders and emergency personnel to "earn the trust of the Austin community" and continuously improve their services. According to a spokesperson from the Austin Transportation and Public Works Department, the police have encountered issues with unmanned vehicles not responding to hand signals during traffic control, and the city cannot ticket these vehicles. The city recently proposed a method where officers can file complaints in municipal court when observing traffic violations. The spokesperson mentioned that Tesla, Inc. contacted Austin officials in May of last year, with the city providing information on local fire and police procedures, school and district maps, and traffic rules during special events. Austin City Council member Zo Qadri expressed frustration with the city's inability to regulate "private companies using these public roads as testing grounds". "In the end," he stated, "we are powerless."