Tesla expected to launch long-discussed robotaxi service

Tesla and SpaceX CEO Elon Musk gestures as he steps on stage during a rally for former US President and Republican presidential candidate Donald Trump at Madison Square Garden in New York, October 27, 2024. US President-elect Donald Trump on November 12, 2024, said Tesla and SpaceX CEO Elon Musk will lead a so-called Department of Government Efficiency alongside US entrepreneur Vivek Ramaswamy. Angela Weiss, AFP

Tesla is expected to begin offering robotaxi service Sunday in Austin, an initial step that Elon Musk's backers believe could lead to the company's next growth wave.

The launch -- which comes as Musk refocuses on his business ventures following a controversial stint in Donald Trump's administration -- will employ the Model Y sport utility vehicle rather than Tesla's much-touted Cybercab, which is still under development.

The long-awaited launch follows the dramatic meltdown earlier this month in relations between Musk and Trump, which saw a cascade of bitter attacks from both men.

Since then, Musk has publicly expressed regret for some of his statements, while his company's Texas operation has readied the Austin push -- part of a major drive on autonomous technology and artificial intelligence that Tesla bulls believe will yield huge profits.

This group includes Wedbush analyst Daniel Ives, who said autonomous technology could be a catalyst for potentially $1 trillion in additional market value or more.

"There are countless skeptics of the Tesla robotaxi vision with many bears thinking this day would never come," said Ives, who predicted that Trump's administration would clear roadblocks for Tesla and pivot from the recent "soap opera."

"The golden era of autonomous for Tesla officially kicks off on Sunday in Austin," Ives said in a note Friday.

BUSINESS-FRIENDLY TEXAS

But the unveiling in the Texas state capital comes amid questions about how Tesla will try to overcome criticism of Musk's activities for Trump.

Tesla saw profits plunge 71 percent in the first quarter following poor sales in several markets.

Tesla sales sink by nearly half in Europe

In picking Austin for the debut of the autonomous vehicle (AV) service, Musk is opting for a US state known for its company-friendly approach to regulation.

"Texas law allows for AV testing and operations on Texas roadways as long as they meet the same safety and insurance requirements as every other vehicle on the road," the Texas Department of Transportation told AFP.

An Austin website listed six autonomous vehicle companies at various stages of operation: ADMT (Volkswagen), AVRide, Tesla, Zoox (Amazon), Motional (Hyundai) and Waymo (Alphabet/Google).

But the Texas legislature this year enacted a new bill that requires prior authorization from the state's Department of Motor Vehicles before companies can operate on a public street without human drivers, a group of seven Democratic lawmakers said in a June 18 letter to Tesla.

Citing the enhanced system, the lawmakers asked Tesla to delay testing until after the law takes effect September 1.

If Tesla proceeds with the launch this weekend, "we request that you respond to this letter with detailed information demonstrating that Tesla will be compliant with the new law," the letter said.

STARTING SLOW

Musk had initially planned the launch for June 12, before pushing back, saying he was being "super paranoid" about safety.

"We want to deliberately take it slow," Musk said in a May 20 interview on CNBC, telling the network that Tesla would probably only operate 10 autonomous vehicles the first week.

But that number will rise to perhaps 1,000 "within a few months," Musk told CNBC. "And then we will expand to other cities.... San Francisco, Los Angeles, San Antonio."

The service will be offered from 6:00 am until midnight and will be available to "early access" users on an invitation-only basis in a geofenced area, Tesla owner Sawyer Merritt said Friday on Musk's X platform, adding that Tesla had given him permission to release the information.

Musk last fall unveiled the Cybercab, which has no steering wheel or pedals. But production is not expected to begin on the vehicle until 2026.

Tesla's robotaxi launch comes well after Waymo's offering of commercial robotaxi service, with more US cities gradually added.

The US National Highway Traffic Safety Administration (NHTSA) in October 2024 opened a probe into Tesla's Full Self-Driving (FSD) software after receiving four reports of crashes.

The NHTSA on May 8 asked Tesla for additional information on its technology in light of the Austin launch.

But the NHTSA does not "pre-approve" new technologies, the agency told AFP.

"Rather, manufacturers certify that each vehicle meets NHTSA's rigorous safety standards, and the agency investigates incidents involving potential safety defects," the NHTSA said.