As Tesla’s (NASDAQ: TSLA) electric-vehicle sales have flattened this year, CEO Elon Musk has increasingly staked the company’s future on his vision for self-driving robotaxis, despite the massive technological and regulatory obstacles in delivering them.
Now Musk – as one of President-elect Donald Trump’s biggest backers – may have the influence to help break through those regulatory roadblocks.
Tesla currently faces a diverse landscape of state driverless vehicle laws that Musk blasted in an October 23 earnings call, calling it “incredibly painful to do it state-by-state.” He signaled he would advocate for one federal approval process if Trump won and followed through on a promise to name Musk “efficiency czar.”
“If there’s a department of government efficiency,” Musk said, “I’ll try to help make that happen.”
On Tuesday, Trump tapped Musk and another ally to lead such an entity, which is not a government agency. It remains unclear how the organization will function.
Musk’s sway is likely to extend beyond efficiency. The billionaire, who gave at least $119 million to a pro-Trump group during the campaign, is expected to influence the president-elect’s pick for the next Transportation Department secretary, according to a person close to Musk and Trump’s transition planning. That department, which includes the National Highway Traffic Safety Administration (NHTSA), regulates automakers and could push through significant changes to the self-driving rules at a national level.
But even if Musk secures favorable regulation, Tesla (NASDAQ: TSLA) would still face steep technological and legal hurdles in deploying driverless vehicles, along with questions over how to insure them, according to Reuters’ interviews with nine regulatory and legal experts and a review of U.S. state driverless-vehicle laws.
Tesla and Musk did not respond to Reuters’ requests for comment.
At present, Tesla remains years behind rivals in California, by far the carmaker’s largest U.S. market and a primary testing ground for the autonomous vehicle industry. Other companies have navigated California’s regulatory maze and completed millions of autonomous vehicle testing miles under state oversight, according to a Reuters review of state regulatory data.
If Musk can succeed in securing federal regulations or laws that preempt state oversight, experts in autonomous vehicle regulation said, it could allow Tesla to sidestep regulations in California.
Tesla (NASDAQ: TSLA) has logged just 562 testing miles since 2016 and hasn’t filed autonomous-driving reports to California regulators since 2019, state records show. Alphabet’s Waymo, by comparison, logged more than 13 million testing miles and secured seven different regulatory approvals between 2014 and 2023, when it received approval to charge passengers for rides in driverless robotaxis. Waymo is among just three companies with California permits to commercially operate driverless vehicles and the only one approved to operate a robotaxi fleet anything like what Musk envisions.
Waymo declined to comment on Tesla’s regulatory strategy or its approach to autonomous driving.
Tesla currently has the lowest-level California permit, which allows testing with human-driver oversight. Only six companies have driverless testing approvals. California data for those firms shows each tested with a driver for a minimum of three years, often for millions of miles, before securing driverless-testing approvals. Amazon’s Zoox, for instance, logged more than 1.6 million miles over three years. General Motors’ Cruise racked up more than 2.1 million miles over five years.
Cruise declined to comment. Zoox said it also has a separate driverless “pilot” permit from California regulators that allows the company to pick up passengers without charging fares.
“Tesla has that entire journey in front of them,” said Phil Koopman, a Carnegie Mellon University engineering professor and autonomous-vehicle safety expert. He said Tesla’s current “Full Self-Driving” (FSD) system — which actually requires a human driver to pay strict attention — is “nowhere near ready to be a robotaxi.”
Musk says self-driving Teslas will be ready next year, echoing unfulfilled promises dating back about a decade. He has increasingly bet Tesla’s future on robotaxis since this spring, when Reuters reported the automaker had scrapped plans for a mass-market affordable car for human drivers amid softening electric-vehicle demand and rising competition from cheap Chinese EVs.
He told investors last month at a Hollywood-style robotaxi unveiling near Los Angeles that Tesla would deploy fully autonomous versions of its Model 3 and Model Y next year in Texas and California. He also unveiled a two-seat “Cybercab” robotaxi he says will start production in 2026 and cost “roughly $25,000.” Tesla stock fell 9% the next day as some underwhelmed investors said Musk’s presentation lacked concrete product details. Since the election, however, Tesla shares have jumped more than 30%, adding nearly $200 billion in market value, as investors expect friendlier autonomous driving and artificial intelligence regulation.
‘BILLIONS OF MILES’
Tesla (NASDAQ: TSLA) has lobbied for electric vehicle subsidies and other benefits over the years.
The company for years has also supported a federal standard for autonomous driving in discussions with Congress and NHTSA, but was unable to get one in place, in part because of a divided Congress, said two people familiar with the company’s strategy. Tesla in 2018 signed a letter supporting a Senate bill that would have preempted some state regulation of autonomous vehicles, but the legislation never got a full Senate vote.
In recent months, Musk has emerged as a prominent member of Trump’s inner circle.
He spent election night at Trump’s Florida Mar-a-Lago club and has frequented the luxury compound since the former president’s November 5 victory, according to sources and videos posted by Republican operatives.
Musk has attended at least one meeting at Mar-a-Lago about the appointment of a senior cabinet position, Treasury secretary, according to a second person familiar with the matter.
A Trump spokesperson did not answer questions about autonomous driving regulations or Musk’s influence but said, “Our federal bureaucracy will certainly benefit from his ideas and efficiency.”
Under a Trump administration, NHTSA could design accommodating autonomous-vehicle standards but a key question would be whether the regulator could or would prevent states from passing their own stricter rules, three legal and regulatory experts told Reuters.
A Republican-controlled Congress also could enact a national approval process that supersedes state laws. NHTSA has traditionally regulated the design of vehicles while states primarily regulate drivers and set traffic laws — a split that isn’t clear once the car itself becomes the driver. Bryant Walker Smith, a University of South Carolina law professor who focuses on autonomous driving, said NHTSA could interpret its authority more broadly if it “was being directed to achieve a certain political outcome.”
Under Trump, NHTSA could clear the path for more novel designs like that of the Cybercab, which Musk says will have no steering wheel or pedals.
National autonomous vehicle regulation is more important to Tesla (NASDAQ: TSLA) than its rivals because Tesla has a different business model. Musk’s strategy involves selling millions of vehicles that can drive themselves anywhere on Earth. Almost all other competitors, including Waymo, operate robotaxi fleets in limited, comprehensively mapped zones of specific cities.
Waymo and others build more expensive robotaxis that are equipped with suites of redundant technologies and sensors, including radar and lidar, which uses lasers to detect objects and create three-dimensional images of a vehicle’s surroundings. Tesla relies solely on “computer vision,” which seeks to use cameras like humans use eyes, with artificial intelligence that translates images into driving decisions.
Asked on a July earnings call how he would overcome regulatory challenges, Musk said Tesla would have “billions of miles” showing FSD is safer than a human driver and that regulators would be “morally obligated to approve.”
But Tesla (NASDAQ: TSLA) so far has little to show regulators. The California Department of Motor Vehicles told Reuters Tesla had not sought driverless-testing or deployment permits required to operate driverless vehicles on public roads. California would be critical to any rollout of what Musk calls a Tesla “robotaxi network,” which he has said could offer rides in both Tesla- and customer-owned taxis. About 37% of all Teslas on U.S. roads are in California, according to industry data provider Experian Automotive.
Waymo is now the only company with California approval to charge passengers for rides in driverless taxis. It wasn’t easy.
Waymo first secured a permit in 2014 to test with a safety driver. It got a driverless-testing permit four years later, in October 2018, after logging more than 2.2 million test miles. It took three more years and 3.7 million more testing miles to secure approval from the California DMV to commercially operate autonomous vehicles — with a human driver onboard — in San Francisco and parts of San Mateo County. Waymo logged another 7.4 million miles before winning approval in August 2023 to charge customers for rides in driverless robotaxis in San Francisco, state records show. Waymo also currently operates in Los Angeles and Phoenix.
GM’s Cruise also operated driverless taxis in San Francisco but had its permit suspended after an October 2023 incident where a Cruise vehicle dragged a pedestrian who had been hit by another car for 20 feet.
LESS REGULATION, MORE LEGAL RISK
Tesla (NASDAQ: TSLA) faces different but still difficult challenges in less-regulated states including Texas, which has almost no restrictions and specifically forbids cities from regulating driverless vehicles.
But Tesla would face immense legal liability for crashes the moment it claims its vehicles are fully autonomous. The automaker has until now blamed Tesla drivers in defending itself against lawsuits and regulatory investigations over accidents involving FSD and Autopilot. Tesla argues it warns drivers to pay attention because those systems aren’t fully autonomous.
If Tesla felt comfortable deploying self-driving technology in low-regulation states like Texas, then “presumably they would be doing it,” said Smith, the University of South Carolina law professor. But “once you say there is no need for a human to pay attention, then you’re pointing the finger back at yourself” when it comes to crash liability.
Insuring driverless Teslas would be another major challenge. Individual consumers can’t currently buy a fully autonomous vehicle — and so no insurance for one exists, said Bob Passmore, a vice president specializing in home and auto insurance for the American Property Casualty Insurance Association, a trade group. He said corporate autonomous vehicle operators currently get insurance through commercial policies or through specialty “surplus lines” policies for unusual cases.
Many state laws are similar to Texas, allowing registered driverless vehicles mostly unfettered access to roads, according to a Reuters review of the statutes. Others impose more restrictions: Nevada requires driverless-vehicle firms to get a testing certificate and use employees as safety drivers. Kentucky and South Dakota require vehicles to be able to pull safely off the road if they encounter problems. Fifteen of the 50 U.S. states have no laws specific to driverless vehicles, according to the Autonomous Vehicle Industry Association, a trade group.
Light or nonexistent regulations could heighten the legal risk because autonomous vehicle companies couldn’t argue they complied with strict government safety standards, said three experts in autonomous-driving law. California’s tougher regulations help protect companies securing approvals, which could provide “powerful” evidence for a defense if permitted firms get sued over crashes, said William Widen, a University of Miami law professor specializing in autonomous-vehicle liability.
“The lawyers would always rather have the blessing of regulators,” he said because it provides evidence that the company wasn’t “behaving recklessly or negligently and that they complied with all applicable laws.”
