Musk pushes regulatory boundaries with Tesla’s Cybercab robotaxi service

Tesla’s race to roll out Cybercab robotaxis will test regulatory boundaries as the electric vehicle maker begins offering paid rides in two-seater sports vehicles that operate without a steering wheel, pedals or mirrors.

Just hours after an event in downtown Austin, Texas, to mark the launch, the ‌National Highway Traffic Safety Administration said it opened an audit of about 1,000 Cybercab vehicles to evaluate how Tesla determined the cars comply with federal vehicle safety regulations.

U.S. regulators limit the commercial deployment of vehicles that do not meet decades-old federal safety standards that were written for human-driven vehicles and require manual controls. But industry experts said regulatory gray areas and Elon Musk’s litigious history could give Tesla the opportunity to force widespread use of the Cybercab anyway.

Amid a frenzy of fans and social media influencers in downtown Austin, Texas, Cybercabs have been added to Tesla’s robotaxi fleet now operating its best-selling Model Y SUVs. Tesla said Cybercab rides were open to everyone and executives outlined pricing plans.

The golden Cybercab with a butterfly door embodies Musk’s strategy of betting the company on autonomous driving software and robotics. That bet has raised its stock valuation to $1.4 trillion, more than that of several of the world’s top automakers combined.

Unlike most other countries, where new vehicle models and technology need regulatory clearance before being released, U.S. automakers can deploy them on public roads by self-certifying that they meet federal standards.

“I don’t think a reasonable interpretation can be made to suggest that the Cybercab can meet the Federal Motor Vehicle Safety Standards,” said Michael Brooks, executive director of the Center for Auto Safety, a consumer advocacy group.

While NHTSA is pushing faster than usual to change vehicle safety standards and separately writing new rules to accommodate self-driving vehicles, its efforts, experts say, are likely to take longer to take effect than Musk promises.

However, Musk is not known to wait for the regulations. “Historically, Tesla has tested the limits and pushed the limits of regulations,” said Philip Koopman, an engineering professor at Carnegie Mellon University and an expert on autonomous vehicle safety. “I hope Tesla tests the limits.”

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Musk could propose a “creative interpretation” of vehicle regulation, saying Cybercabs comply with federal rules and “flooding the market” with them, Koopman said. “That could take years to resolve by NHTSA or state regulators. In the meantime, Tesla could be operating on public roads.”

Tesla did not respond to requests for comment.

A vehicle without conventional controls

Tesla began manufacturing the Cybercab in April and Musk promised that production would grow “exponentially” later in the year or next. During his presentation in 2024, Musk had said that the company would also sell them for less than $30,000.

Tesla has since launched a limited paid robotaxi service in Texas and Florida with its best-selling Model Y SUVs. The Model Y robotaxi drives itself, but has the manual controls required by federal safety standards, as well as backup human drivers in some cars.

Experts have questioned how well Teslas can drive. Tesla has said its Full Self-Driving software, a version of which Cybercabs runs, is up to 10 times safer than human drivers, and its service in Austin has operated without fatal accidents. But Reuters interviews with several former Tesla employees who trained the company’s self-driving software showed it continued to struggle with basic maneuvers.

“No public information about Tesla’s capabilities suggests that Tesla is close to being able to safely and reliably deploy an automated driving system under the wide range of conditions that would be necessary for a vehicle without conventional controls,” said Bryant Walker Smith, a University of South Carolina law professor specializing in autonomous driving regulation.

A path to the public road

For vehicles that do not meet safety standards, NHTSA offers a waiver process that automakers can apply for. The problem: it limits deployment to 2,500 vehicles per year.

Tesla’s Cybercab will not be subject to that limit, the company’s engineering chief Lars Moravy said on social media platform X earlier this year without offering details. In the past, NHTSA has said that Tesla had not requested it.

This has sparked speculation that Tesla has opted to self-certify, as Koopman suggested.

However, precedent does not bode well: Amazon’s Zoox, which is launching a vehicle resembling a toaster oven on wheels, with two seats facing each other and no driving controls, tried the self-certification route and failed.

After Zoox certified its vehicle, NHTSA began an investigation that ended with Zoox withdrawing the claim. Still, about a year after that, Zoox received the federal waiver for limited commercial deployment in July.

Any conflict between NHTSA and Tesla over the company’s self-certification could end up in court, three former top NHTSA officials told Reuters ahead of Thursday’s event. “It happens from time to time and NHTSA, more importantly, has not always won these cases,” one of them said.