Tesla (TSLA.US) Robotaxi “Dream Shattered”? NHTSA may launch only 2,500 CyberCabs a year!

The Zhitong Finance App learned that when Tesla (TSLA.US) unveiled its Cybercab prototype last week, Musk promised to launch this autonomous taxi in large numbers. But there's a big problem: US regulations don't allow this.

According to reports, automobile manufacturers must obtain permission from the US National Highway Traffic Safety Administration (NHTSA) to put cars on the road without steering wheels or other control devices required by US automobile safety regulations. And if Tesla overcomes this obstacle — there's no guarantee, the company can only get a few thousand autonomous taxis on the road every year, which will actually turn its flashy autonomous taxis into a niche product.

Bryant Walker Smith, a law professor at the University of South Carolina and an autonomous vehicle expert, said, “Unless Congress raises this limit like several failed bills, exemptions are not a viable path for large-scale manufacturers.”

Regulatory hurdles are just one of many issues Musk avoided at last week's much-anticipated press conference. NHTSA has long allowed manufacturers to deploy 2,500 vehicles a year with exemptions. That's a small figure for a company that sold almost 500,000 cars in the last quarter alone. This low figure is also in stark contrast to what Musk said to investors last week, when he said Tesla would “mass-produce this car.”

Musk said last week that starting next year, Tesla will first allow Model Y and Model 3 drivers in Texas and California to use their autonomous driving aids without supervision. Musk later said that the company expects to begin production of the Cybercab in 2026, while saying he tends to be “a little optimistic about the schedule.”

However, the press conference did not explain how Tesla will make the leap from selling advanced driver assistance functions to fully autonomous vehicles, nor whether Tesla will operate its own Cybercab fleet.

General Motors (GM.US) applied for an exemption from NHTSA in early 2022 to launch an unmanned shuttle without a steering wheel and other human-centered features through its Cruise autonomous driving division. However, since the agency had not acted on the request for more than two years, the automaker eventually pulled out of the program in July.

NHTSA said Tuesday afternoon that Tesla did not apply for an exemption for Cybercab. So far, the agency has approved only one such application in 2020, when it allowed startup Nuro to deploy low-speed autonomous delivery vehicles designed to transport goods rather than people.

US states have control over vehicles driving on their roads and may set up their own barriers. For example, Tesla has yet to apply for driverless testing or deployment permits in California, while autonomous driving startups such as Alphabet's Waymo and GM's Cruise have deployed autonomous taxis in California.

A California Department of Motor Vehicles spokesperson said that although Tesla has held a license to test autonomous driving technology in the presence of a safe human driver since 2015, the company has not reported using the technology since 2019.

Mary “Missy” Cummings, a professor of engineering at George Mason University and a former NHTSA consultant, said, “I think the bigger issue is state government licensing.” She has always been critical of Tesla's Autopilot driving assistance features. She added that “it will take years for them to obtain the necessary permits in California” before Tesla provides test data to California.

Bryant Walker Smith said that the bigger challenge facing Tesla is technical — developing safe autonomous driving technology. He said the company “has been claiming for ten years” that it will soon deliver a fully autonomous vehicle, but so far it has not been delivered. He said, “Any imminent regulatory hurdle is because Tesla has not and is unable to demonstrate a fairly safe autonomous driving system.”