Regulatory Obstacles Loom Over Tesla's Ambitious Cybercab Plan

Last week, Tesla CEO Elon Musk outlined an ambitious vision at the inaugural Robotaxi Business Conference, announcing plans to produce a prototype Cybercab without a steering wheel and pedals starting in 2026, with expectations of reaching significant production volumes by 2027.

However, beautiful dreams sometimes have to face harsh realities. For Tesla to mass-produce the autonomous taxi Cybercab, it must overcome significant obstacles posed by U.S. government regulations.

The National Highway Traffic Safety Administration (NHTSA) said on Tuesday that Tesla has not yet applied for a road exemption for the Cybercab without a steering wheel.

Typically, automakers must obtain permission from NHTSA to put cars on the road without a steering wheel or other control devices required by U.S. automotive safety regulations.

And even if Tesla successfully overcomes this hurdle, only a few thousand autonomous taxis can hit the road each year. According to the regulations, under the exemption, NHTSA usually allows the deployment of 2,500 vehicles per year, which means that even if the Cybercab hits the road, it will ultimately be a niche product.

So far, NHTSA has only approved one similar application in 2020, allowing startup company Nuro to deploy low-speed autonomous delivery vehicles for cargo and passenger transport.

In addition to the strict approval of NHTSA, the regulations of each U.S. state on vehicle road operation also pose obstacles for Tesla. Whether each state permits the operation of autonomous vehicles on the road is a larger issue. For example, in California, Tesla may need several years to obtain the necessary permits.

A spokesman for the California Department of Motor Vehicles said that since 2015, Tesla has held a permit to test autonomous driving technology with a human safety driver present, but the company has not reported using the technology since 2019.

Mary Cummings, a professor of engineering at George Mason University and former NHTSA advisor, commented that obtaining state permits is a larger issue for Tesla. The company still needs a few years to obtain the necessary permits in California before providing test data to the state.

As people recover from the frenzy of Robotaxi Day, they realize that Tesla has only made an empty promise.

Some comments say, Musk provided few new details on the business model of Tesla's autonomous taxi, such as revenue or market size forecasts.

Other comments pointed out that Musk avoided regulatory issues during the conference. He did not elaborate on how Tesla would resolve the regulatory obstacles to deploying autonomous vehicles, merely stating that the company would provide the service where allowed.

Data shows that Tesla delivered about 1.81 million vehicles worldwide last year, and it is reported that the delivery volume for the first month of this quarter is about 463,000. According to these figures, the potential sales volume after the launch of Tesla's Robotaxi business may be negligible.