Tesla plans ‘friends and family’ service in California, regulator says

In an earnings call this week, Tesla CEO Elon Musk teased an expansion of his company’s fledgling robotaxi service to the San Francisco Bay Area and other U.S. markets.

But California regulators are making clear that Tesla is not authorized to carry passengers on public roads in autonomous vehicles and would require a human driver in control at all times.

“Tesla is not allowed to test or transport the public (paid or unpaid) in an AV with or without a driver,” the California Public Utilities Commission told CNBC in an email on Friday. “Tesla is allowed to transport the public (paid or unpaid) in a non-AV, which, of course, would have a driver.”

In other words, Tesla’s service in the state will have to be more taxi than robot.

Tesla has what’s known in California as a charter-party carrier permit, which allows it to run a private car service with human drivers, similar to limousine companies or sightseeing services.

The commission said it received a notification from Tesla on Thursday that the company plans to “extend operations” under its permit to “offer service to friends and family of employees and to select members of the public,” across much of the Bay Area.

But under Tesla’s permit, that service can only be with non-AVs, the CPUC said.

The California Department of Motor Vehicles told CNBC that Tesla has had a “drivered testing permit” since 2014, allowing the company to operate AVs with a safety driver present, but not to collect fees. The safety drivers must be Tesla employees, contractors or designees of the manufacturer under that permit, the DMV said.

In Austin, Texas, Tesla is currently testing out a robotaxi service, using its Model Y SUVs equipped with the company’s latest automated driving software and hardware. The limited service operates during daylight hours and in good weather, on roads with a speed limit of 40 miles per hour. 

Robotaxis in Austin are remotely supervised by Tesla employees, and include a human safety supervisor in the front passenger seat. The service is now limited to invited users, who agree to the terms of Tesla’s “early access program.”

On Friday, Business Insider, citing an internal Tesla memo, reported that Tesla told staff it planned to expand its robotaxi service to the San Francisco Bay Area this weekend. Tesla didn’t respond to a request for comment on that report.

In a separate matter in California, the DMV has accused Tesla of misleading consumers about the capabilities of its driver assistance systems, previously marketed under the names Autopilot and Full Self-Driving (or FSD).

Tesla now calls its premium driver assistance features, “FSD Supervised.” In owners manuals, Tesla says Autopilot and FSD Supervised are “hands on” systems, requiring a driver at the wheel, ready to steer or brake at all times. 

But in user-generated videos shared by Tesla on X, the company shows customers using FSD hands-free while engaged in other tasks. The DMV is arguing that Tesla’s license to sell vehicles in California should be suspended, with arguments ongoing through Friday at the state’s Office of Administrative Hearings in Oakland.

Under California state law, autonomous taxi services are regulated at the state level. Some city and county officials said on Friday that they were out of the loop regarding a potential Tesla service in the state. 

Stephanie Moulton-Peters, a member of the Marin County Board of Supervisors, said in a phone interview that she had not heard from Tesla about its plans. She urged the company to be more transparent.

“I certainly expect they will tell us and I think it’s a good business practice to do that,” she said.

Moulton-Peters said she was undecided on robotaxis generally and wasn’t sure how Marin County, located north of San Francisco, would react to Tesla’s service.

“The news of change coming always has mixed results in the community,” she said. 

Brian Colbert, another member of the Marin County Board of Supervisors, said in an interview that he’s open to the idea of Tesla’s service being a good thing but that he was disappointed in the lack of communication. 

“They should have done a better job about informing the community about the launch,” he said. 

Alphabet’s Waymo, which is far ahead of Tesla in the robotaxi market, obtained a number of permits from the DMV and CPUC before starting its driverless ride-hailing service in the state.

Waymo was granted a CPUC driverless deployment permit in 2023, allowing it to charge for rides in the state. The company has been seeking amendments to both its DMV and CPUC driverless deployment permits as it expands its service territory in the state.

— NBC’s David Ingram reported from San Francisco.

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