By Dana Hull | Bloomberg
Tesla is seeking approval to offer ride-hailing services in California, a key step by Elon Musk’s company to begin carrying paying customers while its traditional car-selling business falters.
The electric vehicle manufacturer applied late last year for what’s known as a transportation charter-party carrier permit from the California Public Utilities Commission, according to documents viewed by Bloomberg. That classification means Tesla would own and control the fleet of vehicles.
The application suggests Tesla is working to launch a promised ride-hailing business in the near term, opening a new revenue stream and putting it in competition with the likes of Uber Technologies Inc., Lyft Inc. and Waymo. Musk has said Tesla would roll out driverless ride-hailing in Austin in June and aimed to offer it in California by the end of the year, without offering specific details.
Shares of Uber briefly turned negative on the news and were trading up less than 1% as of 12:57 p.m. in New York. Lyft also pared gains. Tesla was little changed.
In its communications with California officials, Tesla discussed driver’s license information and drug-testing coordination, suggesting the company intends to use human drivers, at least initially. Tesla is applying for the same type of permit used by Waymo, Alphabet Inc.’s robotaxi business. While Tesla has approval to test autonomous vehicles with a safety driver in California, it doesn’t have, nor has applied for, a driverless testing or deployment permit from the state’s Department of Motor Vehicles, according to a spokesperson.
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It wasn’t immediately clear whether Tesla would obtain the California Public Utilities Commission permit or when the service might start. A spokesperson said in an emailed statement that Tesla’s application “is pending and not yet public.”
Casey Blaine, Tesla’s senior regulatory counsel, didn’t respond to requests from Bloomberg for comment. Several other Tesla employees who are involved in the effort also didn’t respond to inquiries.
Different business models
A ride-hailing business with human drivers could pave the way for Tesla to introduce robotaxi service in California, where Waymo already operates a driverless fleet in San Francisco.
There are different permitting requirements and operating rules for each business model — Uber and Lyft allow drivers to use their personal vehicles, unlike Waymo — and the state’s stricter demands on autonomous vehicles have tripped up some companies. Cruise had its license suspended in California after an incident that injured a pedestrian, and parent General Motors Co. later folded the operations while abandoning the robotaxi market.
Musk has talked for years about operating a Tesla fleet without human drivers. Tesla does not currently have a fully autonomous vehicle on the market, but it offers driver-assistance systems that control some functions while an alert human remains behind the wheel.
Tesla unveiled a prototype in October of its forthcoming driverless Cybercab. Musk has said the company will roll out its ride-hailing service initially using existing vehicle models, which would include the Model 3 sedan and the Model Y SUV.
Musk recently addressed ride-hailing preparations, saying that there was “a bunch of work that needs to be done to make sure the whole thing works efficiently,” including ensuring that the payment system and app functionality operate as intended.
Tesla’s path to launching robotaxi service is clearer in Texas, where autonomous driving is regulated much like any other vehicle. Its vehicles will be required to have cameras and be able to follow traffic laws and have insurance.
The company will also need a ride-share license with the Texas Department of Licensing and Regulation. As of early February, the company had not had communication with the department, according to a records request. Tesla is also not currently listed as a ride-share licensee on the department’s website.
Uber is preparing to launch autonomous rides with Waymo in Austin and Atlanta this year. Uber Chief Executive Officer Dara Khosrowshahi said this month that he had had conversations with Musk, but that the Tesla CEO decided not to put its vehicles on Uber’s platform.
Kara Carlson and Natalie Lung at Bloomberg contributed to this report.