CA: Tesla's primitive robotaxis are driving in Texas. Will they come to San Francisco next?

When Tesla rolled out a primitive robotaxi service Sunday in Austin, Texas, it took the reverse approach of its competitors.

While other companies, such as Waymo, highlight their time-intensive engineering and heavy investments in safety and reliability, experts have marveled at Tesla's more radical philosophy: Scrap the sophisticated hardware, put full faith in AI, deploy in places that don't have a lot of rules.

It all seemed very seat-of-the-pants, befitting Tesla's brash chief executive, Elon Musk. And the first days were messy. Viral videos of the robotaxis depict basic fumbles, like the car pulling up nearly a block away from its pickup spot. Though the erratic behavior echoed early phases of Waymo and General Motors' self-driving subsidiary, Cruise, Tesla's mishaps drew immediate derision. By Wednesday, commenters on the social media site Reddit had put together a list of captured-on-video mishaps in Austin, where at least one robotaxi had dropped its passenger off in the middle of an intersection.

Such scenes have raised doubts about Tesla's ability to expand its business to California, a more tightly regulated state with tantalizing urban markets, including San Francisco, the epicenter of autonomous car technology. Industry watchers are now divided over whether Tesla needs to crack those markets if it aims to be a player in the driverless taxi sector.

"They have a very long road before they can even consider California," said University of San Francisco engineering professor William Riggs. He characterized Musk's style as bullish, and grounded in "a really bold prediction." It just might work, he said.

Clearly, Tesla had eyed the populous West Coast state long before the company sent its tiny fleet of modified, self-driving, electric Model Ys to pick up passengers in Austin. In a sign of ambition, Tesla obtained a permit with California's Department of Motor Vehiclesto test autonomous automobiles in 2015. This year the company secured a separate permit from the California Public Utilities Commission to serve as a charter party carrier, or taxi.

Yet, even with those initial steps locked down, Tesla is following a jagged path from Austin's scrappy Silicon Hills to the original Silicon Valley. And some observers are puzzled by the company's new way of doing business. As a titan of electric cars, Tesla initially focused on high-performance luxury models before shifting to mass-market products. But as a robotaxi venture, Tesla did the opposite: The company took its most recent suburban utility vehicle, upgraded the software and slapped a flashy logo on the side. Thus, a new ride-hail service was born.

"Everybody else's plan is, make it work first, then make it cheap," said Brad Templeton, a Sunnyvale-based self-driving car consultant. " Tesla is saying, 'It's gotta be cheap on Day One. We gotta make it work with the cheapest hardware.'"

From Templeton's perspective, Tesla made a big gamble with cars that operate chiefly on "computer vision," combining cameras with machine-learning. Lacking the intricate LiDAR sensors and high-definition maps on which Waymo vehicles are trained, Teslas instead build maps on the go. Tesla robotaxis might drive up to an intersection in Austin and "feel out" where the lanes are, Templeton said. Waymos, by contrast, "know" every crack in the road.

Tesla's methodology wouldn't fly in a state with complicated policies and politics and road conditions. But it might fit well in suburbs and rural areas that are less penetrated by technology, particularly if the people there are car-dependent and lack adequate public transit, Riggs said.

"There's too much regulatory friction in California," Riggs conceded. " Tesla doesn't have to come."

During an earnings call in April, Musk touted the shrewdness of his strategy. "Generalized" artificial intelligence would be more adaptable, and easier to scale, he said, than "very expensive sensors and high precision maps" developed for specific areas.

"Once we can make it work in a few cities in America, we can make it work anywhere in America," Musk said. "Once we can make it work in a few cities in China, we can make it work anywhere in China. Likewise in Europe, limited only by regulatory approvals." (To date, Tesla has not announced any robotaxi testing outside Texas.)

After the call, Tesla saw a fleeting rise in share values.

Austin's robotaxi debut had a frat party vibe. A fleet of roughly a dozen vehicles provided rides to an invite-only group of influencers and Tesla enthusiasts. Trips cost a flat rate of $4.20, a reference either to marijuana or "Hitchhiker's Guide to the Galaxy." The videos posted online show passengers galloping up to the electric SUVs, craning cellphones to film steering wheels that turned by themselves.

But Musk had failed to deliver on some of the promises he'd made in the earnings call. He had hyped the modified Model Y taxis as "fully autonomous," meaning they don't need human intervention. He had even claimed that with a software update, regular Model Y owners could convert their cars into robotaxis.

In reality, the robots that cruised Austin streets this week came with with babysitters: Tesla had assigned safety monitors to sit in the front passenger seats. These shotgun riders are not compelled by Texas regulators, and have led to confusion over whether they are needed for emergencies, or merely there for optics.

The company's push to full autonomy will face challenges in September, when a new Texas law takes effect, requiring a state permit for self-driving vehicles, and mandating that they comply with traffic laws.

With the new oversight, it appears Tesla's wings "were clipped significantly," said Cameron Gieda, a mobility executive who specializes in autonomous vehicles.

For all of Musk's daunting ideas, the real "moon shot," as Templeton sees it, is a commercial ride service that doesn't need human supervision. Other companies are far ahead: By next year, Waymo will operate driverless taxis in at least seven U.S. cities, while Amazon's Zoox, which just opened a second Bay Area factory, will soon offer rides in San Francisco, Las Vegas, Austin and Miami. Ultimately, Musk's chance of success depends on whether he can move beyond Austin to dense areas of California or New York, Gieda said.

Getting there won't be easy. Whereas Texas is just starting to clamp down on self-driving operators, California has two agencies that regulate them — the Department of Motor Vehicles and the California Public Utilities Commission — and requires six permits to run a passenger service in fully autonomous vehicles. The two that Tesla has obtained from the DMV and CPUC do not authorize its vehicles to drive without a human.

And then there's the political climate. Long a polarizing figure, Musk recently faced an intense backlash in California and other blue states for being an erstwhile adviser to President Donald Trump. As the Tesla CEO installed himself in the White House and led an aggressive campaign to torch federal programs and agencies, owners of Teslas began putting anti-Elon stickers on their bumpers. Some traded their cars in for other brands. Sales of what had once been a pioneering electric vehicle plummeted.

Though Musk's relationship with Trump has since unraveled, it doesn't mean disenchanted consumers will forgive him. Tesla'sbrand identity is particularly shaky in metropolitan regions anchored by San Francisco and Los Angeles. The company will have to saturate those areas with robotaxis if it seeks to challenge Waymo, which now logs more than 250,000 fares each week.

Tesla is "under a microscope" in a way that Waymo and other companies never were, wrote Phil Koopman, an associate professor of engineering at Carnegie Mellon University, in a post on his personal Substack. Koopman expressed concern about some of the errors: In one video, for instance, a Tesla robotaxi wobbles on a left-hand turn before bailing, then briefly veers into a lane of oncoming traffic.

So far none of these errors has caused a collision or serious injury, and taken together, they aren't necessarily an indictment of Tesla, in Koopman's view. Nonetheless, he urged the company to "get its house in order" before one of the vehicles crashes — and takes Musk's world-conquering plans down with it.