Elon Musk just promised robotaxis for half the US by year’s end, but California’s regulators aren’t buying it—here’s what EV owners need to know.

Tesla CEO Elon Musk outlined ambitious plans for robotaxi deployment during the company’s recent earnings call, but significant regulatory obstacles and falling electric vehicle sales cast doubt on the timeline. This development underscores the challenges facing the EV giant as it pivots toward autonomous technology to bolster its valuation.

Regulatory Hurdles in Key Markets

Musk stated that Tesla is “getting the regulatory permission to launch” robotaxis in states like California, Nevada, Arizona, and Florida. He anticipates operations reaching “half the population of the U.S. by the end of the year” and scaling up by the end of next year. However, current operations remain limited to a small fleet in Austin, Texas, unavailable to the public, reports Reuters.

In California, regulators confirmed Tesla has not applied for necessary permits to operate fully autonomous vehicles that charge passengers. Companies require approvals from the California Department of Motor Vehicles (DMV) and the California Public Utilities Commission (CPUC). Tesla holds only initial permits, with spokespeople from both agencies noting no further applications. Tesla disclosed in a filing that regulators sought information on its robotaxi plans, following reviews of videos showing alleged infractions like wrong-lane usage and speeding in Austin.

Analyst Paul Miller from Forrester reportedly highlighted Musk’s caveat about regulatory approvals, saying, “That caveat is an important one, as regulatory approvals take time.” For comparison, Alphabet’s Waymo accumulated over 13 million testing miles and secured seven approvals across nine years before launching paid driverless rides in 2023. Tesla has reported just 562 testing miles (904 km) in California since 2016 and no autonomous miles in six years.

Progress varies elsewhere. Arizona officials said Tesla applied last month for permits to test and operate autonomous vehicles, with a decision expected by month’s end. The company must also obtain ride-hailing permits and submit plans for police interactions. Nevada DMV discussed processes with Tesla recently, but no actions followed. Florida officials did not respond to inquiries.

This raises questions about rapid expansion. Building on that, investor Gene Munster from Deepwater Asset Management expressed disappointment over the lack of specifics on Austin’s public rollout or vehicle numbers, noting, “It seemed like he wanted to kind of steer clear of really putting hard estimates out there for how things play out.”

Declining EV Sales and Business Pressures

Tesla’s core EV business faces headwinds, with sales dropping 13% in the first half of 2025. Factors include an aging lineup and brand damage from Musk’s political activism. No affordable models arrive until the year’s final quarter, and the impending end of a $7,500 U.S. tax credit for EV buyers adds pressure. Musk acknowledged potential “a few rough quarters.”

Investor Shawn Campbell from Camelthorn Investments, a Tesla shareholder, warned, “Tesla cannot afford a misstep with the robotaxi service,” adding that “the wheels are coming off” its automotive business with declines in “almost every market.”

Ross Gerber, CEO of Gerber Kawasaki Wealth and Investment Management and another investor, said, “The numbers kind of speak for themselves,” describing them as “bad for a growth company, which isn’t growing.”

Shares fell more than 8% in midday trading on Thursday, down 24% year-to-date. Tesla’s roughly $1 trillion valuation hinges on autonomous driving success, as products like the Cybertruck have delayed.

Investor Scrutiny and Future Outlook

Investors intensify focus on robotaxi promises amid sales woes. Musk has pledged driverless Teslas annually since 2016, often unmet. He now expects the business to have a “material impact” by end of next year, shifting from an April prediction of mid-next year, with “millions of Teslas operating autonomously” by mid-2026.

Morgan Stanley forecasts lower Wall Street expectations due to reduced sales and higher costs. Political dynamics, including Musk’s strained ties with President Trump—who denied intentions to cut subsidies—add uncertainty.

Trump posted, “Everyone is stating that I will destroy Elon’s companies by taking away some, if not all, of the large scale subsidies he receives from the U.S. Government. This is not so!”

These elements leave Tesla with little margin for error. As EV enthusiasts monitor developments, the balance between innovation and regulatory compliance will shape the company’s trajectory in autonomous mobility.