Tesla Robotaxi "Dream shattered"? NHTSA may only approve 2,500 Cybercabs to hit the road in a year!

According to the financial news app Zhitong Finance, when Tesla (TSLA.US) unveiled its Cybercab prototype last week, Musk promised to introduce a large number of these self-driving taxis. However, there is a major problem: U.S. regulations do not allow this.

It is reported that automakers must obtain approval from the National Highway Traffic Safety Administration (NHTSA) in the United States to put vehicles without a steering wheel or other control devices required by U.S. vehicle safety regulations on the road. If Tesla overcomes this obstacle - which is not guaranteed, the company can only put a few thousand self-driving taxis on the road each year, effectively turning its ambitious self-driving taxi into a niche product.

Bryant Walker Smith, a law professor at the University of South Carolina and an expert in self-driving cars, said: "Unless Congress raises this restriction as it has with several failed bills, exemptions are not a viable path for large manufacturers."

Regulatory barriers are just one of the many issues Musk avoided at the highly anticipated event last week. For a company that sold nearly 500,000 vehicles in the last quarter alone, the NHTSA has long allowed manufacturers to deploy 2,500 vehicles annually under exemptions. This is a small number for a company of Tesla's scale. Such a low number also sharply contrasts with what Musk told investors last week when he said Tesla would "mass produce this car."

Musk stated last week that starting next year, Tesla will first allow drivers of Model Y and Model 3 in Texas and California to use their autonomous driving assistance equipment unsupervised. Musk then stated that the company expects to start production of the Cybercab in 2026, while admitting he is "a bit optimistic about the schedule."

However, the event did not explain how Tesla will make the leap from selling advanced driving assistance features to fully autonomous vehicles, nor did it clarify whether Tesla will operate its own Cybercab fleet.

General Motors (GM.US) applied for an exemption to the NHTSA in early 2022 to launch a driverless shuttle through its Cruise autonomous driving division without a steering wheel and other human-centric features. However, due to the agency's inaction on this request for over two years, the automaker eventually withdrew the plan in July.

The NHTSA stated on Tuesday afternoon that Tesla did not apply for an exemption for the Cybercab. So far, the agency has only approved one such application in 2020, when it allowed the startup Nuro to deploy low-speed autonomous delivery vehicles designed to transport goods rather than passengers.

States in the U.S. have authority over vehicles on their roads and may set their own barriers. For example, Tesla has not applied for autonomous driving testing or deployment permits in California, where autonomous driving startups like Waymo under Alphabet and Cruise under General Motors have already deployed self-driving taxis A spokesperson for the California Department of Motor Vehicles said that although Tesla has held a permit to test autonomous driving technology with human safety drivers present since 2015, the company has not reported using the technology since 2019.

Mary "Missy" Cummings, an engineering professor at George Mason University and former NHTSA consultant, said, "I think the bigger issue is the state's permit." She has been critical of Tesla's Autopilot driving assistance feature. She added that before Tesla provides testing data to California, "it will take them years to obtain the necessary permits in California."

Bryant Walker Smith stated that the bigger challenge Tesla faces is technological - developing safe autonomous driving technology. He mentioned that the company has been "claiming for a decade" that it will deliver cars with fully autonomous capabilities, but has not done so yet. He said, "Any imminent regulatory hurdles are because Tesla has not and cannot demonstrate a sufficiently safe autonomous driving system."