Elon Musk has long promised that Tesla Inc. would revolutionize urban mobility with autonomous vehicles, and as of mid-2025, the company’s ride-hailing ambitions are finally taking shape amid regulatory hurdles and technological breakthroughs. What began as internal testing in the San Francisco Bay Area has evolved into a limited public rollout, with Tesla’s app now offering rides in select cities like Austin, Texas, and parts of California. This push comes at a pivotal time for the electric-vehicle giant, which reported robust quarterly earnings earlier this year, partly fueled by optimism around its Full Self-Driving (FSD) software.

Investors and industry watchers are closely monitoring these developments, as Tesla seeks to compete with established players like Uber Technologies Inc. and Alphabet Inc.’s Waymo. According to a recent report from TipRanks.com, Tesla’s service is already operational for a small user base, with plans for broader expansion by year’s end, pending approvals.

Regulatory Roadblocks and Strategic Pivots

California regulators have been a key battleground. Tesla applied for initial permits in February, as detailed in a Reuters article, marking the first step toward a full robotaxi launch. However, the service’s debut in San Francisco last week was notably muted—no mention of self-driving capabilities, likely due to ongoing restrictions from the California Public Utilities Commission (CPUC).

Posts on X, formerly Twitter, reflect growing excitement and skepticism among Tesla enthusiasts. Users have shared unverified claims of unsupervised FSD rides starting in Texas by June, with some predicting a nationwide rollout covering half the U.S. population by year-end, though these timelines often come with caveats about regulatory approval. Such online buzz underscores the high stakes, but industry insiders caution that these are speculative and not definitive indicators of progress.

Technological Foundations and Market Impact

At the core of Tesla’s strategy is its FSD technology, which Musk claims is 1,000% safer than human drivers. A Verge report from late 2024 revealed that employee testing in the Bay Area had been underway for months, building a data trove to refine algorithms. Recent updates to the Robotaxi app, as covered in The Cool Down, include seamless integration for summoning autonomous vehicles, helping Tesla rebound from earlier sales dips.

Financially, this gambit could unlock trillions in value. Analysts at Nasdaq estimate that even limited operations could generate significant revenue, with broader adoption hinging on overcoming permitting delays. Tesla’s job postings, highlighted in a Drive Tesla piece, suggest aggressive hiring for expansion into new markets, signaling confidence despite challenges.

Competitive Pressures and Future Horizons

Rivals aren’t standing still. Waymo has years of headway in autonomous operations, and Uber’s vast network poses a formidable threat. Yet Tesla’s vertical integration—controlling everything from vehicle production to software—gives it a unique edge, as noted in recent TechCrunch Mobility coverage, which describes the launch as a bold “gambit” amid evolving transportation dynamics.

Looking ahead, Musk’s vision extends to affordable models and FSD licensing deals, potentially in China and Europe by late 2025. Posts on X speculate about Cybercab production ramping up in 2026, but regulatory scrutiny remains a wildcard. For now, Tesla’s ride-hailing service represents a cautious step toward autonomy, blending human-operated rides with glimpses of a driverless future.

Investor Sentiment and Broader Implications

Wall Street’s reaction has been mixed. Shares surged 21% following early announcements, per TipRanks.com, but volatility persists amid approval uncertainties. A Investing.com report warns that full robotaxi deployment could take years, echoing CPUC statements that Tesla isn’t yet cleared for public self-driving transport.

For the electric-vehicle industry, Tesla’s moves could accelerate adoption of autonomous tech, pressuring competitors to innovate. Insiders see this as a litmus test for Musk’s ambitious timelines, with success potentially reshaping urban transit and failure risking reputational damage. As one X post put it, this is “the largest AI project in the world” entering a new chapter—hyperbole perhaps, but indicative of the transformative potential at stake.

A Groundbreaking Partnership Takes Shape

In a move that could reshape the future of urban mobility in Europe, U.S. ride-hailing giant Lyft has announced a strategic partnership with Chinese tech behemoth Baidu to introduce robotaxi services in the United Kingdom and Germany starting next year. This collaboration marks Baidu’s inaugural venture into the European autonomous vehicle market, leveraging its advanced Apollo Go platform, which has already demonstrated impressive capabilities in China. According to details shared in a recent Reuters report, the partnership aims to deploy Baidu’s electric RT6 robotaxis on Lyft’s platform, pending necessary regulatory approvals.

The initiative comes at a pivotal time for both companies. Lyft, seeking to expand beyond its North American stronghold, recently finalized its entry into Europe through other means, setting the stage for this autonomous expansion. Baidu, on the other hand, brings a proven track record with over 11 million rides completed in China, as highlighted in a Bloomberg article. This deal not only extends Baidu’s global footprint but also aligns with its broader strategy of partnering with ride-hailing firms like Uber to penetrate international markets.

Navigating Regulatory and Technological Hurdles

The rollout is slated for 2026, with initial launches in the UK and Germany, two markets known for their stringent safety standards and progressive stance on innovation. Industry insiders note that securing regulatory nods will be crucial, involving rigorous testing and compliance with local laws on data privacy and vehicle safety. A TechCrunch piece emphasizes that the companies are optimistic about approvals, drawing on Baidu’s experience in densely populated Chinese cities where its robotaxis have operated successfully without major incidents.

Technologically, the RT6 vehicles represent the cutting edge of autonomous driving, equipped with advanced sensors, AI algorithms, and redundant systems for reliability. This partnership allows Lyft to integrate these vehicles seamlessly into its app, offering users a driverless option alongside traditional rides. As reported by Engadget, the fleet’s debut in 2026 could position Europe as a new battleground for robotaxi dominance, challenging incumbents like Waymo and Cruise.

Market Implications and Competitive Dynamics

For industry observers, this expansion signals a acceleration in the global race for autonomous mobility. Lyft’s shares jumped following the announcement, as noted in an Investing.com update, reflecting investor confidence in the revenue potential from reduced operational costs associated with driverless fleets. Baidu, already a leader in China’s robotaxi sector, stands to gain valuable data and insights from European operations, potentially refining its technology for diverse driving conditions.

However, challenges loom, including public acceptance and integration with existing infrastructure. In the UK and Germany, where public transport is robust, robotaxis must prove their value in terms of affordability and efficiency. A CNBC analysis points out that Baidu’s global ambitions through deals like this could face geopolitical scrutiny, given U.S.-China tech tensions, yet the partnership underscores a pragmatic approach to cross-border innovation.

Economic and Societal Impacts on the Horizon

Economically, the introduction of thousands of RT6 vehicles, as detailed in a StockTitan news release, could create jobs in maintenance and oversight while disrupting traditional taxi services. For cities like London and Berlin, this means potential reductions in traffic congestion and emissions, aligning with EU sustainability goals.

On a broader scale, this venture highlights the convergence of Eastern and Western tech ecosystems, fostering advancements that could accelerate the adoption of autonomous vehicles worldwide. As Lyft and Baidu forge ahead, industry insiders will watch closely to see if this model sets a precedent for future expansions, potentially transforming how Europeans commute in the coming decade.

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Tesla CEO Elon Musk is in what one might describe a suboptimal position. He’s pushed hard to get shareholders to view Tesla as an AI and robotics company, not a maker of EVs. And yet, the company’s most visible products, which generate the bulk of its revenues, are its electric cars. 

Yes, Tesla EVs are advanced, particularly when it comes to its underlying vehicle architecture and software. And its driver-assistance system known as Full Self-Driving Supervised, which can be used on highways and city streets and requires hands on the wheel and the driver to be ready to take over, is considered among the most capable on the market today. But to Musk, the ultimate illustration of an AI and robotics company is self-driving cars and humanoid robots. And today, neither of them exist at any scale. 

Tesla’s first notable step toward that goal was in June when it launched a limited robotaxi service in Austin, Texas. Those Robotaxi-branded vehicles, which invited customers can hail via an app, have a Tesla employee sitting in the front passenger seat. But it’s still far from Musk’s original vision of a “general solution” that would allow a Tesla owner to earn money by renting out their vehicle as a robotaxi service. 

The clock is ticking and Musk needs to show more progress — or at the very least tease upcoming launches to keep antsy shareholders content. Which is perhaps why Tesla is embarking on this ride-hailing gambit in California.

Earlier this month, Musk noted that Tesla would be launching a robotaxi service in the Bay Area “in a month or two” — regulatory approvals being the primary hang-up.

The problem? Tesla hasn’t even applied for the permits that would allow it to operate a robotaxi service. I checked Friday morning with the California DMV, which regulates driverless testing, and Tesla has not yet applied for the necessary permits. (A spokesperson did tell me the DMV met with Tesla to discuss the company’s plans to test autonomous vehicles in the state.)

So, instead Tesla has launched a ride-hailing service in the Bay Area. And yeah, users keep calling these robotaxis. 

To be clear, while folks — including Musk’s brother and Tesla board member Kimbal Musk — may refer to these as robotaxis, they are not driving autonomously. (And if they are, it would be a violation of current regulations.) Again, Tesla does not currently have the permits to do anything beyond pay its own employees to use its fleet of EVs to drive people around the Bay Area. No autonomous driving in any way, shape, or form. You can read a recent explainer here that will take you through all of the various permits Tesla needs.

This ride-hailing launch has many folks wondering, what gives? My answer: optics.

A little bird

Recent chatter among some little birds suggests that the National Automobile Dealers Association is focusing its efforts on VW Group spinout Scout and the EV company’s plans for direct sales. The dealership industry group has opposed the direct sales model before. But unlike direct-sales adopters Tesla, Rivian, and Lucid, Scout is attached to a legacy automaker with a long-established dealer network.

Got a tip for us? Email Kirsten Korosec at kirsten.korosec@techcrunch.com or my Signal at kkorosec.07, Sean O’Kane at sean.okane@techcrunch.com or Rebecca Bellan at rebecca.bellan@techcrunch.com. 

Deals!

Think back to the fall of 2023. Logistics company Flexport had captured the attention of Silicon Valley, in part because of founder Ryan Petersen’s fallout with ousted CEO Dave Clark and because of its acquisition of Convoy, the former freight tech unicorn that had just shut down. 

Here’s an update. Flexport has now sold the Convoy platform to DAT Freight & Analytics. The terms were undisclosed, although the company said it had delivered a “massive return on investment for Flexport.” Reporting from Axios’ Dan Primack suggests that, yes, indeed “massive return” is an appropriate description. 

Flexport never disclosed exactly what it had paid for Convoy’s tech, although reporting at the time put the figure at $16 million — a fraction of the unicorn’s previous valuation of $3.8 billion. Primack reported this week that Flexport sold the Convoy platform for $250 million. 

Other deals that got my attention this week …

AIR, an Israel-based startup developing eVTOLs, raised $23 million in a Series A funding round led by Entrée Capital, with participation from existing backer Dr. Shmuel Harlap, an early investor in Mobileye. 

LG Innotek, the components and materials subsidiary of South Korea’s LG Group, is investing up to $50 million in Aeva, acquiring an equity stake of about 6% in the U.S. lidar company. The investment is part of a broader manufacturing partnership between the two companies and marks Aeva’s push into consumer electronics, robotics, and industrial automation. 

Notable reads and other tidbits

Aurora shared some notable progress in its Q2 earnings report. The autonomous vehicle tech company has three self-driving trucks operating commercially between Dallas and Houston, logging more than 20,000 driverless miles by the end of June. It is piloting driverless trucks on a 15-hour route from its terminal in Fort Worth, Texas, to a new terminal in Phoenix and is operating at night. CEO Chris Urmson told me what is next on his list.

Elon Musk’s tunnel-digging company The Boring Company plans to build a 10-mile “loop” that will connect Nashville’s downtown and its convention center and airport. Important side notes: This will be funded by The Boring Company and its private partners, which are not named. And this is the start of a public process to evaluate routes, which means work won’t be starting right away.

Ford plans to reveal more information about its upcoming low-cost electric vehicles at an event in Kentucky on August 11. And, as senior reporter Sean O’Kane notes, the company is talking a very big game.

Joby Aviation has signed an agreement with defense contractor L3Harris Technologies to “explore opportunities” to develop a new aircraft class — specifically, a gas-turbine hybrid vertical take-off and landing (VTOL) aircraft that can fly autonomously — for defense applications. The gas-turbine hybrid VTOL will be based on Joby’s current S4 aircraft platform. This isn’t a contract, per se. But it does mark progress in Joby’s bid to go to market in the defense and consumer sectors.

While Uber continues to partner with every autonomous vehicle company under the sun, Lyft is trying to make its own deals. Lyft said it will add autonomous shuttles made by Austrian manufacturer Benteler Group to its network in late 2026. The shuttles will be deployed in partnership with U.S. cities and airports.

Waymo plans to launch a robotaxi service next year in Dallas, and this time it is partnering with Avis Budget Group to manage its fleet of autonomous vehicles. In other Waymo happenings, two of its robotaxis crashed into each other at one of the company’s staging lots in Phoenix this week, proving that the company’s rapid expansion into new cities does not mean it has ironed out all the kinks. Waymo says it’s investigating the cause.

Chinese AV company WeRide received an autonomous driving permit from Saudi Arabia. The company holds similar permits in China, the UAE, Singapore, France, and the United States.

One last thing

Waymo co-CEO Tekedra Mawakana will join the Disrupt Stage for a wide-ranging conversation on the current state of AVs — and where the industry goes from here. TechCrunch Disrupt 2025 will be held October 27–29 at Moscone West in San Francisco.