TechCrunch Mobility: Tesla’s Ride-Hailing Gambit Faces Regulatory Hurdles

Welcome back to TechCrunch Mobility — your central hub for news and insights on the future of transportation.

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. Its driver-assistance system, Full Self-Driving Supervised, which requires hands on the wheel and the driver ready to take over, is considered among the most capable on the market today. However, to Musk, the ultimate illustration of an AI and robotics company is self-driving cars and humanoid robots, neither of which exist at any scale currently.

Tesla’s first notable step toward that goal was in June when it launched a limited robotaxi service in Austin, Texas. These Robotaxi-branded vehicles, hailed via an app by invited customers, have a Tesla employee in the front passenger seat. This is still far from Musk’s original vision of a “general solution” enabling Tesla owners to earn money by renting out their vehicles as a robotaxi service.

The clock is ticking, and Musk needs to show more progress or tease upcoming launches to keep shareholders content. This context perhaps explains why Tesla is embarking on this ride-hailing gambit in California.

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

However, the problem is that Tesla hasn’t even applied for the necessary permits to operate a robotaxi service. Checks with the California DMV, which regulates driverless testing, confirm Tesla has not yet applied for the required permits. A DMV spokesperson did mention that the department had met with Tesla to discuss the company’s plans for testing autonomous vehicles in the state.

Consequently, Tesla has launched a ride-hailing service in the Bay Area, with users increasingly referring to these vehicles as robotaxis.

It is important to note that while many, including Musk’s brother and Tesla board member Kimbal Musk, may refer to these vehicles as robotaxis, they are not driving autonomously. If they were, it would be a violation of current regulations. Tesla does not currently possess the permits for anything beyond having its own employees use its EV fleet to drive people around the Bay Area. There is no autonomous driving involved in any capacity. A recent explainer details the various permits Tesla requires.

This ride-hailing launch has many people questioning the strategy. The likely answer: optics.

Recent industry chatter suggests that the National Automobile Dealers Association is focusing its efforts on VW Group spinout Scout and its plans for direct sales. The dealership industry group has previously opposed the direct sales model. Unlike direct-sales adopters like Tesla, Rivian, and Lucid, Scout is linked to a legacy automaker with an established dealer network.

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Think back to the fall of 2023. Logistics company Flexport captured Silicon Valley’s attention partly due to founder Ryan Petersen’s dispute with ousted CEO Dave Clark, and due to its acquisition of Convoy, the former freight tech unicorn that had just ceased operations.

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

Flexport had not disclosed the exact price paid for Convoy’s technology, though reports at the time placed it at $16 million—a fraction of the unicorn’s prior valuation of $3.8 billion. Primack reported this week that Flexport sold the Convoy platform for $250 million.

Other notable deals this week include:

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. This investment is part of a broader manufacturing partnership and marks Aeva’s expansion into consumer electronics, robotics, and industrial automation.

Aurora shared notable progress in its Q2 earnings report. The autonomous vehicle tech company has three self-driving trucks operating commercially between Dallas and Houston, logging over 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 discussed what is next on his agenda.

Elon Musk’s tunnel-digging company, The Boring Company, plans to build a 10-mile “loop” connecting Nashville’s downtown, convention center, and airport. This project will be funded by The Boring Company and its private partners, who are not named. This initiative marks the beginning of a public process to evaluate routes, meaning work will not commence immediately.

Ford plans to reveal more details about its upcoming low-cost electric vehicles at an event in Kentucky on August 11. Senior reporter Sean O’Kane notes that the company is making ambitious claims.

Joby Aviation has signed an agreement with defense contractor L3Harris Technologies to explore opportunities for developing a new aircraft class—specifically, a gas-turbine hybrid vertical take-off and landing (VTOL) aircraft capable of autonomous flight—for defense applications. This hybrid VTOL will be based on Joby’s current S4 aircraft platform. While not a formal contract, it represents progress in Joby’s strategy to enter both defense and consumer markets.

While Uber continues to partner with numerous autonomous vehicle companies, Lyft is pursuing its own deals. Lyft announced it will add autonomous shuttles manufactured by Austrian company Benteler Group to its network in late 2026. These shuttles will be deployed in partnership with U.S. cities and airports.

Waymo plans to launch a robotaxi service in Dallas next year, partnering with Avis Budget Group to manage its fleet of autonomous vehicles. In other Waymo news, two of its robotaxis were involved in a collision at one of the company’s staging lots in Phoenix this week, highlighting that rapid expansion into new cities does not necessarily mean all issues are resolved. Waymo is investigating the cause.

Chinese AV company WeRide has received an autonomous driving permit from Saudi Arabia, adding to its permits in China, the UAE, Singapore, France, and the United States.

Waymo co-CEO Tekedra Mawakana will participate in a discussion on the Disrupt Stage covering the current state of AVs and the industry’s future trajectory. TechCrunch Disrupt 2025 is scheduled to take place from October 27–29 at Moscone West in San Francisco.