Tesla Robotaxis Are Big on Wall St. but Lagging on Roads

Shares of Tesla have hit new highs on optimism about the company’s self-driving taxis. But experts say Tesla is far behind Waymo, which has a big head start.

Tesla’s share price hit a record this month in part because many investors believe promises that the carmaker is poised to dominate the emerging market for driverless taxis worth trillions of dollars.

But a visit to Austin, Texas, where Tesla is operating a small fleet of autonomous cars, quickly makes clear that the company is entering a heated race and has a lot of catching up to do.

Tesla has deployed about 30 of its Robotaxis here, according to a website that tallies sightings, since it started its service in June. By contrast, Waymo, a division of Alphabet, Google’s parent company, began its service in Austin in March and said it had about 200 vehicles on the road. That company offers paying rides in four other cities and has more than 2,500 vehicles in total.

This month at least one Tesla was spotted in Austin driving without anyone inside. But each of the Tesla cars that carry paying passengers has a person in the car monitoring it. All the Waymos ferrying passengers in Austin operate without human monitors.

“I’ve never seen a Robotaxi in Austin,” said Kara Kockelman, a professor of engineering at the University of Texas at Austin who studies transportation. “Waymos are around all the time.”

The difference between Tesla and Waymo is not surprising. Google began a self-driving car project in 2009. That project would became Waymo and start its first commercial taxi service in 2018 in Phoenix, giving it a many-year head start.

While Tesla’s efforts began later, it has also been working on the technology for years. The company’s chief executive, Elon Musk, said in 2016 that its cars would be able to drive themselves across the country on their own within two years. And in 2019, Mr. Musk predicted that the company would have one million Robotaxis on the road by the middle of the next year.

The big questions for Tesla and its investors are can the company catch up and how long will that take?

Tesla did not respond to a request for comment.

Waymo said this month that it had completed 14 million paid rides this year. In addition to Austin and Phoenix, the company transports customers in San Francisco, Los Angeles and Atlanta and has announced plans to expand to 20 more cities in 2026, including Dallas, Washington, Miami and London.

Tesla also offers paid rides in San Francisco with human monitors in the driver’s seats. But the company seems unlikely to live up to Mr. Musk’s October prediction of operating in eight to 10 urban areas before Jan. 1.

“Tesla continues to be way behind Waymo,” said Raj Rajkumar, a professor at Carnegie Mellon University who is a pioneer in the development of autonomous technology.

Famous for barbecue joints, live music and technology start-ups, Austin has become what Lewis Leff, a city official responsible for transportation, calls a “petri dish” of autonomous technology.

Zoox, a unit of Amazon, tested vehicles in Austin before it began offering commercial service recently in Las Vegas and San Francisco. Zoox uses a rectangular vehicle with sliding doors and no steering wheel. Waymo uses a Jaguar I-Pace sport utility vehicle, and Tesla uses its Model Y.

This month, Uber began testing a driverless service in Dallas with Avride, an autonomous driving company based in Austin. Elsewhere in Texas, Aurora and other firms are testing driverless trucks.

The self-driving taxi business is very important to Mr. Musk. Tesla’s shareholders recently approved a compensation plan that could ultimately give him shares worth $1 trillion. It requires him to oversee commercial deployment of one million Robotaxis.

Investors are used to Mr. Musk making promises that he does not keep until much later, if at all. Some of them would prefer that Tesla take a cautious approach, said Tom Narayan, an analyst at RBC Capital Markets in London who follows the company.

“The investors I’m talking to are not that concerned as long as we’re moving in the right direction,” Mr. Narayan said.

Mr. Musk has often said that while Tesla got a slower start it will overtake Waymo and other competitors once it perfects its technology — an argument many investors buy. Millions of Teslas already on the road have the hardware they need to become self-driving taxis, he has said, and need only a software update.

“We’re really just at the beginning of scaling quite massively Full Self-Driving and Robotaxi and fundamentally changing the nature of transport,” he said in October.

In theory, Tesla could also offer cheaper rides than other companies because its self-driving system relies solely on cameras to detect and avoid other vehicles, people and objects. Companies like Waymo and Zoox use radar and laser sensors in addition to cameras, making their vehicles more expensive.

But many auto and safety experts say Tesla’s choice to use only cameras could make it hard for the company to catch up to Waymo by depriving it of sensors that can make cars operate better. Unlike radar or laser sensors, cameras struggle to see through fog, may be fooled by glare and have other limitations.

“I’m still deeply skeptical that Tesla is all that close in terms of building a real automated driving system,” said Matthew Wansley, a professor at Cardozo School of Law in New York who has worked for an autonomous driving start-up.

In addition, some experts said, the cost of radar and laser sensors, once thousands of dollars, has fallen significantly and no longer puts other companies at a significant financial disadvantage to Tesla.

“I don’t see it being a meaningful differentiator in terms of the cost to the consumer,” said Christian Gasparic, a partner with the consulting firm Kearney’s transportation practice in Dubai, United Arab Emirates.

Some analysts also doubt whether driverless taxis will generate trillions of dollars of revenue, as Mr. Musk has predicted, or be very profitable. For revenue to even reach hundreds of billions of dollars, many people would have to give up their personal vehicles in favor of riding in taxis, which is unlikely anytime soon, said Michael Tyndall, an analyst at HSBC.

Other costs beyond sensors will also limit profits for companies in this business. The cars have to be monitored by people in control centers who can deal with problems. Staff will be needed to clean and maintain cars.

“There is quite a lot of overhead which is not talked about,” Mr. Tyndall said.

Transportation officials in many cities are bracing themselves for the arrival of driverless vehicles, which could make congested urban areas more difficult to manage.

“The transportation network has become a lot more complicated,” Mr. Leff, Austin’s assistant director of transportation operations, said in an interview at City Hall.

No self-driving system is flawless. Both Tesla and Waymo vehicles have been involved in minor accidents in Austin, city officials said, noting that the self-driving cars were not always at fault. Waymos have driven past school buses dropping off or picking up children, although there have not been any injuries.

Waymo noted that it had recalled the vehicle software after learning of the school bus problems and worked with Austin officials to improve the technology.

A blackout in San Francisco over the weekend exposed another glitch. The power outage brought the company’s vehicles to a halt at darkened traffic signals, snarling traffic.

Self-driving taxis do not seem to understand hand signals and have been known to ignore police officers or emergency workers trying to direct traffic away from an accident.

“We’ve had a lot of issues with the Waymos not recognizing what an officer is trying to get them to do,” William White, an Austin police lieutenant responsible for traffic enforcement, said in an interview. There have been some close calls, he added.

Waymo said it had made efforts to train police and emergency workers on how to deal with its vehicles. At the same time, Waymo said in a statement, it has made “great progress” in teaching the vehicles to understand hand signals.

Texas became a popular place for Waymo, Volkswagen and other companies to test autonomous technology because the state has imposed few restrictions. But this year the Legislature required companies to get permission from the Department of Motor Vehicles to operate. That provision takes effect at the end of May.

Officials were concerned that some companies were moving too quickly. “It’s not ‘Move fast and break things and get to market,’” said Darran Anderson, senior director of strategy and innovation at the Texas Department of Transportation. “It’s deliver a quality solution that is safe for the public.”

During four rides I took in Austin, Tesla Robotaxis performed well but not perfectly. For reasons that weren’t clear, two of the vehicles had safety monitors in the driver’s seats and two had monitors in the passenger seats. The drivers said they could talk about the weather but were not allowed to discuss their work.

Once, a Robotaxi drove through an intersection as the light was turning from yellow to red, a questionable maneuver, but one that some humans would also make. On another occasion, a Robotaxi dropped me a 10-minute walk from a destination.

Frequently, the Robotaxi app indicated that there were no vehicles available, or that there would be a long wait. But the rides were cheap. A 20-minute trip across Austin cost $5.34.

While there are still many opponents to self-driving taxis, some Austin residents like Scotty Reiss, the founder of the website A Girls Guide to Cars, consider them safer than human-driven ones.

“If I could put my young daughter into an autonomous driving car,” she said, “I feel so much safer.”

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