Elon Musk's Tesla Inc. TSLA has been granted its first permit in California, a crucial step towards launching a robotaxi service.

What Happened: The California Public Utilities Commission (CPUC) has approved Tesla’s application for a transportation charter-party carrier permit (TCP), which allows the company to manage a fleet of vehicles for pre-arranged trips, according to a Reuters report.

This permit does not authorize Tesla to provide autonomous rides or operate a public ride-hailing service yet, according to a CPUC spokesperson.

Elon Musk has shifted focus to robotaxis amid slowing sales, promising driverless services in California and Texas this year. In October, Tesla introduced the Cybercab, a concept robotaxi without steering or pedals.

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The TCP permit was applied for in November 2024, but Tesla has not yet pursued other necessary permits from the CPUC or the California Department of Motor Vehicles (DMV).

Currently, Tesla holds a DMV permit to test autonomous vehicles with safety drivers. A DMV spokesperson confirmed Tesla has not applied for additional permits required for fully autonomous operations. Tesla has not commented on the permit or future applications.

Why It Matters: Tesla’s move to secure a permit for its robotaxi service comes at a time when the company is facing challenges in its core electric vehicle market.

Tesla’s application for the TCP permit was seen as a strategic pivot to tap into the ride-hailing market, as the company deals with declining EV sales. This decline was highlighted by a significant drop in California sales, reaching a four-year low, which some attribute to CEO Musk’s political actions.

Despite these challenges, Tesla remains focused on its vision for a fully autonomous ride-hailing fleet, although initial operations may involve human drivers.

The company’s plans for a robotaxi service in Austin by June were described as a “bullish” development by Tesla bull Gary Black, who emphasized the significance of the planned launch.

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

Photo courtesy: Tesla