Elon Musk says Tesla will open ride-hailing to the public in two states next year

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Elon Musk on Wednesday said his company plans to soon roll out a ride-hailing service similar to Uber (UBER-0.68%) in two states friendly to self-driving cars.

“We’ve been thinking about this for a long time…we do expect to roll out ride hailing in California, Texas next year,” Musk said during Tesla’s (TSLA-2.01%) third-quarter earnings call.

The Tesla CEO added that he’s unsure about securing approval in California, where regulators tend to take longer to approve the use of such technology. But, Musk thinks a ride-hail network will “definitely” be available in Texas — where Tesla is headquartered — next year, along with potentially “some other states.”

Later in the call, after another executive reassured investors that Tesla will follow each states’ respective guidelines, Musk said that “we think” driverless Teslas will be doing paid rides “sometime next year.”

That’s one of the most optimistic timelines Musk, a notorious over-promiser, has presented investors with.

Just weeks ago, he said Tesla expects to get approval from those states to allow Model Y and Model 3 vehicles equipped with “fully autonomous unsupervised” Full Self-Driving mode next year. Tesla’s other vehicles — the Model S, Model X, and the Cybertruck — would get access later down the road, according to Musk.

Tesla has been operating its own rideshare network for employees at its facilities in California’s Bay Area using current models and a driver at the wheel, executives said Wednesday. Palo Alto, California, is in talks to use Tesla’s newly-unveiled robotaxi in its rideshare program, but the company doesn’t plan to begin making those cars until 2026.

Many valuations of Tesla’s current and future stock price account for a planned robotaxi network, which Musk has called a “combination of Airbnb and Uber.”

“This is huge!” Ark Investment Management Director of Investment Analysis Tasha Keeney wrote on X. “[T]his is a confirmation that they can start a ride-hail service as well. Autonomous ride-hail should unlock a $10T+ opportunity,” she added.

But getting regulatory approval — especially in California — is expected to be a challenge, given Tesla’s myriad of litigation and investigations into its technology.

Federal regulators just last week launched a new investigation into Tesla’s technology after one of its vehicles equipped with Full Self-Driving fatally struck a pedestrian. The National Highway Traffic Safety Administration has opened at least five investigations into Tesla.

In April, the NHTSA said it linked Tesla’s Autopilot software to more than 200 crashes and 29 deaths and opened more than 50 special crash investigations into Tesla vehicles thought to be linked to Autopilot. The Wall Street Journal (NWSA-0.86%) in July reported that more than 1,200 Autopilot-related crashes have been reported to the NHTSA since 2021.

Tesla has also been accused of false advertising by California’s Department of Motor Vehicles and investigated by the state attorney general’s office over its marketing practices related to its tech. The Department of Justice has opened a separate investigation into Musk and Tesla for their claims about Autopilot.

Tesla is facing legal action in both federal and state court over incidents related to its driver assistance technology. One of the latest lawsuits involves Landon Emrby, who died in 2022 after a Model 3 enabled Autopilot and struck the back of his motorcycle In April, the Austin, Texas-based automaker settled with the family of 38-year-old Apple engineer Walter Huang, who crashed into a barrier on a California highway in 2018 while using Autopilot.

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