Last week $Tesla (TSLA.US)$ CEO Musk 'drew big pies' at the first press conference of the self-driving taxi business Robotaxi, expecting to start production of the prototype car Cybercab without steering wheel and pedals in 2026, and by 2027, it will be produced in very high volume.

Unfortunately, even if dreams are grand, they have to face the harsh reality. If Cybercab wants to be mass-produced, the U.S. government's laws pose a major obstacle. Bloomberg reported that car manufacturers must first obtain approval from the National Highway Traffic Safety Administration (NHTSA), the U.S. regulatory agency, to allow such vehicles to be on the road if they are produced without a steering wheel or other control devices required by U.S. automotive safety regulations. Even if Tesla can overcome this barrier, only a few thousand self-driving taxis can be put on the road each year.

In cases where auto manufacturers are exempted, NHTSA typically allows 2500 vehicles on the road each year. This means that even if Cybercab hits the road, it will ultimately be just a niche automotive product. After all, Tesla delivered about 1.81 million cars globally last year, and the delivery volume announced earlier this month for the third quarter was about 0.463 million cars. Based on these figures, the sales volume that Robotaxi business might be approved for after production in the future is almost negligible within Tesla.

On Tuesday, October 15, Eastern Time, NHTSA stated that Tesla has not applied for an exemption for Cybercab to be on the road. So far, NHTSA has only approved a similar application in 2020, allowing the startup company Nuro to deploy a low-speed, self-driving delivery vehicle for both cargo and passenger transportation.

In addition to strict NHTSA approvals, regulations in various U.S. states on car highway driving also pose obstacles for Tesla. In Tesla's home state of California, Google's sister company Waymo and General Motors' self-driving subsidiary Cruise have already deployed self-driving taxis in the region. Tesla has not yet applied for the necessary autonomous driving testing or deployment permits in the state.

A spokesperson for the California Department of Motor Vehicles stated that Tesla has had a permit to test autonomous driving technology in the presence of a human safety driver since 2015. However, the company has not reported the use of this technology since 2019.

Mary Cummings, an engineering professor at George Mason University in Virginia in the USA and former NHTSA consultant, commented that for Tesla, obtaining state licenses is a bigger issue. Before providing testing data to California, Tesla 'will need several more years to obtain the necessary permits in California.'

After last week's Robotaxi Day event, there was a reference from Wall Street to some media comments stating that when people came back to reality from excitement, they found that Tesla had only delivered an empty promise. Musk 'almost did not provide any new details on Tesla's self-driving taxi business model, such as forecasts on revenue or market size.'

Some comments pointed out that Musk avoided regulatory issues during the event.

"Musk did not elaborate on how Tesla would address regulatory barriers to deploying self-driving cars, only mentioning that the company would offer the service where permitted. Due to some accidents involving self-driving cars, regulatory authorities have conducted stricter reviews of related companies."

There are also comments stating that the event 'did not have much discussion on how the company plans to invest in the service, regulatory obstacles faced, and details on how they plan to overcome them.'

Editor/Somer