Austin is known for live music, Texas’ premier public university and being home to tech companies. It is also becoming a laboratory for autonomous vehicles.
Driverless Waymo taxis, owned by Google’s parent company, regularly drop off diners at Austin’s famous barbecue joints. Box-shaped, four-wheeled robots operated by Avride, a start-up working with Uber Eats, deliver Thai takeout to customers downtown. Zoox, owned by Amazon, and Volkswagen are separately testing autonomous taxis here.
Tesla, the electric car company based in Austin, recently joined the party, rolling out self-driving Model Ys ahead of a taxi service that is expected to begin offering rides as soon as Sunday. The vehicles, which the company calls Robotaxis, are part of an audacious effort by Elon Musk, Tesla’s chief executive, to leap ahead of Waymo, which dominates a nascent business that someday could be worth tens of billions of dollars and perhaps much more.
But the busy streets of Austin show that Tesla will face significant competition and other challenges. It will have to engage in painstaking experimentation to perfect its technology, which some autonomous-driving experts have criticized for having fewer safeguards than those operated by Waymo and other companies.
Also, Tesla is starting from behind. Waymo has been driving paying passengers for years in Phoenix, San Francisco and Los Angeles, and started its commercial service in Austin in March in partnership with Uber.
A small fleet of Tesla Robotaxis will begin carrying passengers in Austin on June 22, Mr. Musk said on X last week but added that the company may delay the start of the service. But analysts expect the cars will be available only to company employees or invited guests. The service will probably not be available to the general public for several months, analysts said.
Tesla is adapting its most advanced driver assistance software, already offered as an option on the cars it sells, to operate without human intervention. If this approach works, the company could quickly roll out driverless taxis around the world.
Mr. Musk has said a software update could allow hundreds of thousands or even millions of existing Teslas to operate as autonomous taxis, making cheap driverless rides ubiquitous.
But the approach Tesla is taking is unusual. Waymo and other companies working to offer self-driving taxi services have been developing their technologies for years, painstakingly mapping streets and training their software to avoid hitting pedestrians, cyclists, garbage trucks, fire engines and all manner of other things found on public roads. Some experts are skeptical that Tesla can swiftly overtake them.
“FSD is an immature system,” said Matthew Wansley, a professor at Cardozo School of Law in New York, referring to what Tesla calls its Full Self-Driving (Supervised) software.
Tesla did not respond to a request for comment. Mr. Musk has long maintained that Tesla’s driver assistance software is safer than human drivers. “We are being super paranoid about safety,” he said on X last week.
Others are moving more slowly. Volkswagen, which is testing self-driving ID.Buzz electric vans in Austin, plans to begin transporting paying passengers in Los Angeles late next year in partnership with Uber.
But the cars at first will have safety drivers aboard, ready to intervene if the car gets into trouble. Volkswagen doesn’t expect to offer fully driverless rides until 2027, said Katrin Lohmann, who overseas the German carmaker’s autonomous driving unit in the United States. “We are approaching it very deliberately,” she said.
Mr. Musk has been predicting for almost a decade that fully autonomous cars are just around the corner and will make Tesla the most valuable company in the world by far. Many investors have bought into his vision and bid up the company’s valuation far above that of other automakers.
One of those believers is Sam Korus, director of research, autonomous technology and robots, at ARK Investment Management. By using data collected from millions of Teslas already on the road, the company will be able to quickly improve its software using artificial intelligence, he said. Tesla shares are among the largest holdings in ARK’s funds.
Tesla will also be able to mass-produce self-driving taxis much faster and more affordably than other companies, Mr. Korus said. “Having a structurally less expensive vehicle should mean it’s extremely difficult to compete with Tesla,” he said.
Austin is attractive for autonomous technology companies in part because Texas imposes fewer regulations than states like California. Among other things, Texas forbids local governments to exert control over the use of autonomous vehicles in their cities and towns.
Some residents are alarmed. Self-driving technology is advancing quickly without enough thought about what it will mean for society, said Adam Greenfield, advocacy director for Safe Streets Austin, a residents’ group.
“The history of disruptive technology is often that we let it wash over us and later on we go back and try to deal with the downside,” Mr. Greenfield said.
Mr. Musk’s involvement adds an extra element of tension even in a city where Tesla employs more than 20,000 people and helps power the local economy. Tesla’s factory in Austin produces the Model Y and Cybertruck.
On Thursday, a small group of protesters gathered in an Austin park and inflated a blowup effigy of Mr. Musk. Blythe Christopher was holding a sign that said, “We don’t need no stinkin’ Robotaxis.”
“I’m very afraid of what it means for them to overtake our downtown,” Ms. Christopher said.
Another challenge for Tesla is that its self-driving system is under investigation by federal officials.
The National Highway Traffic Safety Administration is looking into whether Tesla’s technology was responsible for crashes in conditions where the road was obscured by fog, dust, bright light or darkness. One crash led to the death of a pedestrian.
Waymo and Zoox vehicles in Austin bristle with sensors that use lasers and radar to avoid obstacles and people. Volkswagen’s experimental ID.Buzz has 13 cameras, nine laser-based sensors and five radar sensors. Tesla’s system relies solely on cameras, which are cheaper but “can be a problem in low-light conditions,” said Kara Kockelman, a professor of transportation engineering at the University of Texas at Austin.
Many investors had expected Mr. Musk’s support of President Trump to ease regulatory pressure on Tesla. But that appears less likely after Mr. Musk and Mr. Trump fell out and attacked each other on social media this month. The investigation remains open, the federal traffic safety agency said.
NHTSA has also presented Tesla with a long list of questions about the Austin project, including how the cars will be monitored remotely and how the company will intervene if the cars can’t cope with a situation. Tesla has until Thursday to answer.
In addition to the federal investigation, Tesla has been sued by the families of people who were killed in crashes involving Teslas operating with autonomous features. The families have claimed that the company’s cars were at least partly responsible for the deaths. Tesla has settled some of those cases.
Near the protest in Austin last week, the Dawn Project, a group that is highly critical of Tesla and is financed by a technology entrepreneur, Dan O’Dowd, gave journalists a demonstration designed to highlight the risks of the autonomous software. A Model Y with the latest version of Full Self-Driving software blew past a parked school bus with its stop signals deployed and crushed a dummy dressed to look like a small child.
“I’m worried about how safe it is,” said Krishna Patwari, a retired engineer who was out for a walk with his two young grandsons one afternoon last week. “Companies always cut costs for the sake of profits.”
But Mr. Patwari said he had an open mind and added that Tesla makes “great cars.”
At least some Austin residents seem to accept autonomous vehicles. A few hours after the protest, a wheeled autonomous robot operated by Avride glided away from a sidewalk parking spot near restaurants offering Thai food, sushi and burritos. The robot’s digital display blinked heart images as it navigated past pedestrians.
Avride robots are also making deliveries in Jersey City, N.J., on the campus of Ohio State University, and in South Korea and Japan. Avride is also developing autonomous taxis in Austin with Hyundai, the South Korean carmaker.
“How cute!” exclaimed a woman as she encountered the delivery robot on a crosswalk. Others barely seemed to notice the small vehicles.
Jack Ewing covers the auto industry for The Times, with an emphasis on electric vehicles.
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