Tesla’s long-awaited robotaxis rolled out for the first time on roads in Austin, Texas on Sunday.
In videos shared by Tesla on X, a small group of invited analysts, influencers and shareholders were shown participating in paid rides.
The small number of vehicles deployed had a human safety operator in the passenger seat, according to reports.
Analysts said the “low-key” robotaxi launch highlights Tesla’s big bid to compete with existing self-driving taxi operators in the US and China, as the sector grows.
Musk congratulated Tesla’s artificial intelligence and chip design teams on the launch in a post on X, writing that it was “culmination of a decade of hard work”.
“Both the AI chip and software teams were built from scratch within Tesla,” he added.
Ahead of Sunday’s pilot, he said in a jokey post that customers would pay “a $4.20 flat fee” for rides in Tesla robotaxis.
The small fleet of vehicles do not yet include the Cybercab – the futuristic car concept unveiled by Musk at Tesla’s “We, Robot” event in October – which Musk says will be the company’s driverless taxi in the future.
Instead it was existing Tesla vehicles, with a small “robotaxi” logo on the side, that took to Austin streets on Sunday.
Forrester analyst Paul Miller described the launch of the pilot as a “low-key affair”.
“As expected, only a handful of vehicles are available right now, they only operate in a small part of the city and there’s a safety driver in the vehicle in case it encounters situations it cannot handle autonomously,” he said.
But he added that the move highlighted the company’s ambitions to rival firms already offering driverless ride-hailing in the US and around the world.
Waymo, owned by Google parent Alphabet, along with Amazon’s Zoox, already offer self-driving taxi rides in Austin, as well as in San Francisco, California, and Phoenix, Arizona.
Meanwhile Uber, which recently announced it would bring forward trials of driverless taxis in the UK, has partnered with Chinese firms Pony.AI, WeRide and Momenta to bring autonomous ride-hailing to more cities outside the US and China.
Mr Miller said Tesla is betting that the volume of cars it delivers, data it has from vehicles and cheaper, camera-based self-driving tech “will allow it to come from behind and pull ahead” of rivals.
But he added that its ability to compete, particularly with Chinese firms dominating the sector, will depend on improvement of its advanced assisted driving system – which Tesla calls Full Self-Driving (FSD).
FSD has been subject to probes by US auto regulators and complaints from customers about its safety.
“If that FSD system isn’t a big leap forward from the driver assistance tech that buyers of regular Teslas already use in some countries, it’s going to need a lot of remote monitoring and control from an army of teleoperating safety drivers,” Mr Miller said.
“This will add to Tesla’s costs, and offer plenty of opportunities for embarrassing videos of Tesla robotaxis doing weird things.”
It comes as a number of operators eye the growing market for driverless taxis.
German car maker Volkswagen believes it could swell to €450bn in size by 2035, according to a recent report by Fortune magazine.
But the rise of self-driving cars and ride-hailing services on US roads has also been met with some scepticism over their safety.
Tesla said in a post on its X account on Monday that its robotaxi service “will greatly increase safety for vulnerable road users, such as pedestrians & cyclists”.
The US National Highway Traffic Safety Administration is reportedly reviewing information from Tesla regarding the safety of its self-driving taxis in bad weather, following a request in May.
General Motors pulled the plug on its Cruise robotaxi project in December after accidents involving its self-driving vehicles.
The company also cited the increasingly competitive market as a reason for suspending its ride-hailing initiative.