Tesla Makes a Huge Move to Appease Regulators

Tesla appears to be bending to the will of regulators.

In a visible sign of its shifting posture from daredevil innovation to cautious compliance, Tesla this week relocated its robotaxi safety monitors, employees who supervise the autonomous software’s performance and can take over the vehicle’s operation at any moment, from the passenger seat to the driver’s seat.

Tesla’s Robotaxi service represents one of the company’s most ambitious and long-delayed projects.

First teased by Chief Executive Elon Musk in 2019, the autonomous ride-hailing fleet has been pitched as a cornerstone of Tesla’s future business model, potentially rivaling Uber and Lyft while generating recurring revenue from idle vehicles.

After years of shifting timelines and regulatory skepticism, the current rollout in Austin, Texas, marks the first real-world test of the service. Riders access the Robotaxi through the Tesla app, selecting trips in a way that mimics traditional ride-hailing platforms, but with a company-provided vehicle rather than their own.

For now, the program is confined to Austin, where Tesla relocated its headquarters in 2021, and it operates under strict state rules that require a safety driver in the car. While Tesla has ambitions to expand the service nationwide, the Austin launch offers a crucial test of whether its self-driving technology is ready for commercial scale, and whether regulators and the public are ready to embrace it.

Tesla’s new Robotaxi change, timed with the service’s expansion onto highways, was triggered by new state regulations and Tesla’s elevated ambitions.

Safety monitors are only in the driver’s seat for trips that involve highway driving, as a self-imposed cautious first step toward expanding to highways

— Tesla Robotaxi (@robotaxi) September 4, 2025

What does the law say?

Texas SB 2807, signed into law by Governor Greg Abbott and effective Sept. 1, 2025, establishes the Lone Star State’s first comprehensive regulatory framework for fully autonomous (driverless) vehicles.

The law creates a permit system administered by the Texas Department of Motor Vehicles, requiring companies to receive authorization before deploying AVs without human drivers on public roads. It also mandates that operators submit emergency-response plans for first responders, including communication protocols and coordination procedures.

The law marks Texas’s first serious attempt to regulate driverless vehicles. It introduces state permits, requires emergency-response planning, and centralizes AV oversight, signaling that the era of unfettered self-driving experimentation is coming to an end, even in tech-friendly Texas.

A tactical pivot

Tesla’s tweak, confirmed via social media and highlighted in a report by Investor’s Business Daily, reflects a strategic shift in how the company responds to Texas’s SB 2807, a new law requiring human oversight unless vehicles qualify under Level 4 or higher autonomy.

Level 4 autonomy, as defined by the Society of Automotive Engineers, represents “high automation,” where a vehicle can drive itself without human input under specific conditions, such as within a geofenced area or on designated routes.

Unlike Tesla’s current Full Self-Driving system, which is classified as Level 2 and requires constant driver supervision, a Level 4 vehicle can handle all aspects of driving from steering and braking to monitoring the environment, and does not need a human to intervene while operating within its programmed domain.

If conditions fall outside that scope, such as bad weather or leaving the mapped zone, the vehicle will either disengage or safely stop. This is the level used by Waymo and Cruise’s driverless taxis in places like Phoenix and San Francisco.

While Tesla’s autonomous driving feature is branded as “Full Self-Driving” (FSD), software remains at Level 2, requiring continuous human oversight.

The reposition shift aligns with Tesla’s broadened Austin deployment, across neighborhoods as well as commuter streets. In these new, higher-risk environments, having monitors in the driver’s seat reasserts human control and shields Tesla from more regulatory issues in the future.

Tesla hasn’t always played nice with regulators

Earlier this summer, Tesla secured a transportation network company (TNC) permit allowing it to operate a ride-hailing service in Austin, but the permit did not enable driverless operation. Lawmakers in Texas had urged Tesla to delay its launch until SB 2807’s provisions took effect. Tesla proceeded anyway, but added safety drivers into the operation to monitor the Robotaxis’ performance while on the road.

Critics, including state legislators, warn that public safety and transparency should come before spectacle. Wired quoted lawmakers questioning real-world testing outcomes and calling for clearer communication of safety protocols.

However, Musk claims that the safety drivers will be removed from the operation by the end of the year.

Market response and public skepticism

Tesla shares rose about 1% in premarket trading, buoyed by investor anticipation of the Robotaxi’s wider rollout and potential revenue upside.

Still, consumer sentiment remains cautious. A recent survey of over 8,000 Americans revealed that nearly 48% believe Tesla’s Full Self-Driving should be illegal, with strong preference for systems using both cameras and LiDAR, something Tesla deliberately excludes from its tech stack, relying instead on just cameras.

Tesla’s Robotaxi is inching forward, now legally and strategically safer, but still under watch. The safety driver repositioning may seem minor, yet it epitomizes Tesla’s precarious balancing act: Pursuing autonomy under a lens of scrutiny, where every technological advance must navigate the twin pressures of regulator caution and public opinion.

Tesla is still a recall leader

Since 2009, Tesla has issued at least 83 recall orders, according to BRC Legal. Roughly a third were resolved via remote software patches, while the remainder required physical fixes. No other U.S. automaker has leaned as heavily on digital updates, but few have amassed as many recalls relative to their fleet size.

The volume is staggering. In 2024 alone, Tesla recalled more than five million vehicles across 15 bulletins, according to Motor1. That included two of the company’s largest-ever actions: one covering 2.19 million vehicles with dashboard warning-light font issues, and another affecting 1.85 million cars with hoods that might not latch properly.

While other automakers also struggled with quality issues last year, Tesla led the nation in total vehicles affected by recalls, edging out General Motors and Ford, data compiled by Autoblog show.

Tesla’s recall history has featured spikes in certain years. In 2022, the company set a record with 19 recalls, including seatbelt alarms, touchscreen failures, and camera visibility glitches. The following year saw a sharp drop, with about 440,000 vehicles recalled, a decline from the nearly 3.8 million affected in 2022, according to InsideEVs

Tesla’s newest models are not immune. Earlier this year, nearly 4,000 Cybertrucks were recalled.