Tesla's robotaxi rollout has stalled far short of the company's once-bullish promises, with executives now acknowledging that scaling the service city by city is far more complex than initially suggested. A year ago, CEO Elon Musk declared the network would expand at a "hyper-exponential rate" and reach half the U.S. population by the end of 2025. On Wednesday's earnings call, however, Musk and his team struck a noticeably more cautious tone as they explained why the service remains limited to just three cities with service often restricted to outlying neighborhoods.

Elon Musk

How Far Behind Is Tesla Compared to Waymo?

The gap between Tesla and Waymo's autonomous driving progress is stark. Tesla reported that paying customers have traveled 2.5 million miles in its robotaxi service, including 380,000 miles in rides without an in-vehicle safety monitor. By contrast, Waymo has logged more than 220 million autonomous miles through the end of March, underscoring the significant lead that Alphabet's self-driving unit holds in commercial deployment. This disparity highlights how Tesla's promised speed advantage has not materialized in practice.

Since launching a small robotaxi pilot in Austin in June 2025, Tesla has expanded to only a handful of other cities in Texas and Florida. An investor presentation in January promised expansion to seven metro areas by the end of June, including Dallas, Houston, Phoenix, Miami, Orlando, Tampa, and Las Vegas. However, up until Tuesday, Tesla had only launched in three of those cities: Dallas, Houston, and Miami, with service limited to outlying sections of Houston and Miami. The company announced on Tuesday that it was "now in Tampa and Orlando," but again, service areas were limited to less-trafficked neighborhoods outside city centers.

What Changed in Tesla's Strategy and Messaging?

Before the Austin launch, Musk had positioned Tesla's approach as fundamentally different from Waymo's. He argued that Tesla's technology is "a general solution that works anywhere," contrasting it with Waymo's more deliberate, city-by-city approach. On Wednesday's earnings call, however, Tesla executives walked back that narrative and delved into the specific details of scaling up robotaxi service in individual cities, essentially adopting the same methodical strategy they had previously criticized.

The shift in tone reveals the operational complexities that Tesla underestimated. Executives outlined several reasons for the slower-than-expected rollout:

• Regulatory Variation: Lars Moravy, Tesla's vice president of vehicle engineering, explained that "regulatory situations are different city by city" and that the company is expanding "city by city" to ensure it meets all regulatory requirements one at a time.
• Operational Challenges: CFO Vaibhav Taneja acknowledged there are "different kinks, not just on the software front, but on the operations front" that the company is trying to tackle.
• Controlled Scaling: Taneja stated the company wants to "sort these things out in a smaller fleet in a controlled manner" before going "really high in terms of deployment."

"Regulatory situations are different city by city. The reason we're expanding city by city is to make sure that we're meeting all of those one at a time," said Lars Moravy, Tesla's vice president of vehicle engineering.

Lars Moravy, Vice President of Vehicle Engineering at Tesla

When Wells Fargo analyst Colin Langan pressed executives on why the number of vehicles remains "in the dozens as opposed to hundreds," Tesla Vice President of AI Ashok Elluswamy responded that even with a few vehicles, "you can get a lot of miles out of them." He characterized the growth in robotaxi miles as "literally exponential," adding that "it's in the early part of the exponential. That's why it's hard for others to comprehend".

How Is the Market Reacting to Tesla's Slower Pace?

Wall Street has taken notice of the gap between Tesla's promises and its execution. Barclays analysts wrote earlier this month that Tesla's perceived advantage in robotaxis is its "ability to scale more rapidly," but instead it "has been seen by many investors as somewhat 'slow.'" Forrester analyst Paul Miller noted that Tesla's unsupervised robotaxi miles remain well below Waymo's, underscoring the lead Alphabet's self-driving unit holds in commercial deployment.

Tesla's stock has suffered as a result. The company trades at more than 166 times forward earnings estimates, far above the multiples of traditional automakers and Big Tech companies. The stock has fallen nearly 17 percent this year as of the last close and was down about 4 percent in premarket trading following the earnings call. Much of Tesla's valuation rests on the promise that robotaxis and its Optimus humanoid robots will one day become the company's primary revenue drivers.

Musk reiterated on Wednesday's call that Tesla is balancing the pace of expansion with safety, stating "we want to grow as fast as possible with robotaxi, without harm to anyone." However, Reuters testing of the robotaxi service in the weeks after the Dallas and Houston launches found long wait times, with sometimes no availability at all, suggesting that operational challenges extend beyond regulatory compliance.

The contrast between Tesla's initial vision and current reality underscores a broader lesson in autonomous vehicle development: scaling a robotaxi service requires far more than advanced software. It demands navigating complex regulatory environments, building reliable operations infrastructure, and earning public trust in each market. For now, Waymo's methodical, city-by-city approach appears to be winning the race in terms of actual deployment and miles driven.