Tesla goes a step closer to ride-hailing with California permit

Tesla Inc. was granted approval in California to begin carrying passengers in its vehicles as Elon Musk’s company takes steps toward offering ride-hailing services.

The California Public Utilities Commission said in an emailed statement Tuesday that it approved the electric vehicle maker’s bid for what’s known as a transportation charter-party carrier permit. That will allow Tesla initially to drive its employees on a prearranged basis in company-owned vehicles, before later transporting members of the public.

Bloomberg reported last month that Tesla had applied for the permit as it works to launch a promised ride-hailing business, opening a new revenue stream and putting it in competition with the likes of Uber Technologies Inc., Lyft Inc. and Waymo. Musk has said Tesla would roll out driverless ride-hailing in Austin in June and aimed to offer it in California by the end of the year, without offering specific details.

The new permit is separate from those used by ride-hailing companies, which offer similar services for compensation using smartphone apps. The approval also does not allow Tesla to offer rides in autonomous vehicles, the California commission said.

Tesla’s shares reversed postmarket declines on news of the permit, rising 0.4% as of 4:55 p.m. in New York.

Musk said on a call with investors late last year that the company was already offering transportation to employees in the Bay Area with a safety driver using a Tesla-developed app.

The company didn’t immediately respond to a request for comment.

A ride-hailing business with human drivers could pave the way for Tesla eventually to introduce robotaxi service in California, where Waymo already operates a driverless fleet in San Francisco.

Tesla has made a big bet on autonomous driving, robotics and artificial intelligence as the primary business of selling EVs struggles. The company is facing a significant sales slump thanks to its ageing lineup and a growing backlash to Musk’s close affiliation with President Donald Trump.

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