Why Elon Musk Can’t Legally Sell The Tesla Cybercab As Promised

Forbes

Alan Ohnsman, Forbes Senior Editor joins Forbes Talks to discuss his latests reporting on Elon Musk’s newest major setback: the Tesla Cyber Cab. Alan talks about the regulatory failure of Musk's autonomous vehicle vision, which legally cannot be sold as promised due to untouched safety standards. He also discusses the high-stakes issue of founder behavior, highlighting how Musk’s public attacks on key officials could jeopardize crucial government approvals needed for the company's future.  Read the full story on Forbes: https://www.forbes.com/sites/alanohnsman/2025/11/19/elon-musk-cant-legally-sell-the-tesla-cybercab-hes-promised/  00:00 Introduction 00:42 The Cybercab Vision And The Legal Conflict 03:43 Technology And Regulatory Challenges 07:28 The Cybercab’s Central Role In Tesla's AI-Powered Future 09:14 The Consequences Of Selling A Non-Compliant Vehicle 14:30 The Cybercab's Potential As A Moneymaker And Product Risk 17:27 The Realities Of Tesla's Business  Subscribe to FORBES: https://www.youtube.com/user/Forbes?sub_confirmation=1  Fuel your success with Forbes. Gain unlimited access to premium journalism, including breaking news, groundbreaking in-depth reported stories, daily digests and more. Plus, members get a front-row seat at members-only events with leading thinkers and doers, access to premium video that can help you get ahead, an ad-light experience, early access to select products including NFT drops and more:  https://account.forbes.com/membership/?utm_source=youtube&utm_medium=display&utm_campaign=growth_non-sub_paid_subscribe_ytdescript  Stay Connected Forbes newsletters: https://newsletters.editorial.forbes.com Forbes on Facebook: http://fb.com/forbes Forbes Video on Twitter: http://www.twitter.com/forbes Forbes Video on Instagram: http://instagram.com/forbes More From Forbes:  http://forbes.com  Forbes covers the intersection of entrepreneurship, wealth, technology, business and lifestyle with a focus on people and success.

Transcript

00:00Hi, everybody. I'm Brittany Lewis, a breaking news reporter here at Forbes.

00:07Joining me once again is Alan Oinsman, Forbes senior editor and author of The Current Climate

00:12Newsletter. Alan, thanks so much for coming back on. Hi, Brittany. Good to be with you.

00:17You have some reporting on one of the first major roadblocks that Elon Musk has hit since his

00:22trillion dollar pay package was approved earlier this month. And I'm going to read your headline.

00:27You write that Elon Musk can't legally sell the Tesla cyber cab as promised. So obviously,

00:32my first question has to be, how did he promise to sell these cyber cabs? According to Elon Musk's

00:39vision here, what are some of the features? Well, this has been an ongoing issue for over a year now.

00:47But earlier this month at the shareholders meeting on the November 6th, he kind of ticked off his

00:53future plans for the company. And he talked a lot about optimist robots and AI. And he talked

01:00about cyber cab. And this vehicle has been out for a little while. They showed it off. It's been over,

01:06I guess, a year and a half now, two years since it first debuted. It's a two door model. And he has

01:12claimed from the beginning that this will only be sold as a fully autonomous vehicle with no steering

01:19wheel, no pedals, no mirrors, no standard controls, because it's going to be fully autonomous.

01:26There are two issues related to that. Number one, as we've talked about before,

01:31regardless of what he says, Tesla has not yet proven that it's capable of delivering a fully

01:38autonomous vehicle. It hasn't reached that yet with the technology that it's made available in the public.

01:43But the second issue is, if you want to sell a car like that, that doesn't have these conventional

01:50controls on them, well, it turns out there are actually some legal issues related to doing that,

01:56that, you know, you can't just do that. And specifically, it's because of what's called

02:02Federal Motor Vehicle Safety Standards, or FMVSS in the industry. And they explicitly require

02:10passenger vehicles to have all of the things he's saying are not going to be on this car,

02:15including also windshields and wipers, that car manufacturers have to have these things.

02:22So it is possible to get an exemption if you prove to NHTSA and you request and say, well,

02:30we have this technology, we don't need these things, and here's why. And we have seen the company

02:36Zooks, which has a purpose-built robo-taxi that it's operating in Las Vegas and San Francisco

02:44currently. Zooks, that vehicle has no standard controls. There is no steering wheel, there are

02:51no mirrors, nothing like that. But Zooks has gone through the process of working with the

02:57National Highway Traffic Safety Administration to get an exemption for that vehicle. Currently,

03:03they have a testing exemption, so they can operate it on public roads, and they can pick up passengers,

03:10but they can't charge yet. They are seeking a commercial exemption for that vehicle, and they

03:16believe they'll have it sometime in 2026, so they can begin charging for robo-taxi rides.

03:23So when Elon talked about Tesla CyberCab, I thought, oh, hmm, is Tesla in communication with NHTSA about

03:33this vehicle, and are they seeking an exemption? And as it turns out, they are not. And so that's a bit

03:40of an issue, and that's where problems arise.

03:42And you and I have talked time and time again about Elon Musk's penchant for over-promising

03:49and under-delivering. And when he laid out this vision of what he believed his CyberCab to be,

03:55how far is that right now from the reality of what it can be, especially because he didn't even apply

04:00for this exemption yet? Well, number one, I don't think you would be planning to put in production.

04:07And by the way, he said this will be in production in April 2026. So, you know, five to six months from

04:14now, they're in production. You would not make such a plan unless your technology was rock solid

04:21and bulletproof that this works under all circumstances, no concerns, no issues. That is

04:28not the case with Tesla. He's been promising for, you know, several years now that Tesla will have

04:35a fully autonomous vehicle and will be operating robotaxis. That is not the case right now. In its

04:42current demonstration program, especially in Austin, but it's also got some vehicles operating

04:48in San Francisco, it's Tesla full self-driving, but there is a human backup in the front seat.

04:55If you're still using a human, you know, backup in the front seat, you're not ready to turn this

05:03thing over in the wild and sell it to someone. So it is hard to take seriously the timetable that he

05:13has laid out for this vehicle. That's simply on mastering the technology that you can actually

05:18deliver a safe, reliable, autonomous vehicle. The second issue is this simple regulatory one.

05:25If you want to do a nonstandard vehicle like this, it's possible, but you need to, in advance of

05:31selling it, you know, be in discussions with regulators and loop them in and make sure they

05:37know everything. And when I reached out to NHTSA to say, has Tesla, are they seeking an exemption?

05:43I was told very bluntly, no, they have not contacted us about this. So that's kind of hard

05:49to believe. Like, how can you be claiming you're putting this product into production very soon in

05:55just months? And yet you're not talking to regulators. It's really unusual.

06:04And could he potentially, because I'm not sure how these timetables work here. Let's say Elon Musk,

06:09he reads your piece. He's like, oh my God, I haven't reached out to the regulators. Let me

06:13call NHTSA today. Let's say he reached out to NHTSA today. I mean, and he got the ball rolling.

06:19How long does that process take? Could it be done before April when he wants these up and running by?

06:26I suppose anything is possible, but using Zooks as the example that I mentioned earlier,

06:31Zooks has been in discussion for the last couple of years with NHTSA about this. So it's,

06:36in their case, and by the way, Zooks was, their system, their safety program was created by a

06:44former NHTSA director, Mark Rosekind, after he left NHTSA. He was the top automotive safety

06:50regulator in the United States. He went to work for Zooks. So he did everything the right way,

06:56I guess, in their approach, which was, you know, updating regulators with information,

07:02explaining their technology, kind of taking them through step by step. And, but that's been a long

07:07process. It didn't happen overnight. And that was with someone with real expertise, you know,

07:12who knew the system. So is it possible that Elon could call up Sean Duffy at the transportation

07:20department or the head of NHTSA right now and say, hey, could you speed us through the approval process?

07:25Anything is possible. It just seems unlikely.

07:27And when he was laying out the future of Tesla, after he got his unprecedented historic pay package

07:34approved, I know he was talking a lot about AI, a lot about optimist robots, and he was excited

07:40about those things. How central were cyber cabs to his vision?

07:46Well, I think it's in one sense, very central because, you know, Tesla is in this transitional

07:52period. And all the future businesses that he's talking about are AI powered. So an autonomous

07:58vehicle is a use of AI. It's a very specific use of AI. He wants not to really be, you know,

08:07competing with BYD and General Motors and Toyota and Honda and other companies in selling individual

08:13vehicles that you simply drive, electric or otherwise. He really does want to move into this

08:17new space where the cars drive themselves. Cyber cab, I guess, is supposed to be an autonomous

08:25vehicle you can actually purchase and own yourself, or perhaps you buy many and you operate a fleet of

08:31them and offer a rideshare service. But it ties into his future vision for the company on the autonomy

08:38side. But again, the company has not yet proven that they can equal a company like Waymo, for example,

08:44in the reliability of its autonomous driving technology. And Zoox, which is not far behind Waymo and which is,

08:54you know, coming to market, has also demonstrated for several years that it can operate these vehicles

09:01without humans behind the wheel. Tesla's not there yet. So that's an issue. Their AI driving system is not

09:08yet equal to what we're seeing with industry competitors. So then if he can't sell the cyber cab

09:16as he promised, A, what's the future of the cyber cab? And B, what does that mean then for the future of

09:22Tesla? Well, that's a great question. Robin Denham, the chair of Tesla's board, prior to the annual

09:32meeting, she was, you know, she's been, she was campaigning heavily for, for shareholders to approve

09:37Elon's trillion dollar stock comp package. When she was asked about cyber cab, because there have

09:46been general concerns from people saying, is Tesla really ready to sell such a vehicle? Like

09:51technologically, is your, is your autonomous driving system ready for this? She sort of waved off

09:58those concerns. And she said, look, you know, we can, we can just sell this with a steering wheel

10:03and controls if we need to. So not, not a concern. That's an interesting statement. And, and, and some

10:11would agree, okay, sure. It's a new product that might be helpful. Tesla needs new product. It needs

10:17a hit, hasn't had a hit in a long time, not since model Y came out. But the, the, the catch is that

10:25the, the, the cyber cab is a two door model and Americans at least don't buy two door cars anymore.

10:33That's not a popular product segment in the United States. And in many countries now, small crossovers

10:41and, you know, in the U S pickup trucks, but SUVs and crossovers kind of like dominate and everything's

10:48got at least four doors and a hatch in the back. Um, a, a, a two door model, uh, with these clamshell

10:56doors that kind of like slide up as you open is unusual. Uh, but two door models aren't popular

11:02because they're often seen as impractical. Um, you know, people want to be able to haul multiple

11:07passengers. You want to take your family, your friends, the cyber cab, it looks like it only has

11:12two seats. Uh, and then it has a trunk in the back. But, uh, in that design, that configuration,

11:18it's not clear that even if it was sold just as a straight up electric car, albeit one that's

11:24priced well below $30,000, that, that, that would generate a lot of additional sales for the company.

11:29So it's, it's not the kind of product that market analysts look at and say, oh yeah, that would,

11:34that's going to sell like crazy. It's a, it's more of a head scratcher, I think.

11:37Alan, I have a question because I mean, correct me if I'm wrong. This doesn't seem like

11:42it's some paperwork oversight of, oh, I just forgot to get this signed off here.

11:47It sounds like there was a vision laid out of a car that legally cannot be made yet. I mean,

11:52who is at fault here? Is it Elon Musk for selling this vision that can't legally come true? Does

11:59Tesla have an in-house legal team? I mean, what does that really look like? Oh, Tesla has lots of

12:05lawyers and engineers who know these things, people who work in the auto industry. Um, it's not a

12:10history. Uh, this kind of stuff is really basic. Um, FMVSS guidelines, every new product, uh, that

12:17comes to market, every new car or truck, uh, the manufacturer knows what the rules are, uh, and the

12:22rules require certain specific components. Uh, and again, you can, you can go ahead and, and, and try to

12:30sell something without those components. But if it's something really exceptional, like no mirrors and

12:36no steering wheel, you want to make sure you've, you've sought an exemption from, uh, NHTSA before

12:42you put that on the road. Um, the United States, we have a, a self-certification system. So manufacturers

12:48tell the government, we've crash tested this, the vehicle's safe, it can do these things. And, and we

12:54certify that it complies with FMVSS rules, for example. Um, so if you go ahead and don't, you know,

13:03comply with FMVSS and you haven't sought an exemption, you can try to sell the vehicle,

13:09but as soon as you do, you immediately expose the company to a lot of problems. Um, NHTSA would

13:15probably launch an investigation immediately. They would ask for an exhaustive amount of data,

13:20engineering data, uh, about your product. And they may say, you know what, we're not going to

13:25allow you to sell that for the time being, as we're conducting this review. So you need to just park

13:30it. Well, that's a bad move. If you're a company, because, you know, uh, car, uh, new, new models,

13:36it's, it's hundreds of millions, if not billions of dollars that have gone into the development and

13:41the preparation and the assembly line, you want to be ready to sell as many as you possibly can.

13:46So you don't want to be told, nope, you're, you're not allowed to, uh, to sell this thing right now.

13:51Or, you know, NHTSA could turn around and say, you know what, we don't think your vehicle's safe

13:54enough. You need to put a steering wheel in this and mirrors and all these other things.

13:58So now you have to retrofit it. So the whole thing doesn't make a lot of sense. Um, it's,

14:04it's known that this was coming. Uh, he claims it'll come in April. Uh, perhaps there will be

14:12some acknowledgement of reality that they do need to do more, uh, work on the regulatory side and make

14:17sure that they have this approval. So it's not that the product may not ever come, but certainly the

14:24April timeline for production seems a little hard to believe you. And I always go back to the bottom

14:32line for Tesla here. And I'm curious when you're thinking about these cars, because you always say

14:38Tesla should just stick to the core businesses in order to make money, right? Charging stations,

14:44selling batteries, selling EVs, was the cyber cab ever supposed to be a moneymaker?

14:52That's a great question. I don't, I don't know. It looks very much like a product that Elon Musk

14:59likes a lot. Uh, he also liked cyber truck a lot. And as we've seen, it has turned out to be one of

15:07the biggest flops in the market. Um, given the amount of hype and expectation for how it would sell,

15:12and it's sold very, very poorly. He thought it would do hundreds of thousands of units a year.

15:18Uh, its first full year, it did about 50,000. It will do fewer this year. So, um, his taste in new

15:26products maybe is not the best. Uh, perhaps, you know, the company needs a stronger team to come up

15:34with great new ideas for new products. Um, you know, right now the Chinese, frankly, are, are, are setting

15:41the pace globally in, in electric vehicles, BYD and Xiaomi and Xpeng and Neo and companies like that.

15:48They have come out with really exciting new products. When you see the interiors and all the

15:53tech and the big screens, and it's really futuristic kind of stuff. Um, you don't see Tesla really keeping

16:00up with that. Um, he believes that the secret is full autonomy, but again, as we've said,

16:06they're not there yet. Uh, their, their, their system is not yet reliable enough. So it, it really

16:12seems like, uh, you know, it's not that they don't have lawyers and engineers who know these things.

16:17Um, but he has, you know, it's, it's a vote of one basically at that company and they do what he

16:23wants to do. Uh, but what he wants to do in this case doesn't look like it's, it's going to work.

16:29Alan, I always think back to your reporting. It was either from Q1 or Q2 and the headline was

16:36things are bad at Tesla. Now they're going to get worse, but it seems like for Elon Musk specifically,

16:42things are good for him right now because he, a few weeks ago had that trillion dollar pay package

16:47approved. I mean, when you're thinking about Elon Musk and Tesla and you're reporting on how this

16:54year just isn't great for the company, how exactly does this fit in? It seems like this fits in

16:58right on theme. And as we're about a month out from year end, what specifically are you looking

17:03out for next when it comes to Tesla? Well, I, you know, I still stand by that, that, that topic that

17:09things are bad at Tesla and they're going to get worse, but we're seeing a tale, you know, it's a

17:13tale of two Teslas. Basically there is the real business. And then there is the hope for future

17:20business. And in the market, uh, Elon still has the ability to convince a lot of people that his vision

17:27of the future is going to be big and lucrative and huge. And so buy the stock. And so we have seen

17:32Tesla shares, uh, kind of shake off the reality of, of, of their business. Um, earnings are deteriorating.

17:40Uh, they, they did get a bump in, in Q3 in, in just vehicle sales because of the end of U S tax credits,

17:48but that was a one-off. Um, Q4 is going to be down. Uh, they're going to end the year down.

17:54Once again, the second consecutive year of year over year declines in, in EV sales. Um, and the

18:00problem is, um, there are two issues, not enough fresh product. And then the brand image that is

18:06all Elon, because he's turned off a lot of people who don't want to be associated with the brand

18:11because they don't like him. Um, so that's the reality of, of the business. Then there is this idea

18:18of Tesla's future of humanoid robots and robo taxis and, uh, and, and, and AI features and all

18:26of these amazing things we're going to do in the future. And, and, and a lot of people like that.

18:30So we, we are at this very strange kind of point where on one level, uh, Q4, uh, the fine financials

18:38will not be great. Uh, going into next year, Q1 and Q2 of, of, of, of 2026, there's no indication

18:45it's going to be any better. Um, we could see a third consecutive year of declining sales. Um,

18:51that's, you know, I, I don't know how you ignore that. That is, you know, 95, 98% of their revenue

18:59comes from cars, batteries, and charging revenue. And if those things, you know, batteries are doing

19:06great. There is huge demand for stationary battery packs, uh, both for residential solar utilities and

19:13even data center projects. So that's a great business. So battery is going to be fine.

19:17Uh, charging service has been kind of weird because he fired everyone at one point in the

19:22charging group. And then he hired them back, uh, when this kind of acknowledgement, they're like,

19:26oh yeah, we can make money selling charging services because they have this very extensive

19:31EV charging network. Um, so those two businesses are probably okay, but they don't generate as much

19:37revenue as the car business does. Um, that is, you know, the 800 pound gorilla in this company.

19:42And right now it just, you know, it ain't 800 pounds anymore. It's getting smaller and smaller,

19:47uh, by the month. And I think that's where the real concern is. And so when I look at this and I see

19:52him talking up something like cyber cab, I don't, you know, I have real concerns. Like I don't see

19:59number one, technologically that you're able to do it. There is the legal issue, you know, regulatory

20:04issue, whether you can do it. And then the third thing is, okay, even if your fallback plan B is,

20:09well, okay, we'll just sell it with a steering wheel and it'll be a low cost EV. Okay. But again,

20:17whether it's going to be the vault kind of volume generator, you hope it will be, uh, there's not a

20:21lot of evidence to prove that that's going to happen. And I'd like to throw in one more, uh, issue

20:26here, which is if they decide to really make a full court press to get NHTSA approval, um, Elon is Elon,

20:35his inability not to say things that most CEOs wouldn't say, you know, he's, he's mocked Sean Duffy,

20:43who is secretary of transportation, uh, called him Sean dummy and said he has a, you know, two digit IQ.

20:49Uh, he didn't like something that Duffy said about possibly giving a contract to Jeff Bezos is blue origin

20:56instead of SpaceX. Well, you know, that's not a really wise thing to do. If you need NHTSA approval,

21:02because NHTSA sits under the U S department of transportation, which reports up to Sean Duffy.

21:09So maybe the smart thing would be not to mock the transportation secretary and try to, you know,

21:16build bridges and not offend people. So, you know, you just see Elon being Elon, you know,

21:21he doesn't do things and behave the way that other CEOs do. So I, I, I, you know,

21:26on the question of what am I looking for? I mean, I'm kind of curious at what point the market,

21:32you know, stops believing everything is going to actually happen in the future that he talks about

21:39and accepting that this is a company that, um, if it is pivoting, it's going to be a long, painful

21:44pivot and the near term, there's going to be a lot of pain from, you know, declining core businesses.

21:49And speaking of bridges and potentially lighting them on fire, I mean, where does Elon Musk's

21:56relationship with Donald Trump stand? Could president Trump swoop in if needed? Would he

22:02want to, I mean, are they friends? Are they even acquaintances? What does that relationship look like?

22:07That that's, that's a great question. And I don't know that anyone is clear on that at the moment. I

22:12mean, they had this big public break, um, some months ago, uh, uh, Musk tried to walk that back. I

22:19mean, he did, you know, we're seeing the Jeffrey Epstein files coming out now. I mean, when he was

22:24on his break with, uh, with Trump, he said, you know, Trump's all over the Epstein files, uh, which

22:30I don't know that that's that surprising, but he was clearly, um, you know, he was burning bridges

22:35in that case. They went from being very close and he had been so generous to Trump's campaign last year.

22:40Uh, he was running doge. He was like the co-president at, at one point, it seemed.

22:45Uh, and then they had this break in the spring. Um, publicly it's, there's been no indication of

22:52exactly what the relationship is at this point. Um, probably, uh, Musk has been trying to get back

22:58in Trump's good graces with the recognition that, uh, it would be better to, to, you know, remain,

23:06you know, uh, friendly toward Trump, uh, because of all of his businesses and, and how the federal

23:11government could affect what he wants to do. Um, but we just don't know for sure. Uh, but,

23:17but yes, if, if Trump said, called up Sean Duffy and he said, green light Tesla cyber cab,

23:23okay, maybe they would. Um, and that could really like grease the skids and, and, and things could go

23:29as planned. So anything is, is possible, I guess, but that's, that's a big unknown. Um, publicly,

23:35uh, I, I'm not even sure the last time Trump mentioned Musk, it's been a while, uh, since

23:39he's come up. Um, he just hasn't been a focus. So, uh, perhaps no news is good news that, that,

23:45you know, things are quieter and, and, and there's, they taught, but we'll see.

23:51Well, a lot of unknowns here, but I appreciate you parsing through them and your reporting.

23:56Alan Oensman, thank you so much. I look forward to our next conversation.

24:00Thanks, Brittany. Always fun to talk.

Category

Transcript

Be the first to comment

Recommended