Tesla’s California Sales Plummet as Austin Debuts Driverless Robotaxis in 2026

California's electric vehicle market hits a sudden speed bump—Tesla's sales are crashing. Meanwhile, Austin's streets are rolling out the red carpet for driverless robotaxis. Two cities, one automaker, and a tale of two very different transportation futures.

The Golden State Slowdown

For years, Tesla dominated California's EV landscape. Now, the numbers tell a different story—a sharp, undeniable decline. The data doesn't lie, and it's flashing warning signs for Tesla's home-state dominance. What's causing the drop? Market saturation, fresh competition, or a shift in consumer sentiment? The reasons are piling up faster than unsold inventory.

Texas Takes the Wheel

While California sales stall, Austin is hitting the accelerator on autonomy. Driverless robotaxis are no longer a prototype fantasy; they're navigating real city streets. This isn't just a pilot program—it's a full-scale deployment that bypasses traditional ride-hailing models entirely. The regulatory green light in Texas showcases a stark contrast in adoption speed, proving that innovation thrives where red tape gets cut.

Autonomy's Pivot Point

The simultaneous crash and launch create a pivotal moment. Tesla's strategy appears to be shifting from selling cars to selling rides—a move that could reshape its entire revenue model. This push into robotaxis isn't just about technology; it's a direct play for the future of mobility-as-a-service. Legacy automakers are watching, scrambling to adapt their own timelines as the goalposts move overnight.

Investors are left weighing a California-sized slump against an Austin-sized bet on autonomy. One promises quarterly earnings pain, the other a futuristic payoff that's always just a few years away—the classic tech moonshot that keeps valuations aloft even when sales go earthbound. The finance crowd loves a good narrative, even if the spreadsheet tells a more cynical story.

Robotaxi service goes driverless

In separate news, Tesla has started offering robotaxi rides without human safety drivers in Austin, marking a major step forward for the company. The service, which launched seven months ago, previously required people to sit in the front seats to monitor the vehicles.

Just started Tesla Robotaxi drives in Austin with no safety monitor in the car.

Congrats to the @Tesla_AI team!

If you’re interested in solving real-world AI, which is likely to lead to AGI imo, join Tesla AI. Solving real-world AI for Optimus will be 100X harder than cars. https://t.co/OnP8gredWD

— Elon Musk (@elonmusk) January 22, 2026

Musk announced the development Thursday on X, posting a video from a former Tesla artificial intelligence engineer. Last month, the CEO had revealed that testing without anyone in the cars was underway.

Ashok Elluswamy, who leads Tesla’s AI efforts, explained in another post that “a few” vehicles in the robotaxi fleet WOULD operate without supervision. He added that the number of vehicles running without safety monitors would grow over time.

Musk has been talking more about Tesla’s AI work and robotaxi plans as the company deals with falling vehicle sales. While offering rides without human backups might improve public perception of the driving technology, Tesla told regulators that its small group of cars operating in Texas’s capital city were involved in eight crashes over six months last year.

Tesla’s stock price jumped after the announcement, rising as much as 4% by 2:30 p.m. in New York. Shares of Uber Technologies and Lyft dropped more than 3% during the day before recovering somewhat.

Missed predictions and limited reach

Throughout 2025, Musk repeatedly promised that Tesla would offer unsupervised rides before the year ended. Some of his other predictions missed by a wider margin. In July, he suggested that half of Americans might be able to access autonomous Tesla rides by the end of the year.

Austin remains the only city where Tesla provides robotaxi rides. The company began a taxi service in the San Francisco Bay area last year but hasn’t requested permission to test self-driving vehicles without safety drivers in California.

Tesla’s playing catch-up with Alphabet’s Waymo, which got driverless rides going in Phoenix back in late 2018. Waymo’s now charging passengers for driverless rides across thousands of vehicles in Austin, Los Angeles, San Francisco, Atlanta and Miami.

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