Tesla CEO Elon Musk is accelerating efforts to expand the company’s robotaxi operations amid growing pressure from rivals like Google’s Waymo. Over the weekend, Musk revealed that Tesla is expanding its autonomous ride-hailing service in Austin, Texas, and awaiting regulatory clearance to begin operations in the San Francisco Bay Area “probably in a month or two.”
As part of the push, Musk confirmed that Grok—his AI chatbot developed under xAI—will be integrated into Tesla vehicles “next week at the latest.” The move is believed to be aimed at enhancing the intelligence and appeal of Tesla’s self-driving system, giving it a competitive edge in an increasingly crowded autonomous vehicle market.
Waymo, a subsidiary of Alphabet Inc., has steadily ramped up its robotaxi operations, particularly in California and Arizona. Unlike Tesla’s Full Self-Driving system, which still requires driver supervision, Waymo vehicles operate with no human behind the wheel in designated zones. Waymo’s safety record and regulatory backing have also given it an advantage in building public trust—something Musk is now clearly eager to reclaim.
Register for Tekedia Mini-MBA edition 19 (Feb 9 – May 2, 2026): big discounts for early bird.
Tekedia AI in Business Masterclass opens registrations.
Join Tekedia Capital Syndicate and co-invest in great global startups.
Register for Tekedia AI Lab: From Technical Design to Deployment (next edition begins Jan 24 2026).
Tesla’s Gamble on Grok AI
Tesla’s decision to pair its robotaxi service with Grok—a general-purpose chatbot designed to converse, assist, and learn from human interaction—is seen as an attempt to both enrich the in-car user experience and portray Tesla as the AI-first automaker. Internally, Grok could assist in navigation, entertainment, and personalized vehicle controls, potentially setting Tesla apart in a market where most competitors rely on more traditional UI systems.
But the timing has proven fraught. Grok recently came under intense criticism after it was found to have generated a series of antisemitic remarks and even statements appearing to praise Adolf Hitler. Although xAI has denied that the chatbot made those statements, claiming manipulation or errors in representation, the controversy has cast a long shadow over Grok’s integration into Tesla’s vehicles.
Musk’s ambitions for Grok have been far-reaching—from replacing Google Search for millions of users on X, to becoming the underlying voice and intelligence layer across his companies. But now, critics say the bot’s problematic behavior raises questions about safety, oversight, and the reliability of AI-driven decision-making inside vehicles.
A Distracted CEO
The expansion of Tesla’s robotaxi footprint is happening during a turbulent period for Musk. He recently resigned from the Trump administration’s Department of Government Efficiency (DOGE), only to announce plans to launch his own political party—the America Party—shortly afterward. His increasingly public feuds with President Donald Trump have rattled investors, especially following his criticism of Trump’s tax package, which Musk said could hurt innovation and damage U.S. competitiveness.
This political entanglement, combined with a slowdown in Tesla’s EV sales and rising competition from Chinese automakers, has led to sharp volatility in the company’s stock. Tesla shares plunged nearly 7% on Monday, erasing $68 billion in market value. Though they rebounded slightly after the Grok and robotaxi announcements, investor confidence remains shaky.
Tesla’s path to fully autonomous driving is still dotted with legal and regulatory obstacles. Waymo and Cruise have received permits to operate in several U.S. cities without drivers, while Tesla continues to rely on supervised Full Self-Driving trials. Musk has often framed Tesla’s software approach—relying purely on vision rather than LiDAR—as superior in the long run, but critics argue the lack of redundancy is a safety risk.
In this context, the rollout of Grok is seen as a double-edged sword. While its presence may give Tesla a futuristic sheen and attract tech-forward customers, the bot’s erratic behavior could also heighten scrutiny from regulators already skeptical about Musk’s promises of full autonomy.
With Tesla’s annual shareholder meeting scheduled for November 6, the stakes are growing. Investors are watching closely to see whether Musk can translate his AI experiments into real-world dominance.