Elon Musk’s Robotaxi Dream Could Be A Liability Nightmare For Tesla And Its Owners

Forbes

The company has avoided major legal problems for fatal accidents involving its partially automated Autopilot and FSD features. A fully autonomous ride service changes that.  0:00 Introduction 0:17 Who Is On The Hook For Robotaxi Accidents? 8:04 How Is Tesla Preparing? 9:00 “Riders may not always be delivered to their intended destinations” 13:08 Should AI Be Treated Like A Person? 17:17 Are Tesla’s Robotaxi’s Self-Driving?  Read the full story on Forbes: https://www.forbes.com/sites/alanohnsman/2025/07/08/elon-musks-robotaxi-dream-could-be-a-liability-nightmare-for-tesla-and-its-owners/  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. Joining me now

00:07is Alan Onsman, senior editor and author of The Current Climate Newsletter. Alan,

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

00:15Good to be with you. You recently wrote a piece entitled Elon Musk's RoboTaxi Dream

00:21Could Be a Liability Nightmare for Tesla and its Owners. And this question really came up

00:26during one of our past Muskwatch episodes since Tesla owners could potentially soon enjoy a new

00:32additional revenue stream by adding their car to a fleet of self-driving Tesla RoboTaxis.

00:38Then the conversation progressed to who exactly would be on the hook, say an accident happened

00:43when someone else was essentially Airbnb-ing the car. Would it be the owner of the car

00:47or would it be Tesla itself? So what did you find? Well, yeah, you raised that question. And at the

00:55time, I didn't have a good answer for you. And now, after speaking with some legal experts

01:00and some people in the industry, I have a better understanding. And the answer is,

01:05would those owners have exposure, legal liability? Yes. In most cases, it's likely that they would.

01:13This is a whole new concept of basically Airbnb-ing your car as a robo-taxi. There already are systems,

01:23there's a company called Turo, for example, where you can loan your car out in the case of Turo. But

01:30you also, as an owner for something like that, have to ensure that the car is in good working

01:34condition, the brakes are in good condition, the tires are properly inflated, that sort of thing.

01:39There's something very similar that would likely be the case in a future scenario where I'm a Tesla

01:45owner, I want to make some money off my car as a robo-taxi. In all likelihood, I'm going to have to

01:52have to ensure that that car is pristine, that there are no mechanical issues. Again, tires, you know,

02:01brakes, I've had maintenance done for it. Any recall issues have been addressed so that the car is in good

02:07condition. Because in the event of an accident, will Tesla have liability? Yes, 100%. Will I, as the owner,

02:17probably have liability? Yes, in all likelihood, you will. And this raises a lot of interesting

02:23questions. One of the things is, because no one has done this, what's the insurance for something

02:30like that? And one person I talked to who sort of works with insurers on these kinds of issues said,

02:38you know, he doesn't believe that a lot of insurance companies would be willing to take that risk

02:42initially, because there are just so many unknowns. If you think about it, the average person drives

02:4810, 20, 30, maybe 40 miles a day. If a car is being used as an Uber or a robo-taxi,

02:57it only really makes sense if you're utilizing it a lot. So you're logging lots and lots and lots of

03:03miles. So, you know, as a robo-taxi, it might book 100 or more miles per day. And the reason why that's

03:10significant is its wear and tear, but it also is more opportunity for roadway accidents. If you drive

03:18to work and park, and then drive home and park, you know, you have limited opportunity for accidents.

03:24But if that car is like constantly in use, you know, going through intersections, pedestrian cyclists,

03:30any number of incidents, situations can occur where the car could be involved in an accident,

03:35even if everything is going right. And then, of course, if there are technical problems with the

03:40software, if the cameras are smudged, this is an issue that would be of concern. You know, you as

03:47the owner, that Tesla has eight digital cameras on it, but it does not have an installed cleaning

03:53system for those cameras. Have you ensured that you've cleaned all of those cameras, that the cameras

03:59are all like getting, you know, good visual images of the world? If you haven't, then you might be in

04:05trouble if that car is in an accident. And Tesla might potentially join and say, well, you know,

04:10you put your car in the network, but it wasn't well maintained. And so, you know, you're on the

04:14hook for this too. So there are a whole, it's a whole new can of worms that they're opening up by

04:19doing this. And I think as time goes on, if they make this offer and say, put your car in the network,

04:26read the fine print, because that's where it's likely to say you indeed will have exposure and

04:32some legal liability in the event that things go wrong. And even if there was a smudge on the

04:37camera, let's say you put your car into the fleet and it was smudge list and then someone, you know,

04:43put their hand on it accidentally or something fell onto it. I mean, then that opens an entirely

04:48different can of worms. And I'm sure an attorney, I mean, they're just scratching their head here.

04:52There's so many different variables, different possibilities. When you were talking to attorneys

04:57here for this story, did they say how, I mean, is it essentially worth it for a Tesla owner to put

05:04their car into the fleet? I mean, what, how big of a legal risk is this for a Tesla owner?

05:10No one, no one went out on a limb yet because it's not happening, right? So it's all hypothetical at

05:15this point. I mean, Musk is saying, step right up, put your car in the system, make lots of money.

05:21So I'm thinking, great, I'm going to buy 10 Teslas. I'm going to put them in the network. I'll quit my job.

05:26And then the cars will just make money for me. Great. What could go wrong? It's like a lot.

05:33No, it does sound like a lot could go wrong. And you've and you and I have talked many times

05:38before about Elon Musk. He's no stranger to making these lofty promises and not exactly following

05:44through. So we're not at the place right now that people can put their car into this fleet, right?

05:50That's right. That's right. Yeah. But I think, you know, you were hitting on something earlier.

05:54That is the key point. You send your car out into the system. It's in great condition. But through

05:59the course of the day, something happens, right? What we don't know, because it hasn't really been

06:05defined by Tesla exactly how this would work, is ongoing maintenance throughout the day.

06:10Waymo is the company we have to look at now because they're really the only game in town at

06:15this point in terms of robotaxi. Waymo has a very regimented system for maintenance throughout the

06:24day. So they have multiple depots in the cities where they operate. The vehicles are out in service

06:29giving rides, but then they're scheduled to come back in and recharge. And as they're recharging

06:35at the depot, they're also being cleaned and checked. So you know that those vehicles are actually

06:41getting a lot of attention throughout the course of the day. They've built that into their system.

06:47Tesla at this point has provided no details whatsoever about the regular maintenance just

06:55on a daily basis to make sure that cars are charged, clean, and someone's checking, are the

07:02cameras and all the sensors working well? That's really critical kind of stuff. So there are so many

07:07unanswered questions here. And it goes back to this whole idea. There's been excitement for some

07:13about the promise of Tesla's robotaxi network, but there are so many unknowns still that just have

07:20not been clarified by the company. And so we'll see. At the moment, I am a little skeptical that the

07:28customer-based robotaxi system putting your car, Airbnb-ing your car, is going to happen anytime soon.

07:36Certainly, that's not a plan for Waymo. That's not a plan for Zoox. It's like, no, we're not doing

07:41that. We're operating the vehicles. There are vehicles. We operate them. We have liability.

07:46That was the other thing that was clear. Waymo was very blunt. Like, yeah, if something happens

07:50and we're found that it was our fault, we have liability and we're providing medical coverage

07:55for passengers and things like that. So they have a very clear, there's no gray area. It's very clear.

08:00There's a lot of gray with the Tesla system. And so Waymo's saying, hey, the liability's on us.

08:07When you asked Tesla, what exactly did they say? What is their answer to this question?

08:13Silence. Tesla, you know, for the last five years has not actually had a communications team. They

08:21don't respond to reporters' questions. So you really have to just go by, you know, Elon Musk's

08:26public announcements or what they say at different events. They've not addressed any of these issues

08:32in terms of how this would, like the real mechanics of how this kind of system would work. Musk throws

08:38it out as a concept and then we sort of wait for the details to come later. What I did see, though,

08:44is simply if you read through the terms of use as a writer, there are a lot of interesting details.

08:53If you simply are just riding in the Tesla robotaxi at this point.

08:59And I want to read some of those details because you pointed them out. Here are some of Tesla's

09:03legal terms. Riders may not always be delivered to their intended destinations or may experience

09:09inconveniences, interruptions, or discomfort related to the robotaxi. I mean, that's pretty vague

09:15language and I'm assuming by design. I wonder if that encapsulates an accident. I mean, what is a

09:21disruption? What's discomfort? What's an inconvenience?

09:26Well, I mean, you know, some people might get nervous in the riding in the backseat,

09:29especially if something odd happens. You could get a little panicky. I mean, in the reports so far,

09:36and it's very odd because the pilot in Austin launched on June 22nd. There was an initial flurry

09:43of videos and things and reports from people who were handpicked to participate in the pilot.

09:49It's been sort of quiet since then, although we did learn early this week that there was a minor

09:56accident where a robotaxi bumped into a parked Toyota Camry on a tight alley. No one was harmed,

10:06but it looked like the vehicle was scratched slightly. What has come out, though, from several reports from

10:14early riders was when they requested to get out of the vehicle before they arrived at their original

10:21destination. In multiple cases, the Tesla did something very odd where it sort of stopped in

10:28the middle of the street or in a turn lane and basically said, exit the vehicle. That's not good.

10:34And, you know, that's with a human safety technician in the front seat and the vehicle being closely

10:42monitored by by backup technicians working for Tesla at a remote facility. But something as simple as I

10:50would like the vehicle to pull over so I can get out. In some cases, it hasn't done it in a way that

10:56most people would think is acceptable. And certainly if you're stopping the car in a turn lane and saying,

11:01you know, the car tells you to exit now in the middle of traffic, probably not a great idea.

11:07And so, yeah, the terms are both vague, but, you know, interesting. Like I said, the car may not

11:14take you to where you want it to go. It's just like, well, isn't that the fundamental purpose of

11:18a robotaxi or any taxi that it, you know, you go to where you want to go? And I know that this is all

11:23a hypothetical question here. And you said earlier in the conversation that insurers aren't exactly or

11:29there might not be an insurer that wants to jump initially into this program. I mean,

11:34just how risky is this for an insurer? Well, you know, pretty risky. Honestly,

11:44you know, if I'm one of the big car personal personal insurance companies for an auto policy,

11:50for example, what I want to know is risk before I write the policy. And right now the risk would be

11:57very, very high. We have an unproven technology being used, you know, very broadly. So going beyond

12:05a tightly company controlled project to one that is kind of opened up to anyone with a vehicle can

12:12put their vehicle into this network. I would certainly be hesitant if I'm State Farm or one

12:19of the big insurers to say like, oh, yeah, that'll be fine. It's like, no, because the risk of something

12:24going wrong is very, very high. So the policies could be extremely expensive. Tesla does have its

12:31own company insurance. So does Tesla cover this? Does Tesla have to scale up financially

12:38its own in-house insurance system? My suspicions are it will, that that might be the initial option.

12:46If you want to do this, you have your personal policy. But then if the car is being placed into this

12:50kind of network, maybe that becomes like a Tesla insurance policy. So you have to buy it and pay

12:56for additional coverage. Tesla's already said they're going to take a cut of every ride you provide.

13:01Do they also add an additional fee for company insurance when it's in the network? Maybe something

13:06like that is how it's going to work. And obviously it really does seem like we're

13:11entering some new terrain here. And you spoke to a law professor and they had an interesting point. I want

13:15to read what they said. They said that we, quote, need a new nationwide standard for AI software.

13:20When accidents happen, we should treat it exactly like a human. Talk to us a little bit about that

13:26policy. Well, it's because right now there is no standard whatsoever for this. This is a new area.

13:33And as people, you know, said frequently throughout the conversations, technology is running ahead of

13:39the law in this case. You know, the development of autonomous driving technology is moving fast at

13:46this point. And we don't have national standards at all. So this is an issue that at some point,

13:56Congress will have to address. NHTSA, the Department of Transportation, will have to come up with,

14:01with, you know, what are reasonable policies? William Wyden, the law professor you referenced there,

14:07said basically the rule needs to be the same as it is for humans. It's if the human made the mistake,

14:12the human's responsible. In this case, if the robot makes a mistake, the robot's responsible. And the

14:17robot in this case is the company, right? So, you know, they've developed the software. This would be

14:21Tesla or Waymo or whoever the company is. But there's a dearth of federal rules and kind of a hodgepodge of

14:31state guidelines at this point. I mean, it's really interesting because if a human makes an egregious,

14:37error on the road, I mean, and kill someone, they could go to jail for that. I mean,

14:41you can't exactly toss a robot into jail. And Elon Musk, as we know, is the richest person in the

14:46world. Would a financial punishment, would that really hurt the company? I mean, I'm thinking about

14:52that, too. Well, yeah, I mean, you know, financial pain would be the most likely punishment for sure.

15:01But yeah, as you point out, I mean, you know, Musk is personal. Would Musk personally be at risk? I

15:05don't know about that. But certainly Tesla or the developer would be. Could you find criminal

15:12liability within the company? Maybe. I mean, it's entirely possible. And that certainly has happened.

15:19You know, there are interesting cases in the past. I mean, the one that gets pointed to a lot

15:24would have been the Uber fatality in 2018, where a pedestrian was killed. A woman was crossing a

15:31street while Uber was testing an autonomous vehicle with a human safety driver who wasn't paying

15:37attention. In the end, the woman safety, the woman who was the safety driver was held criminally

15:43responsible because her role in that was to be ready to take over in the event of an emergency

15:51situation. She was not paying attention. Video inside the vehicle showed that she was, I think,

15:56on her phone or something like that when the car struck the pedestrian. So she was held criminally

16:01liable. Uber was not, although I'm sure Uber probably ended up paying a pretty big settlement to

16:07the family in that case. So in that first, that was the first case of a fatality in the U.S. involving an

16:15autonomous vehicle. But because of some of the factors around it, the company was not held criminally

16:23liable. And this is the other issue with Tesla that I mentioned in the piece. Tesla's had partially

16:32automated driving software for a decade, Autopilot and FSD, full self-driving, which are fundamentally

16:40misleading names because they don't. Autopilot sounds like it drives itself. It doesn't. Full

16:45self-driving sounds like it really drives itself. It doesn't. Because Tesla tells you, you, the driver,

16:52must be ready to take over in the event of difficult circumstances, that this is not a fully autonomous

17:00system. As the piece points out, that all changes with Robotaxi. Elon Musk says you can sleep in the

17:06back, you can watch movies, you can relax and do whatever. If the company is telling you that,

17:12you're not responsible. So anything that happens to that vehicle now is the liability of, you know,

17:18Tesla has liability. To that point, Elon Musk is describing Robotaxi's as tiny mobile lounges where

17:24you can watch movies, play video games, you can work. So if you're in a tiny mobile lounge, you wouldn't

17:29exactly be prepared to jump behind the wheel if necessary. So are the Autopilot and full self-driving

17:37features in the Teslas that are going to be given to the fleet, are they fully self-driving?

17:45With this, with this upgraded version of FSD, in theory, yes. So the cars that are operating in Austin

17:53right now, we're led to believe are what would be called like SAE Level 4. And SAE is the Society for

18:03Automotive Engineers. They developed a scale for autonomy some years ago. Zero, Level 1, it's like

18:10nothing. Level 2 is sort of where Autopilot is today. And many of these, they've become sort of standard on

18:19on many cars now, where the vehicle will hold a straight line, it'll stay in lane, it'll brake

18:26automatically, those sorts of things. So partially automated features. And essentially, Autopilot

18:31for some time has really been in that zone. It gets murky between like, you know, what exactly

18:38constitutes Level 3, for example. Level 4, though, is the point at which a human does not need to take

18:44control. The vehicle is now fully capable of driving without human interaction. And so that is

18:53what Tesla's presenting now in the case of the Austin Robotaxi that they've achieved and they're

18:59operating at what's called Level 4. That's been Waymo's standard for some years with its Robotaxis.

19:07So yes, once you get to that level, then human responsibility, if you're in the car,

19:13you're a passenger, right? You're not responsible if something goes wrong. That's where the

19:19responsibility now lies 100 percent with the system, with the tech, and the developer of the technology.

19:25I feel like, as you said, this is a really murky area. There's a lot of gray territory. We're in a

19:31new landscape here. And I feel like I have now a ton of different questions. What's the biggest question

19:38you have right now after all of this reporting on the liability of Tesla versus the Tesla owner?

19:46Honestly, will it ever happen? This whole thing about, you know, will Tesla owners,

19:50will this ever materialize as a meaningful thing? I think the risks to the owners, the financial risks,

19:58and even, you know, one of the folks that I chatted with for the story said,

20:03if it's your car and you've put it in the network and there's a crash in the middle of the night,

20:07you know, at 3 a.m., do you need to get out of bed and go talk to the police, you know,

20:10when it's your vehicle? It's like, yeah, you probably do. You know, if it was your vehicle,

20:15you'll get called in because you're the actual owner of that vehicle. There are just any number

20:20of questions. It's a very, it sounds good in theory to create this kind of network where anyone

20:27can make money just by putting their car in. But when you begin to like walk through the steps here,

20:32it's like, is this really as compelling, you know, and as simple as it sounds? And the answer is,

20:38it's not. There are potential financial risks and legal risks and just inconveniences

20:44in the event of an accident or a mishap, maybe where no one's even died, but where the car was

20:50struck, you know, in an accident. By putting your car into this and using it and logging more miles,

20:57as we mentioned earlier, the likelihood that something's going to happen increases,

21:02that it'll be involved in a collision or an accident simply because it's on the road more.

21:07You know, if you drive once or twice a day a short distance,

21:11your odds of being an accident are low. If you're driving 100 times a day,

21:17it's much higher. The likelihood is much higher that something could go wrong. So my biggest

21:23question would be, at the end of the day, does this even make sense in the near term or in the

21:28foreseeable future? I don't think so. I could be wrong, but right now it looks like more headaches

21:35and hassle than it's worth. I mean, based on your reporting, it sounds like the risk,

21:40does not outweigh, or the risks rather, outweigh the reward here. And even something,

21:45it doesn't need to be a fatal accident, even a minor inconvenience, like a passenger opens the door,

21:50dings it on something. Would that, would the passenger have to pay for that? I mean,

21:55there are so many questions here that I think. That's a great question, yeah.

21:59That I think Tesla really needs to get some answers to. But Alan, I'm grateful for you

22:05for getting some answers, getting some insight here. Thank you so much for coming on.

22:09Thanks, Brittany. Great to be with you.

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