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Tesla robotaxi: Are autonomous vehicles safe enough for roads?

Tesla (TSLA) CEO Elon Musk has turned his attention to the latest endeavor for the EV company: robotaxis. After the heavy criticisms lobbed toward Tesla's own full self-driving features and other automakers' robotaxi fleets is this the right move for the electric vehicle innovator?

Edge Case Research CEO Michael Wagner — whose risk management specializes in autonomous driving adoption — explains that the technology is "not yet good enough to operate everywhere" based on many variables and is curious to see how Tesla has its self-driving data "calibrated" to account for safety.

"What I would really love to see in that kind of an event is what's called a safety case, which is a structured argument for why the technology is ready to go out on the road. We have standards that are written like UL 4600 that they could use to be able to argue that very effectively to the public and to regulators," Wagner says to Yahoo Finance.

For more expert insight and the latest market action, click here to watch this full episode.

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This post was written by Luke Carberry Mogan.

Video transcript

JOHS LIPTON: Elon Musk teased the arrival of a long awaited Tesla robotaxi this August. Assuming it happens, the service will join a fleet of other companies hoping to bring driverless rides to cities worldwide. But the road so far for autonomous taxis has been far from smooth.

Joining us now is Michael Wagner, CEO of Edge Case Research, a firm that helps businesses manage risk with driverless technology. Michael, it is good to see you. And maybe to start, Michael, just kind of get your top-down view of robotaxis, because a lot of viewers, Michael, they have been seeing these headlines of frustrated local officials, right, mishaps, accidents. They might think that kind of progress in this area has stalled, has it, Michael?

MICHAEL WAGNER: Well, thanks for having me. It's certainly an interesting time. I think we're in the moment where the technology is good enough in order to start operating in a lot of different routes, but it's not yet good enough to operate everywhere. And so the smart moves that a lot of the technology developers are taking come in around which roads, which routes they're going to be able to take safely. So that's what we're seeing now is some calibration to be able to determine where it works and where it doesn't.

JULIE HYMAN: And what characterizes, Michael, where it works and where it doesn't right now?

MICHAEL WAGNER: A lot of it is simplicity, because it turns out, especially driving in a city, is very complicated. You have to understand the context of what other pedestrians and what other cars are doing. And so typically, the simpler the route is, the easier and the safer it's going to be for these robotaxis.

JOHS LIPTON: And Michael, I'm interested to dig in some names. As we noted, Tesla going to host this robotaxi event in August. What would you expect to see there, Michael?

MICHAEL WAGNER: Well, they're obviously being quite aggressive in being able to roll out this technology. And they do have a whole lot of data that they can use in order to calibrate and validate their systems. I think what I would really love to see in that kind of event is what's called a safety case, which is a structured argument for why the technology is ready to go out into the road.

We have standards that are written, like UL 4600, that they could use to be able to argue that very effectively to the public and to regulators.

JULIE HYMAN: Do you think that companies like Tesla have done a good job managing expectations around what autonomous driving is currently capable of and the timeline for when it's going to be capable of doing more?

MICHAEL WAGNER: So I think there's a variation in how well the companies have done. I run a startup company myself, and I understand that we need to be bullish about the future and paint a picture that shows where the technology could end up. So I understand that these startups need to do something like that. However, it's very complicated to explain to the general public what makes a driving test difficult and what makes it easy. Sometimes it's very unintuitive. And that communication challenge is a challenge.

But I think as we start to see safe demonstrations from some of the players, we start to see smooth operations and get some sort of public testimonials out there, as well as communication with states and municipalities, we're going to start to really get that communication down.

JOHS LIPTON: And Michael, I just want to get your take on GM's self-driving unit Cruise. Mike, you know, of course, grounded their fleet last year after that accident. It sounds like they're resuming testing in Phoenix, new management team. But what does Cruise's future look like, Michael?

MICHAEL WAGNER: Well, obviously, this is a big point where it could go in a very positive direction or in a negative direction. The good news is that they've brought in a very strong management team. And so I'm definitely rooting for them. That team understands some of the technical solutions that they can follow in order to get their tech out there safely. For example, doing a lot of data analysis with safe manually driven vehicles to understand the routes that they're maybe thinking about taking now in Phoenix.

So I certainly am rooting for them and hoping that they'll succeed. But again, the key to this is going to be strong safety culture. Can they transform that safety culture and set up a transparent communication about where they stand?

JULIE HYMAN: So Michael, to finish, zooming back out here, what do you think is the realistic timeline for when-- I don't even know what the tipping point would be. So I guess tell us what the tipping point would be and when do you think we'll get there.

MICHAEL WAGNER: Well, we've talked to date a lot about robotaxis, OK? So I think that application is going to be quite incremental. If you look at what a lot of the public companies in this space are doing, they're saying that robotaxi proliferation commercially will take a few more years. I think much sooner than that, we're going to see self-driving trucks out on highways. Those operations are planned for the end of 2024. And there's obviously a great economic incentive to get that working.

So I think we're going to see trucks first. And then we're going to see some more scale on robotaxis in two to three-year time frame.

JOHS LIPTON: And Michael, when you look at the big players right now, Alphabet, GM, Amazon, do one of those players in your opinion, Michael, have competitive advantages that the others don't?

MICHAEL WAGNER: Well, several of them have been in this space for quite some time. Waymo, I think, would be acknowledged by many as having a really strong technology, a lot of provenance behind that technology. You know, but a lot of this is frontier Tech And so it could even be a smaller player that's going to get out there and make some technological advancement that's going to open up a new route.

JULIE HYMAN: Michael, thanks so much for your perspective. Really appreciate it.

MICHAEL WAGNER: Thank you.