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As the city weighs the future of its popular but costly rideshare service, Palo Alto Link, city leaders are exploring a deal with Tesla that would turn local streets into a testing ground for the car company’s newly unveiled robotaxi service.
The city recently held a preliminary discussion with Tesla to discuss a potential partnership, according to Meghan Horrigan-Taylor, the city’s spokesperson. If approved, the deal could supplement the existing taxi service that serves the Palo Alto community, including Palo Alto Link, a rideshare program that made its debut last year.
The discussions come at a time when the city is rethinking its options for providing affordable rides to community members. The free Palo Alto Shuttle, which ran two fixed routes, ceased operations in 2020 as the city dealt with plummeting revenues and shifting commute patterns in the midst of the Covid-19 pandemic. Palo Alto Link, which functions like a cheaper Uber Pool, rolled out in March 2023 as a more nimble and convenient replacement. While its hours of operations and geographic reach are somewhat limited, the service offered cheap and, in some cases, free rides to people trying to get from one part of the city to another.
Palo Alto Link has gained some momentum, with the number of users rising from 2.7 per service hour at the onset of the program to 3.1 this spring, according to staff from the city’s Office of Transportation. Yet it is also facing a funding challenge. The initial rollout was supported by a two-year $2 million grant from the Santa Clara County Valley Transportation Authority. With that grant expiring, the city is now forced to bear the brunt of the costs.
So far, the City Council has proved willing to pony up more money to keep the service going. Under a proposal that the council will consider on Oct. 28, the existing Palo Alto Link service would be extended through June 2025. Costs for users would go up from $3.50 to $4, though there would be discounts for youth and seniors. Users would also be able to get weekly passes for $40 (up from $20) and monthly passes for $130 (up from $65).
The city has also reached a deal with Stanford Research Park, which is contributing up to $600,000 annually to support the city’s contract with Nomad Transit, the contractor providing the service. Even with the Stanford contribution, the current budget projects $1.26 million in expenses for Palo Alto Link in fiscal year 2025, with $500,000 coming from the general fund.
While a deal with Tesla could augment the city’s rideshare program, it is far from certain. Horrigan-Taylor noted that the California Public Utilities Commission and the California Department of Motor Vehicles are the regulatory bodies responsible for evaluating and approving the operation of autonomous vehicles in our state.
“They also assess the safety and readiness of autonomous vehicles for public roads,” Horrigan-Taylor said in an email.
While Tesla has been hyping its plans to launch fully autonomous vehicles for years, its efforts have so far generated a mixed response. On Oct. 11, Tesla founder Elon Musk unveiled the company’s robotaxi during a 20-minute presentation in Los Angeles and vowed to start building fully autonomous “cybercabs” by 2026. According to Reuters, the unveiling left many investors hungry for additional details and did little to assuage their concerns. At the end of the media event, Tesla stocks dipped by 9% while those of Uber and Lyft rose by 10% and 11%, respectively, Reuters reported.
The company’s safety record is also facing scrutiny from testers and regulators. One individual who has been testing the fully autonomous vehicles told the Associated Press in August that he had used Tesla’s vehicles three times over the prior four months and that each time the vehicle made “unsafe or illegal turns,” in one cases making a left turn from a through lane while running a red light.
Last week, the National Highway Traffic Safety Administration announced that it is investigating whether Tesla’s software has the necessary safeguards in place to ensure that drivers can take control of the vehicles in situations where the autonomous technology is failing, according to the New York Times.
But at least one Palo Alto lawmaker believes that the company could represent a solution to the city’s ridesharing dilemma. Council member Greg Tanaka, who attended the Los Angeles event earlier this month, called the new robotaxi “very impressive.”
“Tesla has the technology, they have the hardware but they’re looking at test areas,” Tanaka said during the Oct. 21 meeting of the council. “That’s where Palo Alto comes in.”
Tanaka, a tech enthusiast and the council’s leading fiscal conservative, observed that Palo Alto Link continues to lose money.
“I think everyone in the community loves it, but the big question we’ve all been discussing is, ‘How do we fund it?'” Tanaka asked.
Tanaka said that he, City Manager Ed Shikada and Chief Transportation Official Philip Kamhi had a discussion with Tesla last week about the potential partnership. The company, he noted, already has its engineering headquarters in Palo Alto.
While Musk has become notorious in recent months for spreading misinformation on X and for raising money for former President Donald Trump, his relationship with the liberal city in the heart of Silicon Valley has been mostly copacetic. In January, the city and Tesla signed a deal to upgrade the electric grid in the area around the Stanford Research Park, a project whose costs are being evenly split and that is expected to benefit the city’s broader plan to modernize its grid. Tesla also unveiled last month a proposal to install a metallic grizzly bear sculpture near its local headquarters on Page Mill Road.
While the potential Tesla deal won’t be realized for some time because of regulatory hurdles, Palo Alto Link is expected to get extended next week for at least another eight months. According to a new report from the Office of Transportation, its hours of operation would be 7 a.m. to 7 p.m. and it will operate 10 vehicles to provide “virtually positioned pick-up and drop-off locations with an acceptable walking distance with the help of a web application.” It will also continue to provide door-to-door service for riders who may require additional assistance.
“The service addresses first-/last-mile challenges in Palo Alto and provides a convenient and affordable transportation option for residents, employees, and vulnerable/transit-dependent populations,” the report states.
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This is so embarrassing. Why not also talk to that goon about tunneling everywhere underneath Palo Alto so we can have 700mph hyperloop rides across town. Just as much of a waste of time. Glad I don’t live in this city anymore. Pathetic.