As autonomous vehicle (AV) technology hurtles towards wide-spread commercialization, the U.S. is proving that there is no single roadmap for AV success. Instead, the regulation of AVs represents an irregular patchwork where each state defines its own rules, timelines, and barriers to entry. For companies like Waymo, Tesla, and Zoox, navigating this fragmented landscape is as critical as the technology itself.
The federal government plays a limited role in AV legislation, focused primarily on vehicle safety standards under the National Highway Traffic Safety Administration (NHTSA). Instead, the real regulatory action takes place at the state level. This uneven regulatory environment is creating clear winners and losers, with some states welcoming largely unrestricted AV innovation and others erecting tricky, bureaucratic roadblocks.
According to a March 2025 report from Wells Fargo Securities, about 23 U.S. states- representing roughly 50% of the population- have light-touch or no AV-specific regulations. These states are greenfields for AV companies eager to test and launch commercial operations. Texas, for example, requires no special permits beyond standard traffic compliance, making it a hotbed for potential launches.
In contrast, California, which is home to about 15% of the U.S. rideshare market, has the most stringent and complex regulatory process. AV companies must secure up to seven different permits from both the Department of Motor Vehicles (DMV) and the California Public Utilities Commission (CPUC) to operate commercially. While Waymo has successfully navigated this labyrinth, Tesla has not yet received even the first-level testing permit.
Tesla in Texas
Last week, Tesla was granted a permit to offer its ride-hailing service in Texas. The company, which has been offering a limited AV pilot service in Austin since June, plans to take advantage of Texas’ less stringent AV regulation. CEO Elon Musk has ambitious plans for Tesla’s self-driving cars. Speaking at the company’s second-quarter earnings conference call in July, he said:
“I think we’ll probably have autonomous ride-hailing in probably half of the population of the US by the end of the year.”
With minimal regulatory friction, Texas presents an ideal testing ground to kickstart Musk’s expansive vision. However, the company still faces internal hurdles. Despite its ambitions, Tesla’s Full Self-Driving (FSD) software remains classified as Level 2 autonomy, meaning a human driver must remain in control. The presence of job adverts for safety drivers across U.S. cities suggest that Tesla is still in the data collection phase, rather than ready for full deployment.
Waymo’s Strategic Edge
Meanwhile, Waymo is striding ahead, with commercial driverless services already live in cities like San Francisco and Phoenix, and expansion plans for 12 more markets. Its AVs operate at Level 4 autonomy and have logged over 50 million miles, with safety data showing 81% fewer injury-causing crashes than human drivers.
Patchwork Challenges Ahead
This inconsistent landscape poses both opportunities and challenges. In states like Georgia, Florida, and Nevada, AV companies face minimal regulatory hurdles. But in 16 states, covering 23% of the population, AV regulations remain undefined, making investment risky.
As the AV industry continues to grow, the absence of a national regulatory framework could slow progress and create safety and equity gaps. For now, AV companies must continue playing regulatory hopscotch, tailoring their strategies to the unique demands of each state. Until the U.S. reaches some consensus on AV policy, whilst the road ahead may be autonomous, it is far from uniform.
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