Tesla shares soared over 9% on Monday following the launch of its long-anticipated robotaxi service, marking a key milestone in the company's autonomous driving ambitions. CEO Elon Musk has long emphasized self-driving technology as central to Tesla’s high valuation. The company rolled out a small fleet of driverless taxis in Austin, Texas, on Sunday, offering rides without human drivers for a flat rate of $4.20 within a restricted area. This marks the first time Tesla vehicles have transported paying passengers without a driver behind the wheel.

The trial is vital for Tesla as it shifts focus from mass-market electric vehicles to autonomous technology and robotics, especially amid slowing EV demand and increasing competition from Chinese automakers. Tesla informed U.S. regulators that details about the robotaxi’s safety features are confidential and should not be disclosed publicly. This comes after the National Highway Traffic Safety Administration (NHTSA) sought clarification on safety concerns, particularly in adverse weather conditions.

Wedbush Securities analyst Dan Ives, a long-time Tesla supporter who experienced multiple rides during the test, described the experience as “safe, comfortable, and personalized.” He noted the vehicle’s smooth navigation through challenging urban scenarios. Videos from social media influencers also showed the robotaxis handling complex city traffic with caution, yielding space and slowing for oncoming vehicles. Despite this promising start, experts warn the small-scale trial—consisting of around 10 cars with safety monitors onboard—is just an early phase in a lengthy path toward wide deployment.

Tesla and competitors like Waymo have faced federal scrutiny and vehicle recalls due to accidents. Critics remain skeptical about Tesla’s reliance on camera-based AI rather than incorporating backup sensors like lidar and radar, citing weather and lighting limitations. The company also faces regulatory hurdles, including a new Texas law effective September 1 that will require permits for self-driving vehicles, reflecting bipartisan concerns over safety.

If the stock rally holds, Tesla stands to gain nearly $100 billion in market capitalization, pushing its valuation close to $1 trillion. However, shares are still down about 12% year-to-date, impacted by weaker demand and controversy surrounding Musk’s political affiliations. Despite this, Tesla trades at a steep multiple of 149 times forward earnings, significantly higher than rivals like Ford (9.3x) and even tech leaders like Microsoft (31.6x).