(Reuters) - China-based autonomous driving startup WeRide has received approval from California to test its driverless vehicles with passengers, according to a permit from the state's utility regulator.

The move comes as the company seeks a valuation of as much as $5 billion from its New York IPO even as the U.S. is set to ban vehicles with China-developed systems, according to people briefed on the matter.

The permit from the California Public Utilities Commission (CPUC) - issued earlier this month for three years - allows WeRide to ferry passengers in test vehicles with a driver and without one. WeRide will not be allowed to offer rides to the general public and cannot charge any fares.

WeRide has 12 active vehicles and will operate in San Jose and nearby areas, CPUC said in a statement to Reuters.

Developing and commercializing robotaxis in the U.S. has been tougher than expected with regulatory hurdles, opposition from city agencies and public outrage.

Alphabet's Waymo, which has about 700 vehicles in its fleet, is the only U.S. firm operating uncrewed robotaxis that collect fares.

General Motors' Cruise restarted testing with safety drivers in April after one of its vehicles hit a pedestrian last year.

WeRide, founded in 2017, first received permits from California to test its vehicles without passengers in 2021. The company, which also makes autonomous vans, buses and street sweepers, has driverless permits in Singapore and the United Arab Emirates.

WeRide did not immediately respond to Reuters' requests for further details.

(Reporting by Sourasis Bose in Bengaluru and Abhirup Roy in San Francisco; Editing by Anil D'Silva)