*

Musk emphasizes safety, limits robotaxi operations to

specific

conditions

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Republican Texas governor signs bill regulating autonomous

vehicles

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Law does not take effect until September

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About 10 cars carry invited riders in limited area, with

no one

behind wheel

(Adds background on Tesla robotaxi development)

By Norihiko Shirouzu and Abhirup Roy

AUSTIN, June 22 (Reuters) - Tesla deployed a

small group of self-driving taxis picking up paying passengers

on Sunday in Austin, Texas, with CEO Elon Musk announcing the

"robotaxi launch" and social-media influencers posting videos of

their first rides.

The event marked the first time Tesla cars without human

drivers have carried paying riders, a business that Musk sees as

crucial to the electric car maker's financial future.

He called the moment the "culmination of a decade of

hard work" in a post on his social-media platform X and noted

that "the AI chip and software teams were built from scratch

within Tesla."

Teslas were spotted early Sunday in a neighborhood called

South Congress with no one in the driver's seat but one person

in the passenger seat. The automaker planned a small trial with

about 10 vehicles and front-seat riders acting as "safety

monitors," though it remained unclear how much control they had

over the vehicles.

In recent days, the automaker sent invites to a select group

of influencers for a carefully monitored robotaxi trial in a

limited zone. The rides are being offered for a flat fee of

$4.20, Musk said on X.

Tesla investor and social-media personality Sawyer Merritt

posted videos on X Sunday afternoon showing him ordering,

getting picked up and taking a ride to a nearby bar and

restaurant, Frazier's Long and Low, using a Tesla robotaxi app.

If Tesla succeeds with the small deployment, it still faces

major challenges in delivering on Musk's promises to scale up

quickly in Austin and other cities, industry experts say.

It could take years or decades for Tesla and self-driving

rivals, such as Alphabet's Waymo, to fully develop a

robotaxi industry, said Philip Koopman, a Carnegie Mellon

University computer-engineering professor with expertise in

autonomous-vehicle technology.

A successful Austin trial for Tesla, he said, would be "the

end of the beginning - not the beginning of the end."

Most of Tesla's sky-high stock value now rests on its

ability to deliver robotaxis and humanoid robots, according to

many industry analysts. Tesla is by far the world's most

valuable automaker.

As Tesla's robotaxi-rollout date approached, Texas lawmakers

moved to enact autonomous-vehicle rules. Texas Governor Greg

Abbott, a Republican, on Friday signed legislation requiring a

state permit to operate self-driving vehicles.

The law, which takes effect September 1, signals that state

officials from both parties want the driverless-vehicle industry

to proceed cautiously.

Tesla did not respond to requests for comment. The

governor's office declined to comment.

"EASY TO GET, EASY TO LOSE"

The law softens the state's previous anti-regulation stance

on autonomous vehicles. A 2017 Texas law specifically prohibited

cities from regulating self-driving cars.

The new law requires autonomous-vehicle operators to get

approval from the Texas Department of Motor Vehicles before

operating on public streets without a human driver. It gives

state authorities the power to revoke permits for operators they

deem a public danger.

The law also requires firms to provide information on how

first responders can deal with their driverless vehicles in

emergency situations.

The law's permit requirements for an "automated motor

vehicle" are not onerous but require firms to attest their

vehicles can operate legally and safely.

It defines an automated vehicle as having at least "Level 4"

autonomous-driving capability under a recognized standard,

meaning it can operate with no human driver under specified

conditions. Level 5 autonomy is the top level and means a car

can drive itself anywhere, under any conditions.

Compliance remains far easier than in some states, notably

California, which requires submission of vehicle-testing data

under state oversight.

Bryant Walker Smith, a University of South Carolina law

professor who focuses on autonomous driving, said it appears any

company that meets minimum application requirements will get a

Texas permit - but could also lose it if problems arise.

"California permits are hard to get, easy to lose," he said.

"In Texas, the permit is easy to get and easy to lose."

MUSK'S SAFETY PLEDGES

The Tesla robotaxi rollout comes after more than a decade of

Musk's unfulfilled promises to deliver self-driving Teslas.

Musk has said Tesla would be "super paranoid" about robotaxi

safety in Austin, including operating in limited areas.

The service in Austin will have other restrictions as well.

Tesla plans to avoid bad weather, difficult intersections, and

will not carry anyone below age 18.

Commercializing autonomous vehicles has been risky and

expensive. GM's Cruise was shut down after a serious

accident. Regulators are closely watching Tesla and its rivals,

Waymo and Amazon's ( AMZN ) Zoox.

Tesla is also bucking the young industry's standard practice

of relying on multiple technologies to read the road, using only

cameras. That, Musk says, will be safe and much less expensive

than lidar and radar systems added by rivals.