Last year, Palo Alto launched its ridesharing service, the “Palo Alto Link,” but the operational costs have proven to be quite high. Recently, Tesla announced its plans to introduce robotaxis, and the city government has begun discussions with Tesla to explore the possibility of testing this service in Palo Alto.

According to a report by Palo Alto Online, city spokesperson Meghan Horrigan-Taylor noted that if this partnership succeeds, Tesla’s robotaxis could complement the existing taxi services. This conversation comes at a time when the city is reconsidering options for providing affordable transportation to its residents.

The free Palo Alto Shuttle, which once operated two fixed routes, ceased operations in 2020. During the COVID-19 pandemic, the city faced a significant drop in revenue and changes in commuting patterns.

Launched in March 2023, the Palo Alto Link serves as a more flexible and convenient alternative to lower-cost ridesharing options like Uber Pool. While it has restrictions on operating hours and coverage, the service offers an affordable transit solution for people trying to travel within the city, with some instances even providing free rides.

City officials report that the Palo Alto Link has gained some traction, with ridership increasing from 2.7 passengers per service hour at the program’s inception to 3.1 in the spring of this year. However, it now faces funding challenges. Initially, it received a $2 million, two-year grant from the Santa Clara Valley Transportation Authority. As this funding is set to expire, the city must now look for ways to cover these costs.

Currently, the Palo Alto City Council is willing to invest additional funds to sustain the service. A proposal set for discussion on October 28 aims to extend the existing Palo Alto Link service until June 2025. As part of the proposal, one-way fares will increase from $3.50 to $4, with discounted prices available for children and seniors. Passengers will also have the option to purchase weekly passes for $40 (up from $20) and monthly passes for $130 (previously $65).