Earlier quoted context omitted.
The cap is legally mandated, for safety reasons. They are not regulated for safety in high speed crashes. https://en.m.wikipedia.org/wiki/Low-speed_vehicle
The cap is 35 mph according to the link here: https://news.ycombinator.com/item?id=10558220 It looks like Google limited it to 25 mph on their own accord.
From https://www.dmv.ca.gov/portal/dmv/?1dmy&urile=wcm:path:/dmv_...
An NEV/LSV is a motor vehicle that:
- Has four wheels.
- Within one mile can reach a speed of more than 20 miles per hour (mph) but not more than 25 mph on a paved level surface.
...
Local authorities, by ordinance or resolution, may restrict or prohibit the use of NEVs/LSVs. An NEV/LSV may:
- Not be operated on any roadway with a speed limit above 35 mph.
...