New York: Tesla Inc. shares surged over 5% on Monday following a Bloomberg report indicating that President-elect Donald Trump’s transition team is considering federal regulations for autonomous vehicles.
This development comes shortly after Trump appointed Tesla CEO Elon Musk as a co-head of his administration’s government efficiency department, signaling closer ties between the automaker and the incoming administration.
Federal Framework for Autonomous Vehicles
The report suggested that Trump’s team is actively seeking policy leaders within the Department of Transportation to establish a unified regulatory framework for self-driving vehicles. This move could streamline the approval process for autonomous technology, which Musk has criticized as overly burdensome.
Musk recently described the state-by-state approval system as “incredibly painful”, highlighting the challenges faced by Tesla and other automakers. The CEO made the remarks weeks after unveiling Tesla’s futuristic two-seat “Cybercab” robotaxi, which lacks a steering wheel or pedals and is expected to enter production in 2026.
“A unified federal regulation could streamline this (approval process), allowing Tesla to push forward more rapidly with FSD testing,” commented Mamta Valechha, an analyst at Quilter Cheviot.
Challenges Beyond Regulation
Despite the potential benefits of a centralized regulatory framework, Tesla’s immediate hurdles lie in the advancement of its Full Self-Driving (FSD) software. The technology, which has been under development for over four years, is not yet fully autonomous and still requires driver supervision.
The FSD software is also under scrutiny by the U.S. National Highway Traffic Safety Administration (NHTSA) following multiple incidents, including a fatal crash in 2023, involving Tesla vehicles equipped with the system.
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Market Reaction
Investors have responded positively to Trump’s victory and Musk’s White House connections, propelling Tesla’s market valuation past the $1 trillion mark. Since November 5, Tesla’s shares have climbed nearly 28%, fueled by optimism that Musk’s influence in Washington could ease regulatory challenges for self-driving vehicles.
The rally has elevated Tesla’s price-to-earnings ratio to unprecedented levels, surpassing those of traditional automakers like Ford Motor Co. and General Motors Co., as well as tech giants such as Apple Inc. and Nvidia Corp.
