President-elect Donald Trump’s transition team has signalled plans to prioritize the development of a federal framework for fully autonomous vehicles, a move that could have significant implications for Tesla Inc. and its CEO, Elon Musk, Bloomberg reported.
According to people familiar with the discussions cited by the publication, these regulatory ambitions could reshape the landscape for self-driving technology in the United States and accelerate Tesla’s plans to deploy driverless vehicles at scale.
The push for new regulations comes at a pivotal time for Musk, who has established himself as a key ally of Trump and a major donor to his campaign.
With Musk recently appointed, alongside entrepreneur Vivek Ramaswamy, to lead the president-elect’s Department of Government Efficiency, he has gained political leverage that could expedite regulatory changes.
Plans under consideration
According to individuals with knowledge of the discussions, who requested anonymity due to a lack of authorization to speak publicly, the Trump team is seeking policy leaders for the department to create a regulatory framework for self-driving vehicles, Bloomberg said.
Although the Transportation Department, via the National Highway Traffic Safety Administration (NHTSA), can implement regulations to facilitate the deployment of autonomous vehicles, it would take an act of Congress to pave the way for widespread adoption of self-driving cars.
According to two sources, a bipartisan legislative proposal in its preliminary stages aims to establish federal guidelines for AVs.
One candidate under consideration for Transportation secretary is Emil Michael, a former Uber Technologies Inc. executive who has spoken with Trump’s team and potential staffers, they said.
The work is in its early stages and policy details have yet to be determined, they said.
Republican Representatives Sam Graves of Missouri and Garret Graves of Louisiana have also been considered to lead the department, the people said.
Current challenges facing Tesla’s AV dreams
Existing federal rules pose formidable challenges for companies like Tesla, which plans to produce large numbers of driverless robotaxis.
Current regulations cap the number of self-driving vehicles a manufacturer can deploy at 2,500 annually under special exemptions.
Efforts to increase that limit to 100,000 have repeatedly failed in Congress due to legislative gridlock.
The Trump administration’s support for AVs may revive hopes for such legislative changes.
While the National Highway Traffic Safety Administration (NHTSA) has some latitude to ease restrictions, a comprehensive federal framework requires legislative backing.
Past efforts, including one during Trump’s first term, advanced through the House but faltered in the Senate.
Attempts to merge AV-focused bills with other proposals also stalled during President Biden’s administration, largely over disagreements about liability protections for manufacturers.
Tesla’s path forward and AV market competition
Tesla’s ambitious plans hinge on its Full Self-Driving (FSD) system, currently classified as a Level 2 driver-assist system.
Despite years of promises, FSD has yet to achieve true autonomy, with critical safety interventions occurring every 100-200 miles.
To deploy viable robotaxis, this number needs to improve by orders of magnitude.
Musk optimistically projects that Tesla will achieve self-driving capabilities in Texas and California by mid-2025, though he has historically shifted timelines.
The creation of a federal AV framework could also open doors for other robotaxi developers, such as Waymo and Zoox.
Alphabet-owned Waymo has been expanding its robotaxi operations in major cities like San Francisco, Los Angeles, and Phoenix, while Amazon’s Zoox has begun testing in Las Vegas and San Francisco.
Tesla’s stock outlook amid regulatory shifts
Tesla’s stock has reacted positively to potential regulatory tailwinds, surging over 5% Sunday night on trading platforms like Robinhood as news of Trump’s interest in self-driving cars spread.
Analysts have, in the recent past, expressed bullishness regarding Tesla’s AV vision adding to its stock and materialisation of Trump’s plans could unlock this opportunity.
Analysts at Morgan Stanley, led by Adam Jonas have argued earlier that if Musk leverages his political influence effectively, Tesla could experience a sustained rally owing to its bold commitment to autonomous vehicle development and its proprietary robotaxi platform.
Analysts believe Tesla’s autonomous technology could be the “great unlock” that elevates the company into an AI leader.
Morgan Stanley’s most bullish scenario forecasts Tesla’s stock rising to $500.
The firm contends that Tesla’s expertise in AI, data, and vertical integration uniquely positions it to capitalize on the AV market’s growth.
Dan Ives, an analyst at Wedbush, shares Morgan Stanley’s optimism.
Ives predicts that Tesla’s market capitalization could rise from $1 trillion to $1.5 trillion or even $2 trillion in the next 12 to 18 months, driven by FSD technology and the upcoming launch of the Cybercab, Tesla’s driverless vehicle.
He highlighted that under Trump’s leadership, regulations around AVs could become significantly more favourable, reducing the “regulatory spiderweb” that has previously hindered Tesla’s progress.
RBC Capital Markets has also revised its outlook for Tesla, raising its price target to $387 from $323.
The bank cited its growing confidence in Tesla’s AV capabilities and operational advantages gained through vertical integration.
RBC analysts were particularly encouraged by their tour of Tesla’s Giga Texas facility, which showcased the company’s progress in scaling its autonomous technologies.
They also noted Tesla’s competitive edge over legacy automakers due to its hands-on approach to software, hardware, and AI development.
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