Tesla surges as Trump plots regulatory overhaul of self-driving cars

Tesla shares soared by over 7% following reports that U.S. President-Elect Donald Trump’s administration plans to prioritize federal regulations for self-driving vehicles. Bloomberg reported that Trump’s transition team has identified autonomous vehicle policy as a critical focus for the Department of Transportation.

In a single trading session, Tesla’s market value was boosted by $70 billion as news broke about the anticipated facilitation of autonomous driving vehicle regulation. The U.S. currently lacks a unified federal framework for self-driving cars, leaving states to craft individual rules that have created a fragmented and often cumbersome approval process.

Critical to corporate vision

Tesla CEO Elon Musk has been a vocal critic of the fragmented state-by-state regulatory system, describing it as a significant barrier to the widespread adoption of autonomous vehicle technology.

Musk views self-driving capabilities as a pivotal asset for Tesla’s long-term success. During the company’s most recent earnings call, he hinted at plans to work closely with federal policymakers to streamline legislation.

Musk’s endorsement of Trump’s candidacy underscores the strategic importance of advancing self-driving regulations. His remark that he “would be fucked” without Trump’s election victory highlights just how critical these policy changes are to his vision for Tesla’s future.

Tesla deploys an advanced version of Full-Self Driving (FSD) in the U.S., which is currently under investigation by the National Highway Traffic Safety Administration (NHTSA) over accident frequencies.

But it plans to go several steps further, beginning the production of the steering wheel-free, pedal-less Cybercab in 2026. The viability and commercial success of this project depend on lowering the regulatory hurdles.

Current federal rules limit the deployment of self-driving vehicles to 2,500 units per year through a waiver system. Efforts to raise this cap have repeatedly stalled in Congress, with legislation failing to pass during Trump’s first term.

If Trump sweeps the path for Musk, the latter would be one step ahead of other car makes, as his production plans for autonomous driving vehicles are already outlined.

Overly optimistic?

While regulatory clarity could streamline the road map for autonomous vehicles, Tesla still faces significant technological barriers. The company’s FSD system, which has been in development for over four years, remains far from achieving full autonomy.

According to Ashok Elluswamy, Tesla’s head of FSD, the company aims to achieve over 600,000 miles of autonomous driving between critical disengagements, a benchmark set by the National Highway Traffic Safety Administration (NHTSA).

Currently, Tesla’s system averages just 241 miles between disengagements, highlighting the scale of the challenge. Critics argue that Tesla’s timeline for achieving unsupervised autonomy, projected for 2025 in California and Texas, is overly optimistic.

Despite these challenges, investors remain hopeful about the new administration’s ability to drive policy changes that favor Tesla. Since Trump’s election victory, Tesla’s stock surge has propelled the company’s market capitalization past $1 trillion.