Tesla shares surge amid reports of federal self-driving vehicle regulations under Trump administration

Tesla's stock jumped more than 5 percent on Monday after a Bloomberg News report that President-elect Donald Trump's transition team is considering federal regulations for autonomous vehicles. The news follows Trump appointing Tesla CEO Elon Musk to lead his incoming administration's government efficiency team as co head. Trump's team is already in talks with transportation policy leaders to create a unified federal regulatory framework for self-driving vehicles, Bloomberg sources say.

Musk has been critical of the existing approvals process for autonomous vehicles on a state-by-state basis, and sees this as fitting well into the problem of road safety, he says. Tesla’s futuristic two-seat "Cybercab" robotaxi, without a steering wheel or pedals, announced in May and planned for production in 2026, came less than two weeks after Musk’s comments.

Mamta Valechha, an analyst at Quilter Cheviot, said a streamlined federal regulatory framework could accelerate Tesla’s Full Self Driving (FSD) testing and deployment. But Valechha said regulatory hurdles aren't the biggest hurdle for Tesla. For over four years the company has been developing its FSD software – which has not yet been eliminated and is still under the control of driver.

The U.S. auto safety regulators are investigating Tesla's FSD after incidents, including reported collisions involving four vehicles equipped with the company's software. In 2023, one of those crashes was fatal, a factor that has prompted concerns regarding the safety and readiness of the technology for wide spread use.

Tesla’s stock has fattened nearly 28 percent since November 5, catapulting the company over the USD 1 trillion valuation pile. While there are plenty of reasons for debate, investors seem to be taking hope that Musk's proximity to the White House might help facilitate regulatory changes favorable to self driving technology.

By these gains, however, the stock’s rise has driven its price to earnings ratio way past traditional automakers such as Ford and General Motors and even tech giants like Apple and Nvidia. Analysts caution that while federal regulations could provide clarity, Tesla’s FSD technology and safety record remain critical factors for its future success.

The potential regulatory shift represents a significant milestone for the autonomous vehicle industry, signaling increased federal interest in shaping the future of self-driving technology.