Tesla Shares Surge Following Regulation News

By Akash Sriram
(Reuters) – Tesla shares rose more than 5% on Monday after Bloomberg News reported that President-elect Donald Trump's transition team was planning to establish federal regulations for autonomous vehicles.

This comes shortly after Trump appointed Tesla's CEO, Elon Musk, as a co-head of the administration's government efficiency department.

Trump's team is seeking policy leaders for the transport department to create a federal regulatory framework, according to sources familiar with the matter.

Last month, Musk criticized the cumbersome state-by-state approval process for self-driving vehicles as "incredibly painful," following his introduction of a two-seat "Cybercab" robotaxi devoid of a steering wheel and foot pedals, set to launch in 2026.

Mamta Valechha, an analyst at Quilter Cheviot, stated, "A unified federal regulation could streamline this (approval process), allowing Tesla (NASDAQ:TSLA) to push forward more rapidly with FSD testing."

However, the regulation is not the main obstacle for Tesla currently; rather, it is the company’s Full Self-Driving (FSD) driver assistance software, which is not fully autonomous and still requires driver supervision.

The FSD technology, under development for over four years, is currently the subject of an investigation by a U.S. auto safety body due to four reported collisions involving Tesla vehicles equipped with this software, one of which resulted in a fatal crash in 2023.

Trump's victory has propelled Tesla beyond a $1 trillion market valuation, with shares rising nearly 28% since November 5, driven by investor optimism that Musk's connections to the White House would facilitate regulatory easing for self-driving vehicles.

This significant increase has pushed the stock's price-to-earning multiple, a common benchmark for stock valuation, above traditional automakers like Ford Motor (NYSE:F) and General Motors (NYSE:GM), as well as tech giants such as Apple (NASDAQ:AAPL) and Nvidia (NASDAQ:NVDA).