Electric vehicle giant Tesla TSLA shares climbed over 5% on Monday, reaching $338.74, following a Bloomberg report indicating that President-elect Donald Trump’s transition team is prioritizing a federal framework for autonomous vehicle (AV) regulations. Talks are rife that Donald Trump will ease regulations for self-driving cars during his upcoming second presidential term.
RBC Capital analyst Tom Narayan emphasized the potential benefits of federal deregulation for Tesla, which derives 33% of its valuation from the AV business, as quoted on electric-vehicles.com. "Federal deregulation on autonomous vehicles would be a positive for Tesla shares. Robotaxis account for 44% of our valuation," Narayan wrote in a research note.
He added that federal policies could also support Tesla’s efforts to achieve Level 4 autonomy for its Full Self-Driving (FSD) system, representing an additional 33% of Tesla’s valuation. Narayan foresees AVs transforming into multi-purpose living, working, and sleeping spaces, with Tesla developing purpose-built vehicles for these uses.
Despite optimism about deregulation, Narayan acknowledged hurdles for Tesla's FSD system. Current data shows Tesla tracking at 10,000 miles before requiring human intervention, compared to Waymo's 17,000 miles. In states like California, obtaining robotaxi licenses may require lidar systems — a technology Tesla's camera-based system avoids. Narayan questioned whether federal policies would supersede such state-level requirements.
Tesla is targeting volume production of its Cybercab by 2026, aiming for an output of 2 million units annually without extended ramp-ups. CEO Elon Musk expressed confidence in reaching this milestone during the last earnings call. Tesla also plans to debut its Cybercab in ride-hailing services in Texas and California as early as next year.
Uber UBER stock and shares of rival Lyft LYFT fell 5.4% and 4.5%, respectively, on Monday following a report that Donald Trump will ease regulations for self-driving cars during his upcoming second presidential term. Tesla's plan for a robotaxi network could challenge Uber's command of the ride-hailing market.
However, Uber is also actively advancing in the robotaxi space, leveraging its app as a platform for autonomous vehicle developers to connect with potential users. The ride-hailing giant has forged partnerships with leading companies like Google’s GOOGL Waymo, General Motors’ GM Cruise, and Avride, among others, to integrate autonomous vehicles into the Uber app.
Meanwhile, earlier this month, Lyft announced partnerships with technology innovators like Mobileye MBLY to accelerate its AV initiatives. However, Tesla seems to have an edge on the matter as Tesla owners will be able to list their vehicles on a Tesla-operated ride-hailing app, utilizing the company’s Full Self-Driving technology.
Tesla-heavy ETF Consumer Discretionary Select Sector SPDR Fund XLY advanced about 1% on Nov. 18, while another ETF ARK Autonomous Technology & Robotics ETF ARKQ jumped 1.6% on the day. Uber-heavy fund iShares US Transportation ETF IYT fell 1.1% on Nov. 18.
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