Tesla Stock Rallies As Trump Team Prioritizes FSD Regulations: Analyst Calls It 'Huge Step' But Retail Cautious

Tesla, Inc. ($TSLA) shares rose sharply in premarket trading on Monday after a Bloomberg report said President-elect Donald Trump’s transition team was considering prioritizing the formation of a federal framework for full self-driving (FSD) electric vehicles.

If the incoming administration approves full self-driving, it is a definitive positive for Tesla, which now promotes its FSD as "FSD (Supervised.)"

The report said Trump’s transition team is eyeing policy leaders from the Department of Transportation (DOT) to develop the framework to regulate self-driving vehicles. While DOT can issue rules through the National Highways Traffic Safety Administration, an act passed by Congress could kickstart widespread adoption, it added.

Among those who are being considered to head the efforts are former Uber Technologies, Inc. ($UBER) executive Emil Michael as well as Rep. Sam Graves (R-Mo.) and Rep. Garret Graves (R-La.), Bloomberg said.

A Congressional nod would pave the way for an expeditious launch of Tesla’s Robotaxi - a fleet of driverless taxis lacking steering wheel and pedals, which is currently planned for late-2025 or 2026.

Commenting on the development, Wedbush analyst Daniel Ives said this is another indication that the "Trump Administration will aggressively go down the AI/autonomous path."

The analyst called this a "huge step" toward easing regulations for self-driving cars.

"The golden path for Tesla around Cybercabs and autonomous is now within reach, with an emboldened Trump/Musk strategic alliance playing out in real time and very in line with our thesis," he added.

The Wedbush analyst estimates that AI and autonomous opportunities are worth $1 trillion for Tesla alone. 

Ives has an "Outperform" rating and $400 price target for Tesla shares.

The Future Fund LLC Managing Partner Gary Black also concurred with Ives about the positive impact Trump prioritizing FSD vehicles can have on Tesla. That said, the fund manager says this is already been discounted by the stock, as it has rallied 28% since the night of Trump’s election victory compared to a merely 1% gain for the Nasdaq Composite.

On the Stocktwits platform, retail sentiment toward Tesla stock remained neutral.

TSLA sentiment and message volume November 18, 2024 premarket as of 8:50 am ET | Source: Stocktwits

In premarket trading, as of 8:50 am ET, Tesla shares were up 6.20% to $340.60. The stock was among the top-ten active stocks on Stocktwits.