Tesla’s plans for autonomous ride-hailing services could be a step closer to becoming reality, with recent developments suggesting that regulatory obstacles may soon be overcome. Shares in the electric carmaker surged more than 5% on Monday after Bloomberg reported that President-elect Donald Trump’s transition team intends to prioritize the establishment of a new federal framework for self-driving car regulations at the U.S. Department of Transportation.
This proposed regulatory shift could significantly benefit Tesla, which has been focused on advancing its Full Self-Driving (FSD) technology and its Robotaxi business. Tesla CEO Elon Musk, a vocal supporter of Trump during his presidential campaign, has tied the company’s future to these innovations, viewing autonomous ride-hailing as a critical growth avenue.
Tesla’s market capitalization has already surpassed $1 trillion (€0.94 trillion) since Trump’s election victory, with the company’s shares soaring 37% since Election Day. Despite global competition, including from Chinese rivals, Tesla has seen impressive growth, and the proposed changes to federal regulations could accelerate its expansion further.
From Electric Vehicles to Autonomous Vehicles
Musk, who took the helm of Tesla in 2008, has long been seen as a driving force behind the electric vehicle (EV) revolution. However, as global demand for EVs has weakened and competition has increased, Tesla has focused on finding new growth opportunities. In October, Musk revealed the Tesla Robotaxi, an autonomous Cybercab service that operates without a steering wheel or pedals. The service would use cameras and artificial intelligence for navigation, with costs projected to be as low as €0.18 per mile. Tesla plans to begin the service in Texas and California by 2025, with broader expansion contingent on regulatory approvals. The company aims to start mass production of the Cybercab by 2026.
Regulatory Hurdles Ahead
Despite Musk’s ambitious goals, Tesla’s FSD technology has faced scrutiny. In the U.S., manufacturers are allowed to deploy only 2,500 self-driving vehicles per year under National Highway Traffic Safety Administration (NHTSA) exemptions. Tesla’s FSD system, which still requires driver oversight, came under investigation last month after a fatal pedestrian accident involving a Tesla vehicle in autonomous mode. Tesla’s fully autonomous vehicles, which lack steering wheels and pedals, will face significant regulatory challenges.
However, the Trump administration’s proposed regulatory changes could help smooth the path for Tesla’s self-driving cars. Any new rules will need bipartisan support from Congress, meaning the transition could face delays, but the shift would nonetheless represent a major step forward for the company.
Global Autonomous Vehicle Progress
Progress in the U.S. could spur similar advancements in other regions. In the European Union, Germany has already developed frameworks for level 3 and level 4 autonomous driving, with vehicles at these levels expected to be on the road by 2025. Tesla aims to launch its FSD vehicles in Europe and China in early 2025, aligning with these regulatory timelines.
In China, Tesla’s key market, autonomous driving is also advancing rapidly. The government has selected 20 cities for a pilot program on smart-connected vehicles, with an estimated 250,000 level 4 autonomous vehicles projected to be sold for mobility services by 2034.
With regulatory frameworks in the U.S., EU, and China evolving, Tesla’s ambitious Robotaxi service could transform the company’s future and reshape the global transportation landscape.
