Tesla stock surged 7% on Monday following a Bloomberg report indicating that the incoming Trump administration plans to prioritize relaxing autonomous vehicle regulations, while Uber stock dropped 7% on the same news. The development represents a significant shift in the regulatory landscape for AI-powered self-driving vehicles.
According to sources familiar with the matter, President-elect Donald Trump’s transition team has informed advisors that implementing a federal framework for self-driving vehicles will be a top priority for the Department of Transportation. Current federal regulations severely restrict car manufacturers’ ability to sell large quantities of vehicles without traditional steering wheels or pedals, with the National Highway Traffic Safety Administration (NHTSA) limiting manufacturers to just 2,500 self-driving vehicles annually.
The regulatory changes would particularly benefit Tesla CEO Elon Musk, a prominent Trump ally, who recently unveiled the Cybercab—an autonomous vehicle featuring no steering wheel or pedals. Tesla has announced plans to begin selling the Cybercab in 2026, and relaxed regulations could accelerate this timeline and allow for mass production.
Wedbush analyst Dan Ives characterized the potential regulatory easing as a “significant tailwind for Tesla’s autonomous and AI vision heading into 2025.” Ives estimated that autonomous vehicles represent a $1 trillion opportunity for Tesla and could propel the company to a $2 trillion valuation within 12 to 18 months—representing potential upside of 76% from current levels. He noted that “Musk’s significant influence in the Trump White House is already having a major influence.”
The news has different implications for ride-hailing giant Uber. While the stock dropped initially, Citi analyst Ronald Josey suggested autonomous vehicles might not be entirely negative for Uber’s business model. He argued that AV operators could leverage Uber’s existing network for ride demand, with Uber potentially offering fleet management and centralized services that could increase take rates.
Tesla stock has surged 37% since Trump’s election victory earlier this month, while Uber stock has declined 6% in the same period. The Trump transition team did not immediately respond to requests for comment on the reported regulatory plans.
Key Quotes
Building out AV Services, like Fleet management, and operating a centralized service per city/area likely lowers the barrier to entry for AV networks while leveraging Uber’s services. Simply put, by offering (and scaling) AV services across its partners, we believe take rates can increase as well.
Citi analyst Ronald Josey explained in a Friday note how Uber could potentially benefit from autonomous vehicles rather than being disrupted by them, suggesting the company could pivot to providing infrastructure services for AI-powered vehicle fleets.
Musk’s significant influence in the Trump White House is already having a major influence, and ultimately 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.
Wedbush analyst Dan Ives highlighted in a Sunday note how Elon Musk’s political connections are creating favorable conditions for Tesla’s AI-driven autonomous vehicle ambitions, potentially accelerating the company’s path to deploying self-driving technology at scale.
Our Take
This story illustrates how political dynamics are increasingly shaping AI deployment timelines and market valuations. The 37% surge in Tesla stock since Trump’s election reflects investor confidence that regulatory barriers to AI-powered autonomous vehicles will fall, potentially unlocking the massive autonomous transportation market years earlier than previously expected.
What’s particularly noteworthy is the $1 trillion valuation analysts are placing on Tesla’s autonomous AI opportunity—a figure that underscores how transformative AI applications in transportation could be. However, the technology still faces significant challenges beyond regulation, including safety validation, edge case handling, and public acceptance.
The divergent impacts on Tesla and Uber also highlight a critical question facing many industries: will AI-powered automation create winner-take-all markets, or will incumbents successfully adapt? Uber’s potential pivot to fleet management services suggests established players may find ways to remain relevant in an AI-driven future, though likely with transformed business models.
Why This Matters
This development marks a pivotal moment for AI-powered autonomous vehicle technology and could fundamentally reshape the transportation industry. The potential regulatory relaxation signals strong government support for self-driving AI systems, which could accelerate the deployment of autonomous vehicles across the United States.
For the broader AI industry, this represents validation that advanced AI applications can gain regulatory approval and mainstream adoption. Tesla’s autonomous driving technology relies heavily on AI and machine learning, including computer vision, neural networks, and real-time decision-making algorithms. Easing restrictions could trigger a race among automakers and tech companies to deploy AI-driven transportation solutions.
The market reaction—with Tesla gaining $70 billion in market value while Uber lost ground—demonstrates how AI-powered automation is reshaping competitive dynamics in established industries. This could have ripple effects across sectors where AI threatens to disrupt traditional business models, from logistics to delivery services. The close relationship between Musk and the incoming administration also highlights how political connections may influence AI policy and regulation, setting precedents for how emerging AI technologies are governed in the future.
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