In November, Tesla saw the largest increase in market capitalization among leading global companies, driven by optimism surrounding CEO Elon Musk’s close relationship with U.S. President-elect Donald Trump. Reports suggest Trump plans to relax regulations on self-driving cars, fueling expectations of growth for the automaker.
Tesla’s stock surged 5% during Monday afternoon trading, pushing its valuation past the $1 trillion mark. This milestone reflects growing investor confidence in the accelerated deployment of Tesla’s fully autonomous vehicle technology.
The electric vehicle maker has aggressively pursued its autonomous driving technology, testing Full-Self Driving software in passenger cars and introducing a Cybercab prototype for ridesharing services. While the company has struggled to hit production targets, it aims to bring its first fully driverless taxis to market next year.
However, it is still hampered by regulatory barriers set at the state level, which can slow down or even block deployments. A national framework could make it easier for companies like Tesla to bring AVs to the market.
It is still being determined whether the Trump administration can establish such a policy without the support of Congress, which will have to pass legislation allowing for federal oversight of AVs. However, the incoming president’s team is reportedly considering hiring an executive for the Transportation Department to reduce these barriers. The position could be given to Emil Michael, previously a senior advisor for the Obama-era National Highway Traffic Safety Administration.
In addition to a potential boost from a looser regulatory environment, analysts expect the Trump administration to reduce taxes on EVs and solar panels, which would further help the Tesla business. Moreover, the company is building its second $200 million battery factory in Shanghai, which will help it take advantage of China’s push to develop high-tech, green infrastructure and shift away from fossil fuels.
Those expectations helped propel the stock to its best week since late January 2022. The stock rose 29% on Friday, its highest weekly gain in a decade and enough to lift the company’s market cap above $1 trillion. Investors have also been buoyed by hopes the new White House will reduce corporate tax rates and enact other policies that favor domestic businesses. However, the close ties between Musk and Trump also raise concerns about possible conflicts of interest. The Tesla founder donated over $100 million to re-elect Trump, runs several of the president-elect’s campaign committees, and is part of his transition team.
