Trump Set To Hand Musk 'Golden Path For Tesla' After Reversing Course On Autonomous Vehicle Ban

The future of Tesla Inc TSLA could be decided by autonomous vehicles with the company betting aggressively on the future of its robotaxis.

After once threatening to ban autonomous vehicles in America, President-elect Donald Trump may be having a change of heart, bringing music to the ears of Elon Musk and Tesla investors.

What Happened: New reports say President-elect Trump has plans to ease restrictions on self-driving vehicles, which could help companies such as Tesla in its push to expand FSD and bring robotaxis to the market.

Bloomberg reported the federal framework for autonomous vehicles could be prioritized by Trump's transition team. The report said the Transportation Department could make it easier to operate self-driving vehicles in America. While the plan could prioritize making it easier for companies to test self-driving vehicles, Congress would need to approve legislation to make mass adoption happen.

It's worth noting that this is only a report and Trump previously spoke out against autonomous vehicles.

Hours before Musk unveiled the Tesla Cybercab in California on Oct. 10, Trump spoke at the Detroit Economic Club and took on autonomous vehicles.

"Do you like autonomous? Does anybody like an autonomous vehicle? Know what that is? Right? When you see a car driving along? Some people do, I don't know. A little concerning to me, but the autonomous vehicles we're going to stop from operating on American roads,” Trump said.

Trump's comments came despite a growing friendship with Musk at the time, who had been campaigning for him in the 2024 election.

The comments weren't likely a huge surprise given Trump's largely antagonistic stance toward electric vehicles, often criticizing the vehicles and in some cases blaming them for destroying bridges and American infrastructure.

Musk supported Trump’s comments that removing credits for American consumers to switch to electric vehicles would negatively impact the company but much more negatively impact Tesla’s competitors.

The Tesla CEO also supported Trump’s stance on making it harder for Chinese automakers to compete for electric vehicle market share in the U.S.

Trump's reversal of stance on autonomous vehicles could be the latest win for Musk and Tesla after the billionaire supported Trump in the election and has grown their friendship.

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Why It's Important: While it is unknown if Trump will make it easier for self-driving vehicles to be on roadways and what may have caused his change of heart, the impact on Tesla should not be underestimated.

Wedbush analyst Daniel Ives maintained an Outperform rating and $400 price target on Tesla while highlighting the impact of the reports of Trump's transition team making self-driving vehicles a priority in a new investor note.

"This would be a huge step forward in easing U.S. rules for self-driving cars and be a significant tailwind for Tesla's autonomous and AI vision heading into 2025," Ives said of the Bloomberg report. "Musk's significant influence in the Trump White House is already having major influence and ultimately the golden path for Tesla around Cybercabs."

Ives said a strategic alliance between Trump and Musk is "playing out in real time" and is bullish for Tesla.

"We estimate the AI and autonomous opportunity is worth $1 trillion alone for Tesla and we fully expect under a Trump White House these key initiatives will now get fast-tracked."

The analyst said Tesla can march to a market capitalization of $1.5 trillion to $2.0 trillion over the next 12 to 18 months thanks to the FSD and autonomous progress.

"We have never viewed Tesla simply as a car company…instead we have always viewed Musk and Tesla as a leading disruptive technology global player."

Musk "made a strategic and big bet on" Trump winning the election and the win could be known by Tesla bulls for years to come, Ives added.

"Tesla and Musk are set to reap the benefits from a new friendlier regulatory era in the Beltway ahead."

TSLA Price Action: Tesla stock is up 4.99% to $336.78 on Monday versus a 52-week trading range of $138.80 to $358.64. Tesla stock is up 38.1% year-to-date. The stock is up 36.4% since Election Day.

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