Bet Trump and Musk "win thoroughly".
On November 18, CCTV News quoted Bloomberg as saying that according to insiders, President elect Trump's team plans to "build a federal framework for fully autonomous vehicle" as one of the priorities of the US Department of Transportation.
If new regulations make fully autonomous vehicles possible, then Tesla CEO and Trump's huge donor Elon Musk will directly benefit. He is betting Tesla's future on autonomous driving and artificial intelligence technology.
This is undoubtedly a significant benefit for Tesla. With the decline in demand in the US market, Tesla's sales performance has become lackluster, and autonomous driving has become the focus of Tesla's search for growth.
Tesla's autonomous driving has entered a critical stage, with Musk repeatedly calling for relaxation of restrictions
After the launch of the full auto drive system FSD V12 earlier this year, the usage of Tesla FSD has increased significantly. As of the third quarter, the FSD fully autonomous driving capability (Driver Supervision Edition) has accumulated over 2 billion miles of driving, with over 50% of this achieved on the V12 version.
It is worth mentioning that FSD has also driven Tesla's revenue and net profit to climb. In the third quarter of 2024, Tesla achieved a revenue of 25.182 billion US dollars, a year-on-year increase of 8%; Net profit was 2.167 billion US dollars, a year-on-year increase of 17%, far exceeding market expectations. The service fee sector represented by FSD has made a significant contribution. Currently in the United States, the price of Tesla FSD is $12000, and the subscription fee has been reduced to $99 per month.
Musk previously stated during the earnings call that Tesla internally estimates that by the second quarter of next year, FSD will be safer than human drivers, "without waiting for Robotaxi to achieve fully autonomous driving. We expect to be able to achieve this goal with existing models next year
In October of this year, Tesla also launched the Robotaxi Cybercab, sparking a frenzy in the capital market. Musk stated that Cybercab is expected to achieve mass production by 2026, with an annual output of 2 million vehicles. He also expects that California and Texas will offer shared mobility services to the public next year. He also revealed that Tesla employees in the San Francisco Bay Area now have an autonomous ride hailing service, but this service still uses safety personnel.
At present, the National Highway Traffic Safety Administration (NHTSA) allows manufacturers to deploy up to 2500 autonomous vehicle per year with permission. Autonomous vehicle without steering wheel or accelerator pedal (such as Tesla's Cybercab) are not allowed to be deployed on a large scale at present.
In recent years, Tesla's autonomous driving system has been repeatedly investigated by the federal government due to safety and other issues. Musk has repeatedly called for the relaxation of restrictions on autonomous driving technology. In Musk's view, there should be a national approval process for autonomous vehicle in the United States, rather than the current state by state approval process. It is "very painful" to obtain approval from state to state.
Musk himself is also about to join the Trump team. On November 12th local time, Trump announced that Musk will lead the proposed "Government Efficiency Department" after he takes office as president. The Ministry of Government Efficiency will pave the way for dismantling government bureaucracies, reducing excess regulatory regulations and wasteful spending, and restructuring federal agencies.
Analysts value Tesla's autonomous driving and AI at $1 trillion
The news that Trump sought to relax the restrictions on autonomous vehicle confirmed the previous expectations of Wall Street.
In the eyes of analysts, Musk has made a strategic big bet on Trump's entry into the White House, which Tesla bulls call a 'once-in-a-lifetime bet'. Driven by positive news, Wall Street analysts have raised Tesla's target price.
Dan Ives, an analyst at Wedbush Securities, reiterated his rating of Tesla's stock as "outperforming the market" and raised its target price from $300 to $400.
Ives values Tesla's autonomous driving and artificial intelligence segments at approximately $1 trillion, and he predicts that Tesla will surpass the $2 trillion market value threshold within the next 12 to 18 months. Ives said that he fully believed that under the leadership of the Trump government, the federal regulatory difficulties faced by Musk and his team in the field of fully autonomous vehicle in the past few years would be greatly alleviated.
Not only in the field of autonomous driving, Wall Street believes that Musk's vast business empire will benefit greatly from the new government.
Musk's companies are generally high-tech enterprises in cutting-edge fields, and he has long sought to reduce regulation to eliminate obstacles to the development of his vast business empire. His businesses include Tesla, social media X, as well as American space exploration technology company SpaceX, artificial intelligence startup xAI, brain computer interface company Neuralink, and tunneling company Boring Co.
These companies are currently involved in a series of investigations and lawsuits by federal agencies, involving alleged violations of securities laws, workplace safety, labor and civil rights, violations of federal environmental laws, consumer fraud, and vehicle safety deficiencies. Some or even all of the 19 federal lawsuits and investigations against his company that have been disclosed so far may come to an end.
Renowned technology analyst and executive partner of Deepwater Asset Management, Gene Munster, has long been bullish on Tesla. In an interview with foreign media, he said, "Musk now has the ability to turn a stone into gold and is very good at listening." Munster believes that in addition to Tesla, SpaceX is also a "clear beneficiary" of Trump's presidency, and as the new government considers enacting artificial intelligence regulations, xAI may also receive returns.
Since Trump announced his victory in the 2024 presidential election in the early hours of November 6th local time, Tesla's stock price has risen by over 27%.