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Since Donald Trump was elected as President of the United States on November 6, shares of Tesla (TSLA) have charged higher by about 28% on the expectation that Elon Musk's support for his candidacy would pay future dividends under a new Trump administration. It now appears that Musk's alliance with incoming President Trump is indeed about to pay off. According to Bloomberg, members of President-elect Trump's transition team are planning to set a federal framework that would make fully self-driving (FSD) vehicles one of the Transportation Department's main priorities.

• This development is having the opposite effect on shares of rideshare companies Uber (UBER) and Lyft (LYFT), each of which are trading with steep losses today. Although TSLA's highly publicized Robotaxi unveiling on October 10 was mostly viewed as a bust, a more favorable regulatory environment for autonomous vehicles could help speed up TSLA's timeline. Musk is targeting Cybercab to reach volume production in 2026, which looks like a more realistic goal now that the Trump Administration will be in his corner.
• At this point, it's uncertain what steps the Transportation Department may take to help accelerate the deployment of AVs. In fact, President-elect Trump hasn't named who his Transportation Secretary will be yet. However, one change could be increasing the number of AVs that manufacturers are allowed to deploy. Currently, the NHTSA only allows auto manufacturers to deploy 2,500 AVs per year, limiting how quickly car makers can collect and analyze AV driving data.
• With that said, a more favorable regulatory environment doesn't resolve the substantial technology and production roadblocks that still exist. After several years of massive R&D investments into the technology, TSLA's FSD driver assistance system is still experiencing major issues. This past October, the NHTSA opened yet another investigation into the company's FSD feature after receiving reports of four crashes, including a fatal one that involved a pedestrian. According to the NHTSA report, the FSD system failed to react appropriately to reduced roadway visibility conditions.
• TSLA's FSD system has also faced various recalls, including one that impacted over 2.0 mln vehicles last December. These issues come even as TSLA's capex has soared to nearly $11.0 bln on a TTM basis, with a significant portion of those investments earmarked for TSLA's "Dojo" supercomputer that trains AI models using video and data from its vehicles to improve FSD.

It's been a bumpy ride for TSLA lately as rising competition and high interest rates have weighed heavily on its growth -- automotive revenue inched higher by just 2% in Q3 -- but the market is in the process of pricing in the company's next growth wave. First, TSLA is expected to begin production of Model 2, its more affordable, mass market EV in 1H25. While we believe there is still plenty of room for skepticism regarding TSLA's robotaxi plans and AVs in general, the Model 2 launch may be followed by the launch of Cybercab in 2026. If all goes to plan -- and that's a big if -- then TSLA's growth rates look set to receive a huge jolt over the next two years.