TMTPOST -- Tesla Inc. shares jumped as much as 8.7% before settling 5.6% higher on Monday. Shares outperformed the U.S. stock market as the benchmark S&P 500 advanced about 0.4% after wiping out all the post-election gains last Friday. Tesla shares popped over a positive about deregulation.

Credit：Tesla

Advisors were told that President-elect Donald Trump’s transition team planned to make a federal framework for self-driving vehicles one of the Transportation Department’s priorities, Bloomberg reported, citing sources familiar with the matter. The Trump team is reportedly looking to staff the department with leaders who will develop a framework for regulating self-driving vehicles. The report also revealed lawmakers’ effort s to clear a path for autonomous vehicles (AVs). A bipartisan legislative measure that’s at the early-discussion stage would create federal rules around AVs, according to the sources.

Tesla didn’t respond to the report. If the news is accurate, and the upcoming Trump cabinet introduces new rules that allow wider deployement of cars without human controls, it will directly benefit Tesla CEO Musk, whose has placed bet the future of the electric vehicle (EV) giant on self-driving technology and artificial intelligence (AI).

The U.S. regulation is a major hurdle for Tesla's expansion of its self-driving vehicles. Automakers must secure permission from the National Highway Traffic Safety Administration (NHTSA) before putting cars on the road that lack a steering wheel or other controls required by U.S. auto safety rules. NHTSA has long permitted manufacturers to deploy 2,500 vehicles per year under a granted exemption. That is a fraction for Tesla, which sold nearly half a million cars for the third quarter alone. At a robotaxi event that first saw Tesla's  self-driving taxi prototype, dubbed Cybercab last month, Musk said Tesla would first allow Model Y and Model 3 drivers in Texas and California to use their car’s suite of automated driving aids without supervision starting next year.

A federal framework could make automakers like Tesla easier to obtain self-driving licenses. “This would be a huge step forward in easing U.S. rules…and be a significant tailwind for Tesla’s autonomous and AI vision heading into 2025,” wrote Wedbush analyst Dan Ives in a report.

Ives, a Tesla bull, felt upbeat on new framework as "Musk’s significant influence in the Trump White House is already having a major influence." “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 [Tesla investment] thesis,” Ives said.

Ives thinks Tesla is now looking at a $1 trillion opportunity in AI and autonomous driving, and that puts the company on track to a $1.5 trillion – $2 trillion valuation over the next 12 to 18 months. He rates shares Buy and has a $400 price target for Tesla, way ahead of the average price target of about $245 among analyts tracked by FactSet.  

Tesla shares have soared 34.7% as of Monday close after the U.S. presidential election. The company last week first crossed $1 trillion in market value since the mid 2021, driven by the frenzy bet that Musk and his companies including Tesla will benefit from Trump’s return to the White House.

Musk has committed more than $75 million to his American PAC last month to help Trump and other Republicans win the election this year. His total known political spend this year is at over $132 million, Yahoo Finance reported late October. That’s one of the largest sums dedicated to a political candidate and a party. Musk also offered to give away $1 million a day to voters in swing states for signing his PAC’s petition backing the Constitution.

Trump said last Tuesday Musk and former Republican presidential candidate Vivek Ramaswamy were appointed to lead the Department of Government Efficiency, or DOGE, to "slash excess regulations, cut wasteful expenditures, and restructure Federal Agencies." Musk and Ramaswamy's work "will conclude no later than July 4, 2026," or by the 250th anniversary of the Declaration of Independence, Trump said.