Tesla shares, though, popping today on a report that said that the Trump administration is planning to ease federal rules on self-driving vehicles. Now, this follows news on Friday that Trump's team is also reportedly planning to kill the $7,500 tax credit for EV purchases. So joining us now is Tom Narayan of RBC Capital Markets. Tom, it's great to have you on. Let's start right there. What's going to matter more?
for Tesla and for the vehicle market and any of these AI plays that might be attached to autonomous driving. Is it going to be a different regulatory landscape for autonomous vehicles, or is it going to be taking away that tax credit? What's going to matter more?
Yeah, it's going to be giving less regulatory restrictions on robo-taxis, definitely. Federal restrictions was one of the big reasons why GM stopped making its Origin purpose-built vehicle, right? It allows you to make a vehicle without pedals and steering wheels. So you need that federal deregulation, if you were to call it, a policy framework in order to allow for that. That's what the Tesla Cyber Cab is. Why is that important? It cuts down a lot of costs.
Currently, the competition is Waymo. You guys talked about that. It has pedals, steering wheels. It's another car company making the vehicle. So if you can make your own vehicle at lower cost, doesn't have steering wheels or pedals, you can bring down the cost. And Tesla's argument is they can actually gobble up market share. And if you look at autonomy and AI, et cetera, that comes at a much higher multiple. You have a trillion-plus dollar market cap for Tesla.
is are you going to get there with an auto business for selling more cars or through AI autonomy, right? So autonomy is the way they can justify that market cap more they can from selling cars.
Mm. So it raises the question. Tesla bounced again today up more than 5%. It was one of the best performers in the market. It's up more than 50% in a month. We have seen shares also today, to your point about Waymo, of Uber under pressure. It doesn't seem like this is a zero-sum game. Anybody who's tied to these regulations or exposed to these regulations I would imagine is going to benefit. But looking at Tesla specifically, are you surprised to see how much the stock has run in just a short period of time?
Yes and no. I think post-election I was somewhat surprised, especially with the move on the $7,500 credit being cut. I actually think that's a negative for Tesla. I know there's a narrative that eliminating that credit is good for Tesla because it can compete better against other EVs, but the reality is in the US, penetration for EVs is only 8%. Tesla's real competition is Toyota Camry, right? Not the Chevy Equinox.
I actually think that credit going away is actually a negative for Tesla, but the reality is getting federal deregulation on AI or specifically on self-driving vehicles is a huge positive, assuming it all happens, right? Remember, this is all like in the – we don't know the details here. The devil's in the details.
but just because, you know, my Robotax evaluation is 44% of my whole price target, FSD is 33%, right? So like, the sky, not the sky's the limit, but you get the idea, right? Like we're talking about huge multiples. And so that deregulation, I'm not surprised.
The stock has moved about 90 bucks a share, I think, since the election. How much is Tesla now a Musk and Trump stock? It was a Musk stock before, and that had its benefits. And right now, Elon Musk and the president-elect seem very much aligned, and it's moving on some of this policy stuff. But how much risk is there for investors? How much should investors keep in mind the possibility that at some point these two guys
who have been known to be a little erratic, disagree on something, and what kind of an impact could that have on the stock?
Yeah, and I've written that I thought that the move after the election, a lot of that move wasn't really based on the fundamentals, right? It was based on a maybe-this-could-happen type ideology. But I do have to say, though, that something like deregulating Robotaxi's autonomy on a federal basis, it does matter. And that's also something that, once a genie's out of the bottle, it's hard to kind of put that back.
right so it's a mixed answer to your question i do think certainly like it's it's not completely tied to president-elect but certainly having policy that's a tailwind for you most definitely helps right so it's kind of a mixed answer but i do think like if you believe in robo taxes you do believe in autonomy fsd if you believe in it um having deregulation kind of sets
everything in motion to achieve what this company wants to achieve.