Charged: Tesla rises on report Trump seeking to ease self-driving rules

Institutional investors and professional traders rely on The Fly to keep up-to-the-second on breaking news in the electric vehicle and clean energy space, as well as which stocks in these sectors that the best analysts on Wall Street are saying to buy and sell.

From the hotly-debated high-flier Tesla (TSLA), Wall Street’s newest darling Rivian (RIVN), traditional-stalwarts turned EV-upstarts GM (GM) and Ford (F) to the numerous SPAC-deal makers that have come public in this red-hot space, The Fly has you covered with “Charged,” a weekly recap of the top stories and expert calls in the sector.

SELF-DRIVING: Members of President-elect Donald Trump’s transition team have told advisers they plan to make a federal framework for fully self-driving vehicles one of the Transportation Department’s priorities, David Welch and Allyson Versprille of Bloomberg report, citing people familiar with the matter. If new rules enable cars without human controls, it will directly benefit Tesla and its CEO Elon Musk, Bloomberg points out. Current federal rules pose significant roadblocks for companies looking to deploy vehicles without steering wheels or foot pedals in large quantities, which Tesla plans to do, the journalists add. While the Transportation Department can issue rules through the National Highway Traffic Safety Administration that would make it easier to deploy autonomous vehicles, an act of Congress would clear the way for mass adoption of self-driving cars, according to Bloomberg. A bipartisan legislative measure being discussed in early stages would create federal rules around autonomous vehicles two sources told Bloomberg. One candidate under consideration for Transportation secretary is Emil Michael, a former Uber (UBER) executive who has spoken with Trump’s team and potential staffers, they said.

Commenting on the news report, Wedbush analyst Daniel Ives says 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. Musk’s significant influence in the Trump White House is already having a major influence and ultimately 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 Wedbush’s thesis. The firm has an Outperform rating on the shares with a price target of $400.

$500 BULL CASE IN PLAY: Morgan Stanley argues that Elon Musk’s entry into the political sphere has “expanded investor thinking around Tesla’s fundamental outlook” and questions if the current rerating is “temporary… or will Tesla begin to play a greater role in the US renewable/autonomous industrial complex?” Elon Musk’s public support for President-elect Trump has “vaulted Tesla’s CEO to be considered a powerful voice in the incoming administration” and Tesla shares have responded by rallying by over 40% to a two-year high and above the firm’s $310 price target, the analyst noted. With so many policy variables in play, the firm is not, at this time, changing its forecasts or implied multiples driving its base case price target or Overweight rating, but it questions if 2030 assumptions underpinning its current $500 bull case – including total company FY30 revenue of approximately $550B with EBITDA over $140B – are now “in play.”

Meanwhile, Deutsche Bank says the magnitude of Tesla’s post-election over the past week has been surprising. Since election night, Tesla has added over $300B of market cap, crossing the $1 trillion level for the first time since early 2022, the analyst tells investors in a research note. Beyond attributing the price action to tactical factors like retail exuberance and short covering due to lack of near-term negative catalysts, Deutsche sees “potential large terminal value benefits” to Tesla’s efforts in auto, robotaxi, and even humanoid robotics from a Trump win, the analyst tells investors in a research note. The firm believes the market reaction supports the view the new administration’s approach toward CEO Elon Musk’s endeavors “will likely be much different going forward.” Deutsche could envisage the new administration setting robotaxi standards at the national level to make approval of deployment faster. And should the Inflation Reduction Act get repealed or changed, or extra tariffs get levied for imported parts, Tesla’s relative competitive position would only strengthen, the analyst contends. Deutsche has a Buy rating on Tesla with a $300 price target.

Click here to check out Tesla’s recent Media Buzz Sentiment as measured by TipRanks.

EV TAX CREDIT: President-elect Donald Trump’s transition team is planning to kill the $7,500 consumer tax credit for electric vehicle purchases, Jarrett Renshaw of Reuters reports, citing two sources with direct knowledge of the matter. Representatives of Tesla have told a Trump-transition committee they support ending the subsidy, said the two sources. Tesla CEO Elon Musk said earlier this year that killing the subsidy might slightly hurt Tesla sales but would devastate its U.S. EV competitors, which include legacy automakers such as General Motors, Reuters points out.

JOINT VENTURE: Rivian Automotive and Volkswagen (VWAGY) entered into a transaction agreement to create their new joint venture — “Rivian and VW Group Technology,” known as Rivian and Volkswagen Group Technologies — with a total deal size of up to $5.8b, which is expected to start on November 13. Through this JV, the companies plan to bring next-generation electrical architecture and best-in-class software technology for both companies’ future electric vehicles, covering all relevant vehicle segments, including subcompact cars. It is highly complementary reflecting Rivian’s industry-leading software and electrical hardware technology as well as Volkswagen Group’s significant global scale and industry-leading vehicle platform competencies. The joint venture will be headed by Wassym Bensaid from Rivian and Carsten Helbing from Volkswagen Group.

Volkswagen Group plans to invest up to $5.8B in Rivian and the joint venture by 2027. An initial investment of $1B in the form of a convertible note has already been made. At closing of the Joint Venture, Volkswagen Group will invest about $1.3B as consideration for background IP licenses and a 50% equity stake in the joint venture. These investments also balance part of lower future costs identified during the technical feasibility tests and the sharing of costs for the inclusion of selected Volkswagen MEB models. The remaining investment of up to $3.5B is expected to come in the form of equity, convertible notes, and debt at future dates and based on clearly defined milestones. Further investments are tied to clear operational, technical, and financial milestones. The joint venture will operate as an independent company.

MOVING TO PLUG SIDELINES: BTIG downgraded Plug Power (PLUG) to Neutral from Buy. The company continues to take the necessary steps to extend its liquidity runway as it waits for hydrogen order momentum to accelerate, but while global hydrogen demand continues to grow, the slope of that growth continues to be lower than expected, the firm tells investors in a research note. BTIG adds that Plug Power’s product offering is well positioned for the global hydrogen buildout and its downgrade is a function of demand and more product sales that are needed to improve margins being pushed out.