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Tesla (TSLA, Financials) shares climbed more than 6% on Friday, extending a rally fueled by Chief Executive Officer Elon Musk's announcement that he will devote more time to the electric vehicle company. The gains followed the Trump administration's decision to relax regulations governing autonomous vehicles to bolster U.S. competitiveness against China.
The U.S. Department of Transportation said Thursday that it would implement a new framework aimed at reducing regulatory hurdles and moving toward a national safety standard for self-driving technology. Transportation Secretary Sean P. Duffy said in a statement that the initiative would "slash red tape" and encourage innovation in a sector seen as critical to economic leadership.
Tesla, which has positioned autonomous driving as a key pillar of its future growth, is expected to benefit from the regulatory shift. During Tesla's first-quarter earnings call on Tuesday, Musk said the company plans to begin offering fully autonomous ride services in Austin, Texas, starting in June 2025. He said the business could expand to additional U.S. cities later this year and become financially significant by the second half of 2026.
Investors have responded positively to Musk's renewed focus on Tesla and plans for lower-cost models and self-driving capabilities, outweighing concerns about the company's weaker-than-expected quarterly results.
Following Friday's increase, Tesla shares have risen about 15% for the week, although the stock remains down nearly 33% since the beginning of the year. The latest gains positioned Tesla among the best performers on the S&P 500 and Nasdaq Friday, as the broader industry faces mounting pressure to accelerate innovation amid rising competition from Chinese companies.
The Trump administration's regulatory changes come as the U.S. aims to solidify its leadership in emerging automotive technologies, while companies such as Tesla seek to translate technological advances into new revenue streams.
This article first appeared on GuruFocus.