CNBC’s Jim Cramer weighed in on the recent buzz surrounding President-elect Donald Trump’s potential relaxation of autonomous driving regulations and its impact on Tesla (TSLA) stock. While reports emerged from Bloomberg suggesting the Trump transition team aimed to streamline federal regulations for self-driving cars, Cramer expressed skepticism. He deemed this potential regulatory shift a “bad reason” for investing in Tesla, calling it “too good to be true.”
However, Cramer’s skepticism about the regulatory changes doesn’t translate into bearish sentiment towards Tesla. He maintains his bullish stance, emphasizing that the company’s inherent value extends beyond any potential changes in federal regulations. Cramer believes Tesla’s status as a technology company, rather than just an automaker, is the primary driver of its stock value. This “Musk premium,” as he calls it, allows Tesla to command a significantly higher price-to-earnings ratio than traditional automakers. He suggests that success could come from other avenues, like favorable municipal regulations or the potential for lucrative Tesla rental programs near federal highways, bypassing the need for widespread national approval of autonomous vehicles.
The Mad Money host points out the inherent challenges in the Trump administration’s proposed nationwide robotaxi framework. He highlights the practical hurdles involved in obtaining consensus from numerous state and local governments, making the plan, in his words, “just plain fanciful.”
Tesla’s ambitious plans for a fleet of autonomous vehicles in Texas and California, set to roll out next year, are in the spotlight. While the company awaits regulatory approvals and hasn’t yet achieved full autonomy with its Full Self-Driving (FSD) technology, CEO Elon Musk has consistently expressed confidence in achieving fully autonomous driving through future software updates. However, Musk’s history of ambitious yet sometimes unrealized timelines is well-documented, adding a layer of complexity to investor sentiment.
Musk’s vision for Tesla’s robotaxi fleet is expansive, comparing it to a hybrid of Airbnb and Uber. The concept involves a fleet partially owned by Tesla, with individual customers able to add or remove their vehicles at will. Riders would hail vehicles via the Tesla app, placing Tesla in direct competition with established ride-sharing giants. This aggressive expansion into the ride-hailing market represents a significant growth opportunity, bolstering Cramer’s positive outlook.
Despite the overall positive assessment, Tesla’s stock performance has shown some fluctuations. Monday saw a 5.6% surge, closing at $338.74, but Tuesday opened with a 1.2% dip in premarket trading. Nevertheless, Tesla stock remains up 36.4% year-to-date, indicating strong overall performance.
