Tesla (TSLA) is about to become one of the biggest beneficiaries of a shift in U.S. regulations. The country’s auto safety regulator, the National Highway Traffic Safety Administration (NHTSA), said it would “absolutely” consider dropping the requirement for fully autonomous vehicles to have steering wheels. Not long ago, NHTSA also decided to scrap manual brake pedals from such vehicles.
Both changes are part of a broader push by the Trump administration to modernize driverless car rules. Tesla is building Robotaxis and has designed its Cybercab without a steering wheel or pedals. So, a rule change like this could remove a real barrier for the company. The regulator’s reasoning is simple: If a car is never meant to be driven by a human, a steering wheel serves little purpose.
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The timing of these changes is ideal for Tesla. The company recently expanded its Robotaxi service into new cities. The relaxed rules could make it easier for the firm to roll out purpose-built vehicles at scale. Rivals like Alphabet’s (GOOG) (GOOGL) Waymo, which is doubling down on its self-driving ambitions, and Amazon’s (AMZN) Zoox are expected to benefit from this, too, but neither has tied its future to autonomy as much as Tesla has.
The news, however, came with a note of caution. On the same day, the NHTSA sent a letter to autonomous vehicle developers urging them to fix a troubling pattern. The driverless vehicles have reportedly been interfering with police, ambulances, and firefighters at emergency scenes. The agency said that it had recorded several cases where driverless cars blocked first responders or failed to recognize flashing lights, cones, and smoke.
While the regulators are easing up on the rules, they’re also making it clear that safety concerns haven’t gone away. In the past, some have argued that the U.S. should relax its safety regulations to ensure China doesn't speed ahead in terms of autonomous driving. China won’t be slowing down anytime soon, so the U.S. has to come up with a workable technology before it. For that, easing up on the rules so the technology can be iterated faster is a welcome step.
About Tesla Stock
Tesla is a clean energy and technology company best known for its electric vehicles. The company is also expanding into energy storage, artificial intelligence, and robotics. Its vehicles include the Model 3 and Model Y. Tesla is also investing heavily in AI ventures such as its Full Self-Driving (FSD) software and Robotaxi network. Founded in 2003, the company is headquartered in Austin, Texas, and is led by CEO Elon Musk.
TSLA stock has returned over 31% in a year, underperforming the Global X Autonomous & Electric Vehicles ETF's (DRIV) 50% returns. On a year-to-date (YTD) basis, the stock is down 7% while the ETF is up 20%.
www.barchart.com Tesla’s valuation remains highly debated. The forward GAAP P/E of 289.23x sits 92% above the company’s own 5-year average of 150.81x. The forward price-to-sales ratio of 14.28x is similarly 37% above its 5-year average of 10.45x. TSLA stock has famously always traded at a premium, but it is currently expensive even by its own historical standards.
Much of that premium is built on the long-term potential of Robotaxi, Optimus, and FSD. The company is now starting to show meaningful progress in these areas, with Robotaxi expanding into new cities and FSD adoption steadily growing. The EPS growth trajectory supports the premium valuation. The analysts estimate the EPS to grow 28% in 2026, surging to 126% by 2029. The capital structure is one of its strongest aspects. Tesla is currently net cash positive by almost $29 billion, exceptional for a company with a $1.48 trillion market cap. While the stock remains expensive, Tesla’s recent progress in autonomy should help investors feel more confident about the premium.
Tesla’s Earnings Grow as It Doubles Down on Robotaxi
Tesla reported its first-quarter fiscal 2026 earnings on April 22. Revenue was reported at $22.39 billion, representing a 16% growth year-on-year (YoY). The non-GAAP EPS of $0.41 also grew a strong 52% YoY, beating the analyst consensus. The company’s auto margins, excluding regulatory credits, increased from 17.9% in the prior quarter to 19.2%, signaling improvement in Tesla’s core car business. CFO Vaibhav Taneja noted a surge in demand across Europe, with France and Germany each achieving 150% growth in deliveries quarter-on-quarter.
Moving forward, Tesla is entering a heavy investment phase, raising its 2026 capital expenditure guidance to more than $25 billion. The amount is expected to be largely spent on Optimus, AI infrastructure, and the expansion of Tesla’s Robotaxi network. CEO Elon Musk stated that the company aims to have unsupervised FSD and Robotaxis operating in roughly a dozen states by the end of the year. The CFO confirmed that the heavy spending will push free cash flow negative for the rest of the year. However, he believes that the investment is crucial to lay the groundwork for Tesla’s next phase of growth in autonomous mobility and robotics.
What Are Analysts Saying About TSLA Stock?
On July 9, Citizens initiated coverage of TSLA stock with a “Market Perform” rating and did not assign any price target to the stock. Despite the growing demand for Robotaxi, the firm expects a slower ramp, the analyst tells investors in a research note. It also sees long-term opportunities for Optimus and other physical AI initiatives. However, the company believes the market is overly optimistic about how soon these projects will be launched and start contributing meaningfully to revenue. As a result, its 2027 and 2028 revenue estimates are 4% and 12% below Wall Street consensus.
Based on 43 Wall Street analysts with coverage, TSLA stock holds a consensus “Moderate Buy” rating. The stock currently sits near the median price target of $414. Out of the 43 analysts covering the stock, 17 have a “Strong Buy” or “Moderate Buy,” five have a “Strong Sell,” and 21 have a “Hold” rating. The wide range of estimates suggests that Tesla is facing intensifying global competition and eroding profit margins.
www.barchart.com On the date of publication, Jabran Kundi did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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