US agency eases some self-driving safety rules, sending Tesla stock soaring

By David Shepardson

WASHINGTON (Reuters) -The Trump administration announcement that it aims to speed deployment of self-driving vehicles by exempting some from certain safety requirements and easing rules requiring reporting of safety incidents sent Tesla (NASDAQ:TSLA) shares up nearly 10% on Friday.

CEO Elon Musk, a close adviser to President Donald Trump, has repeatedly pledged to launch commercial robotaxi operations soon. Tesla also faces scrutiny from the National Highway Traffic Safety Administration over its Full Self-Driving software after a fatal crash.

U.S. Transportation Secretary Sean Duffy said on Thursday that the new framework to boost autonomous vehicles would help U.S. automakers compete with Chinese rivals.

The revised rules will allow some autonomous vehicles that do not comply with federal safety standards such as having rearview mirrors to operate on U.S. roads. The rules will also allow carmakers to report less severe crashes monthly, and add a property damage reporting threshold for less severe crashes involving self-driving vehicles.

"This administration understands that we’re in a race with China to out-innovate, and the stakes couldn’t be higher," Duffy said. "Our new framework will slash red tape."

Consumer Reports noted that under the new rules, vehicles with advanced driver assistance systems like Tesla Autopilot will not need to report crashes using the system unless it involves a fatality, an injured person requiring hospitalization, a pedestrian being struck, or an air bag deployment.

As part of the revision, the NHTSA said it would expand a program to exempt some self-driving vehicles from safety requirements and streamline the reporting of safety incidents for advanced driver assistance and self-driving systems.

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Advocates for Highway and Auto Safety said it was disappointed that the U.S. Department of Transportation "chose to dilute, instead of enhance, the reporting requirements."

The group also raised concerns about the safety exemptions saying, "without safeguards, safety regulations, transparency and accountability, the success of AV deployment is imperiled at best and could result in deadly consequences at worst."

The Alliance for Automotive Innovation, a trade group representing nearly all major automakers, praised the USDOT.

The industry has "been hamstrung by government inaction... This announcement shows the administration is also proceeding with a sense of urgency, so we don’t cede AV leadership to China and other countries," it said.

Automakers have long sought to deploy automated vehicles on U.S. roads that do not comply with federal safety standards. Some of those standards were written with human drivers in mind, like requiring rearview mirrors or brake pedals.

NHTSA is expanding its Automated Vehicle Exemption Program to now include domestically produced vehicles. The program currently allows companies to operate only imported non-compliant automated vehicles on U.S. roads.

Seth Goldstein, equity strategist at Morningstar, said the reduced regulations would "help Tesla grow its robotaxi operations faster," but what matters most is "when the software is able to drive safe enough on its own."

In 2022, General Motors (NYSE:GM) filed a petition with NHTSA seeking permission to deploy up to 2,500 self-driving vehicles annually without human controls such as brake pedals or mirrors. GM withdrew the petition last year after a lengthy government review had not been completed.

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GM said in December it would halt funding of its self-driving Cruise robotaxi business after one of its robotaxis seriously injured a pedestrian who had been hit by another vehicle in October 2023, and it had to pay a $500,000 criminal fine to resolve a Justice Department probe into the matter. GM had invested more than $10 billion in Cruise since 2016.

Alphabet (NASDAQ:GOOGL)’s self-driving unit Waymo said in October that it had closed a $5.6 billion funding round as it looks to expand its autonomous ride-hailing service.

Autonomous-driving operators also have to comply with state regulations governing how they can deploy the vehicles.

California regulators on Friday issued proposed rules that could affect Tesla and its plans to launch a robotaxi network in the state. The proposal would now require autonomous-vehicle companies using passenger vehicles to conduct a minimum of 50,000 miles (80,467 km) of testing with a safety driver before they can apply for a permit to do driverless testing.

Companies would then need to perform at least 50,000 additional miles of driverless testing before they could apply to deploy the vehicles for commercial operations. The state currently has no minimum mileage requirements for testing.

Tesla as of last fall had logged 562 miles of testing with a safety driver in California since 2016, state records show.

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