Musk has also revealed plans for Tesla to launch self-driving taxis in Austin, Texas, in June 2025, underscoring the company's commitment to automation amid rising competition from firms like BYD.

The new rules specifically apply to partial self-driving vehicles using Level 2 systems, which Tesla utilizes, while competitors like Waymo, which employs full automation, will not receive the same exemptions.

However, these changes have raised concerns about reduced transparency in vehicle safety reporting, potentially eroding public trust in automotive technologies.

Despite these concerns, the National Highway Traffic Safety Administration (NHTSA) maintains that the new regulations do not favor any specific self-driving system and aim to enhance overall safety protocols.

The automotive industry has welcomed these changes, with leaders emphasizing the necessity of a regulatory framework to support the full deployment of autonomous vehicles.

As Tesla navigates these regulatory shifts, the impact on its market position remains uncertain, particularly with ongoing competition from both domestic and international players.

The Transportation Department has announced exemptions from certain federal safety rules to facilitate the testing of self-driving vehicles, a move aimed at boosting U.S. manufacturers' development efforts.

Transportation Secretary Sean Duffy highlighted the urgency of this initiative, emphasizing the need to compete with China and reduce bureaucratic hurdles to establish a unified standard.

Tesla, which recently reported a staggering 71% drop in profits for the first quarter of 2025, stands to benefit significantly from these regulatory changes as it faces declining sales in Europe.

Following the announcement of these regulatory changes, Tesla's stock surged nearly 10%, reflecting investor optimism about the potential advantages for the company.

In contrast, General Motors announced it would cease funding for its self-driving Cruise robotaxi business after a serious incident in late 2023 resulted in a $500,000 fine from the Justice Department.

Additionally, NHTSA will expand its Automated Vehicle Exemption Program to include domestically produced vehicles, previously limited to non-compliant imports, which may benefit manufacturers like Tesla.