Musk's Tesla gets lift as Trump cuts red tape on self-driving car rules to counter China

The Trump administration is rolling back regulatory hurdles for self-driving cars to give US automakers, includint Tesla, a competitive edge in the global race for vehicle automation. The US department of transportation announced on Thursday that carmakers can now apply for exemptions from certain federal safety rules, provided the self-driving vehicles are used for research, demonstrations, or other non-commercial purposes.

Transportation secretary Sean Duffy framed the decision as a strategic move. “We’re in a race with China to out-innovate, and the stakes couldn’t be higher,” he said in a statement. “Our new framework will slash red tape and move us closer to a single national standard.” At present, the self-driving industry in the US is navigating a patchwork of state-level regulations, which has long been a concern for manufacturers.

The new rule also addresses crash reporting, a topic Tesla CEO Elon Musk has openly criticised. Currently, Tesla is responsible for reporting a large number of self-driving crashes due to its leadership in partial automation. Musk had earlier called the system unfair and too burdensome. Under the revised policy, the federal government will keep crash reporting requirements in place but will remove what it calls "unnecessary and duplicative" processes.

This policy shift came just a day after Musk told investors that Tesla's self-driving taxi service will begin operating in Austin this June. Although it's still unclear how the relaxed rules will directly benefit Tesla, the move signals a broader attempt by the Trump administration to support American tech firms amid increasing pressure from Chinese companies like BYD.

Safety advocates had warned that the Trump administration might eliminate crash reporting altogether, but Thursday's announcement confirmed it will remain — though in a simpler form.