(Reuters) - Tesla shares rose nearly 7% in trading before the bell on Monday after Bloomberg News reported that President-elect Donald Trump's transition team was planning to set up federal regulations for autonomous vehicles.

The report comes days after Trump named the automaker's CEO, Elon Musk, as a co-head of the incoming administration's government efficiency department.

Last month, Musk criticized the state-by-state approval process, required for self-driving vehicles, as "incredibly painful", weeks after unveiling a two-seat "Cybercab" robotaxi without a steering wheel and foot pedals, set to go into production in 2026.

Trump's team is looking for policy leaders for the transport department to develop a federal regulatory framework, the report said, citing people familiar with the matter.

"A unified federal regulation could streamline this (approval process), allowing Tesla to push forward more rapidly with FSD testing," said Mamta Valechha, analyst at Quilter Cheviot.

However, the regulation is not the primary barrier holding Tesla back at the moment, it's the company's Full Self-Driving (FSD) driver assistance technology that is still not fully autonomous and requires driver supervision.

The FSD technology, which has been in development for more than four years, is also under a U.S. auto safety body investigation, after four reported collisions involving Tesla vehicles equipped with the software, including a 2023 fatal crash.

Trump's victory has propelled the company past a $1 trillion market valuation mark, with shares surging nearly 28% since Nov. 5, as investors hope Musk's close ties to the White House would ease regulation for self-driving vehicles.

The steep climb has also pushed the stock's price-to-earning multiple, a common benchmark for valuing shares, well above automakers such as Ford Motor and General Motors, and even tech giants such as Apple and Nvidia.

(Reporting by Akash Sriram in Bengaluru; Editing by Shinjini Ganguli)