 "Will Elon Musk’s exit from government help Tesla rebound?")
Tesla’s stock saw a sharp recovery on Wednesday following a Politico report suggesting that CEO Elon Musk could soon step down from his role in the Department of Government Efficiency (Doge), potentially allowing him to devote more attention to the electric vehicle company.
The White House dismissed the report as “garbage,” while Musk himself took to X to refute the claim, calling it “fake news.”
Despite these denials, Tesla shares closed over 5 per cent higher, reversing earlier losses that followed the company’s weaker-than-expected first-quarter delivery numbers.
According to sources cited in the Politico report, US President Donald Trump has been pleased with Musk’s efforts to reduce federal spending through Doge but has recently discussed the billionaire returning to focus on his businesses.
NBC News also reported that Trump indicated to his cabinet that Musk’s tenure as a special government employee would end within months, aligning with the legal 130-day service limit for such positions.
How Tesla has been impacted by Musk’s political involvement
Even with the stock’s brief uptick, Tesla has been experiencing a prolonged downturn. The company’s stock has declined more than 31 per cent since the start of the year, including a 36 per cent drop in the first quarter — the worst quarterly performance for Tesla since 2022.
The decline follows a significant drop in vehicle deliveries, with Tesla reporting sales of just under 337,000 electric vehicles in the first quarter of 2025, marking a 13 per cent decrease from the same period in 2024.
This represents the steepest drop in deliveries in Tesla’s history outside of the pandemic-related disruptions in 2020.
The company attributes the downturn to production pauses as it transitions to an updated version of the Model Y, which led to temporary factory shutdowns. However, some investors and analysts point to Musk’s personal and political activities as a contributing factor.
Early Tesla investor Ross Gerber criticised the CEO’s leadership, stating on X: “These numbers suck. The brand is broken and may not be fixable.” Gerber, once a strong supporter of Musk, has increasingly voiced concerns about his management of Tesla.
Leaving DOGE is a good start but it doesn’t change his tweeting garbage daily. The tesla brand is severely tainted at this point. Damage is done. $TSLA
— Ross Gerber (@GerberKawasaki) April 2, 2025
Musk’s political activities have triggered controversy and backlash that have spilled over into Tesla’s business. His leadership of Doge, an initiative aimed at cutting government spending and reducing the federal workforce, has led to widespread protests, boycotts, and even acts of vandalism against Tesla stores and charging stations.
The close alignment with Trump’s administration has alienated some customers, particularly in Democrat-leaning regions where interest in electric vehicles has traditionally been strong.
Market data from S&P Global Mobility indicates that repeat Tesla purchases in blue states fell from 72 per cent in late 2023 to 65 per cent by the end of 2024, while purchases in Republican-leaning red states remained stable at around 48 per cent.
Polling also shows that public sentiment toward Musk has grown increasingly polarised. A CNN survey found that only 35 per cent of Americans have a favourable view of Musk, compared to 53 per cent who hold an unfavourable opinion.
Meanwhile, a February 2025 Morning Consult poll revealed that 32 per cent of US car buyers would not consider purchasing a Tesla, up from 27 per cent the previous year and 17 per cent in 2021.
How investors have reacted to Musk & Tesla
Amid the stock’s decline, several major investors have voiced concerns about Musk’s ability to effectively lead Tesla while engaging in political and government work. New York City
Comptroller Brad Lander has called for the city to sue Tesla on behalf of NYC’s pension funds, citing Musk’s involvement in government affairs as misleading to shareholders. “Elon Musk is so distracted that he’s driving Tesla off a financial cliff,” Lander stated.
Randi Weingarten, president of the American Federation of Teachers, sent letters to pension fund managers highlighting Tesla’s underperformance, warning that the company’s poor sales figures were “shaping up to be abysmal,” reported BBC.
She urged fund managers to assess whether Tesla remains a viable long-term investment given Musk’s political distractions.
Adding to investor worries, Tesla’s stock decline has wiped out approximately $300 million from New York City’s pension funds in just three months, further fuelling the argument that Musk’s focus on Doge and his personal political agenda is damaging Tesla’s financial standing.
How Musk’s political activities are not helping
Beyond his government role, Musk has made substantial political investments, pouring millions into a Wisconsin Supreme Court race in an attempt to support Republican candidate Brad Schimel. Despite Musk’s financial backing and vocal endorsements, Schimel was defeated by Democratic candidate Susan Crawford .
Musk’s involvement in the race drew sharp criticism from progressive groups, who accused him of using his wealth to sway judicial outcomes. Following the election loss, Musk’s influence in political circles has come under renewed scrutiny.
Additionally, Musk’s government role has had wider consequences for Tesla beyond stock fluctuations. The Trump administration’s automotive tariffs, particularly those affecting key Tesla suppliers in China and Mexico, have raised concerns about supply chain disruptions.
While Musk has defended these policies as necessary to boost domestic production, critics argue they place additional financial strain on Tesla’s already struggling operations.
Trump, for his part, has sought to counteract anti-Tesla sentiment by publicly promoting the company’s vehicles at the White House .
However, his administration has also taken a firm stance against vandalism targeting Tesla, with Trump vowing to prosecute those defacing the company’s vehicles under domestic terrorism laws. Despite these measures, Tesla continues to face a wave of protests and boycotts from customers opposed to Musk’s political alliances.
Can Tesla recover?
Tesla’s full quarterly earnings report, scheduled for release on April 22, is expected to provide a more comprehensive look at the company’s financial health.
While Tesla has urged investors not to rely solely on the preliminary delivery numbers, analysts remain cautious about the company’s trajectory. Factors such as pricing strategies, production costs, and foreign exchange movements will all play a role in shaping Tesla’s financial future.
CNN quoted Wedbush analyst Dan Ives who summed up the situation bluntly: “The more political [Musk] gets with Doge, the more the brand suffers, there is no debate.”
He described Tesla’s first-quarter performance as “a disaster on every metric” and warned that the company is facing a critical moment to regain investor confidence.
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