Tesla’s shares witnessed an upswing in May, climbing over 22% as investors welcomed CEO Elon Musk’s decision to scale back his political engagements and concentrate more fully on the company’s primary business activities. Despite this encouraging performance, the stock remains approximately 14% below its level at the beginning of the year due to ongoing difficulties in global sales and investor sentiment.
Musk’s recent role leading the Department of Government Efficiency (DOGE), an initiative under the Trump administration that aims to improve federal agency operations, had drawn criticism and appeared to weigh on Tesla’s share price earlier this year.
Industry analysts described Musk’s White House involvement as a “20% overhang” on the stock, a burden that has now eased following his departure. President Donald Trump publicly praised Musk’s exit, calling him “terrific” and emphasising that he would continue to offer support.
During Tesla’s latest earnings call, Musk confirmed that he would drastically reduce the time devoted to DOGE by the end of May, though he plans to remain involved on a limited basis until Trump’s term concludes. He also intends to retain his White House office and maintain a close advisory relationship with the president.
“I expect to remain a friend and an advisor, and certainly, if there’s anything the president wants me to do, I’m at the president’s service,” he stated.
Operational challenges persist for Tesla, with European sales plunging by half year-on-year in April and deliveries in China declining by roughly 25% during the initial weeks of the current quarter. These setbacks have been worsened by public backlash against Musk’s political affiliations, including protests related to his endorsement of Germany’s far-right party AfD.
Furthermore, pension fund managers have urged Tesla’s board to impose stricter oversight on Musk, demanding he dedicate a minimum of 40 hours per week to the company to address what they describe as a “crisis” in leadership.
Despite these obstacles, Tesla is actively highlighting its progress in autonomous driving and artificial intelligence as key areas for future growth. The company is preparing to launch its long-awaited robotaxi service in Austin, Texas, reportedly set for mid-June, deploying a fleet of Model Y vehicles equipped with Tesla’s latest Unsupervised Full Self-Driving technology. This initiative aims to boost Tesla’s competitiveness against rivals such as Alphabet’s Waymo, which recently surpassed 10 million paid driverless rides in the United States.
Tesla’s stock has also benefited from its manufacturing presence in the United States, with two major assembly plants located in Fremont, California, and Austin, Texas. This domestic production capability helps Tesla mitigate the impact of tariffs that have affected other automakers. Additionally, Tesla’s vehicles contain a higher proportion of North American-made parts than many competitors, bolstering its resilience amid ongoing trade tensions.
Market analysts remain cautiously optimistic about Tesla’s outlook. While the recent surge in share price has been impressive, some technical indicators suggest the gains may be slowing, with warnings that the stock could enter a consolidation phase before making further advances. The company’s ability to regain market share and demonstrate consistent sales growth will be crucial in shaping its longer-term prospects.