Tesla Inc. (TSLA) Stock: Musk’s Political Exit Could Finally Fix Tesla’s Brand Problem
TLDR
Elon Musk has left his White House role at the Department of Government Efficiency (DOGE), ending his stint in Trump’s administration
Tesla stock has dropped 25% since December but rose slightly after Musk’s departure announcement
Tesla faces declining sales with first-quarter deliveries down 13% year-over-year, the worst quarterly drop in company history
The company plans to launch robotaxi service in Austin, Texas next month with remote human oversight
SpaceX’s latest Starship rocket launch failed, exploding over the Indian Ocean without meeting key testing goals
Elon Musk called time on his White House stint Wednesday, stepping away from his role leading the Department of Government Efficiency. The move brings some relief to Tesla investors who watched shares tumble as Musk’s political activities drew controversy.
As my scheduled time as a Special Government Employee comes to an end, I would like to thank President @realDonaldTrump for the opportunity to reduce wasteful spending.
The @DOGE mission will only strengthen over time as it becomes a way of life throughout the government.
— Elon Musk (@elonmusk) May 29, 2025
Tesla stock gained 0.4% Thursday, closing at $358.43. The shares have recovered more than $120 since April when Musk first said he would spend less time in Washington.
But the damage from Musk’s political turn runs deep. Tesla shares lost about 25% of their value since mid-December after initially soaring on Trump’s election victory.
The stock hit nearly $490 in December as investors bet on benefits from the Musk-Trump relationship. Those hopes faded as DOGE’s controversial actions turned off left-leaning voters who typically buy electric vehicles.
Tesla’s sales numbers tell the story. First-quarter deliveries dropped 13% year-over-year, marking the worst quarterly decline in company history.
European sales roughly halved in April. The company faces strong competition in key markets including the U.S., China and Europe.
Robotaxi Launch Could Change Everything
Tesla plans to launch its robotaxi service in Austin, Texas next month. The launch represents a crucial test of Musk’s pivot from affordable electric vehicles to autonomous driving technology.
Musk said the company has been testing driverless Model Y cars in Austin. The first self-delivery from factory to customer is planned for June.
The robotaxi launch will proceed slowly with humans overseeing early rides remotely. This cautious approach aims to ensure safety but raises questions about scalability.
Analysts see the Austin launch as make-or-break for Tesla’s autonomous driving ambitions. A successful rollout could validate the company’s $1 trillion autonomous driving potential.
Tesla trades at roughly 180 times estimated 2025 earnings, far above traditional automakers. The premium valuation depends on the company delivering on its self-driving promises.
Political Damage May Take Time to Heal
Musk’s political activities created real brand damage among Tesla’s core customer base. About 5% of brand damage remains, according to Wedbush analyst Dan Ives.
Individual retail investors hold about 40% of Tesla’s tradeable shares, well above the 20% average for other tech giants. This makes retail sentiment crucial for the stock.
Some major individual shareholders like Leo KoGuan supported Musk’s DOGE work. But the broader impact on sales suggests many potential customers were turned off.
Tesla Energy criticized Republican plans to end energy tax credits late Wednesday. The company said ending credits would threaten America’s energy independence.
SpaceX faced its own setbacks this week. The latest Starship rocket launch failed, exploding over the Indian Ocean without achieving key testing goals.
Starship fully stacked for Flight 9.
Launch NET May 27. pic.twitter.com/GdM6aljIRU
— Space Sudoer (@spacesudoer) May 26, 2025
The failure puts another pause in Musk’s development timeline for the rocket central to U.S. space program goals. Federal regulators had granted SpaceX a launch license just four days earlier.
Musk now returns to face challenges across his business empire. Tesla’s sales slide tests investor patience while SpaceX dominates commercial launches despite recent setbacks.
The company plans to launch a new lower-price model in coming weeks. New cars and new self-driving technology represent Tesla’s path back to growth.
Analysts say deeper operational fixes are needed beyond just Musk’s return from Washington. Tesla faces market saturation and strong competition in all three key markets.
Tesla’s forward price-to-earnings ratio of roughly 165 keeps it expensive compared to other Big Tech companies and traditional automakers. The valuation assumes major breakthroughs in autonomous driving technology.
Musk said in July that investors who don’t believe Tesla will solve vehicle autonomy should not hold the stock. June’s robotaxi launch in Austin will test that confidence.
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Filed under: News - @ May 30, 2025 11:21 am