A few CEOs are as closely tied to their companies as Elon Musk has been to Tesla TSLA. His leadership and bold vision transformed the EV maker into an industry giant. However, Musk’s deep dive into politics — with him leading U.S. President Trump’s Department of Government Efficiency (“DOGE”) — has left investors jittery lately, fueling concerns that he has got too distracted. His active involvement in politics, especially at a time when Tesla is struggling with low sales and competition challenges, hasn’t gone down well with investors.
But now, reports from Politico suggest that Musk may soon step down from DOGE, potentially shifting his focus back to Tesla. That was enough to send Tesla shares up 5% yesterday.
Musk’s rapport with Trump initially boosted Tesla’s stock late last year as investors bet on policies favoring the company. Instead, his high-profile role in DOGE soon became a growing concern, fueling worries about Musk’s divided attention. In fact, it can be attributed as one of the key reasons behind Tesla’s 30% decline so far in 2025.
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With Tesla shares down and uncertainty lingering, the big question is, will Musk actually walk away from DOGE? And even if he does and directs his full attention to Tesla, is the stock worth buying now? Or are there deeper issues at play? Let’s find out.
Musk Unlikely to Leave DOGE Before His Tenure Expires
The Politico report, citing Trump insiders, suggested that the billionaire and Trump had mutually decided Musk would soon return to running his businesses. It also stated that Musk’s expected departure comes amid growing frustration among some Trump administration insiders and allies who see his unpredictability as a growing political risk.
But during an interview early this week, Trump himself acknowledged Musk’s contributions, praising his leadership while noting that Tesla’s CEO has “a big company to run.” However, he also emphasized that Musk was welcome to stay in the White House as long as he wished.
Musk was asked, “You are technically a special government employee, and your tenure is supposed to last 130 days. Are you going to continue past that, or is that the timeframe you plan to stick to?” To which he replied, “I think we will have accomplished most of the work required to reduce the deficit by a trillion dollars within that time frame.”
Both Musk and the White House were quick to dismiss the Politico report. White House press secretary Karoline Leavitt called the report “garbage,” reaffirming that Musk would leave only when his work at DOGE was complete. Musk himself shot down the rumor on X, replying, “Yeah, fake news.”
So, one thing is clear—Musk is not leaving before his official tenure ends (which is likely on May 30). But Musk’s increasing political ties are just one of the reasons troubling Tesla. There’s a lot that’s not working for the company now and there’s a lot more that he has to prove to regain investors’ faith.
TSLA Q1 Deliveries Disappoint, BYD Takes the EV Crown
Yesterday, Tesla reported first-quarter deliveries of 336,000 vehicles (missing the consensus estimates of around 378,000 units), the lowest quarterly numbers in more than two years. Sales were down from 495,570 units in the fourth quarter 2024 and 386,810 in the first quarter of last year.
An obvious reason for Tesla deliveries being soft in the first quarter of 2025 is that the company had to retool its factories to produce the new version of its Model Y SUV. The anti-Musk sentiment is also real, which is hurting the company’s sales. Tesla owners want to distance themselves from Musk. Stickers reading "I bought this before Elon went off the rails," attacks on Tesla showrooms and more owners selling their cars in protest all highlight how Tesla's reputation has taken a hit. The company is facing slowing sales, rising competition and a tough market. Vehicle deliveries are down across all key regions — the United States, China and Europe.
As Tesla’s deliveries declined, Chinese EV giant BYD Co Ltd BYDDY saw a strong sales surge. In the first three months of 2025, BYD delivered 416,388 battery electric vehicles (BEVs), surpassing Tesla’s 336,681 units for the same period. This marked the second straight quarter that BYD has held the title of the world’s top EV maker. With rapid expansion and cutting-edge technology, BYD continues to challenge Tesla’s longtime dominance.
Tesla Can’t Afford to Stumble on its Robotaxi Promise
Pressure is rising for Musk to launch affordable models and accelerate autonomous driving—the cornerstone of Tesla’s long-term vision. The company is on track to launch one in the first half of 2025 and expand its lineup from there. But its autonomous vehicle (AV) ambitions are more crucial.
Tesla plans to roll out unsupervised Full Self-Driving (FSD) in Austin this June. In February, it applied for a permit from the California Public Utilities Commission to operate a self-driving taxi service. Last month, it secured the first of several approvals required to eventually launch its long-awaited robotaxi service to the state. While the initial phase will still involve human drivers, the ultimate goal is a fully autonomous fleet to compete with companies like Alphabet GOOGL.
Alphabet’s Waymo is still the clear leader in the AV and robotaxi race. With years of experience, extensive real-world testing and strategic partnerships, Waymo is already running commercial services in multiple cities. And with Alphabet committing $5 billion to the effort, Waymo looks ready to lock in its dominance.
For Tesla, 2025 is shaping up to be a pivotal year. It must prove that its AV technology works with no further delays.
TSLA Estimates Southbound
Analysts have been lowering EPS estimates for Tesla. These numbers might fall further in the coming days, with Tesla slated to report first-quarter results later this month.
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Should You Sell TSLA Stock Now?
Tesla’s core EV business is indeed struggling. The brand image is not the same as before, competition is high, and the company also faces trade policy risks. However, one bright spot is Tesla’s energy generation and storage business, which is thriving. Deployments doubled in 2024 to 31.4 GWh, and in the first quarter of 2025, Tesla deployed 10.4 GWh of energy storage — a staggering 156% year-over-year increase.
Despite its EV struggles, Tesla’s long-term narrative now hinges on its autonomous driving ambitions. Progress in FSD approvals and robotaxi development will be critical for future growth. If Tesla executes well on these fronts, shares could stage a strong comeback and selling now could mean missing out.
While short-term challenges may continue to put pressure on the stock, the long-term potential remains intact. This doesn’t look like the right exit point. In fact, Wall Street’s average price target suggests a 17% upside from current levels.
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For existing investors, holding on seems reasonable, while new buyers may want to wait for clearer signs that Tesla can deliver on its AV and affordable EV promises. Tesla currently carries a Zacks Rank #3 (Hold) and has a VGM Score of D. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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