Shares of the electric vehicle manufacturer Tesla (TSLA) began the trading day in negative territory but later turned positive, with shares up by 5% as of 2:15 p.m. ET. The day’s developments included Tesla’s first-quarter delivery report and speculation that CEO Elon Musk might curtail his involvement in government affairs.
Tesla’s early trading difficulties were attributed to a report indicating that the company delivered fewer than 337,000 vehicles in the first quarter, falling short of analysts’ expectations. This marked a 13% decline from the previous year and represented the lowest delivery figure since 2022.
Reports this year have highlighted a global decrease in Tesla vehicle sales, which may be linked to Musk’s association with the Department of Government Efficiency (DOGE), an initiative by President Donald Trump’s administration aimed at reducing government expenditure to address budgetary issues.
Later in the morning, Tesla’s stock began to recover as investors grew hopeful that Trump’s expected tariff announcement would alleviate some market uncertainties that have persisted since his tenure began.
A report from Politico added further momentum to Tesla’s stock recovery, indicating that Musk might step back from his role with DOGE. This report, citing three anonymous sources close to the president, suggested that optimizing Musk’s focus on Tesla could benefit the company. Tesla’s stock has suffered this year following a robust post-election performance.
Musk has publicly acknowledged the challenges of his DOGE involvement, mentioning issues such as vandalism to Tesla vehicles and a depressed stock price. He has described his role with DOGE as “a very expensive job.”
The potential departure of Musk from DOGE could be viewed favorably, as it would allow him to focus more on Tesla, where he already manages several tech companies, including SpaceX and X (formerly Twitter). Tesla faces growing competition in its core electric vehicle market, along with significant upcoming projects like the launch of its autonomous driving and robotics divisions.
Despite Tesla trading at a high forward earnings multiple of over 107, and existing uncertainties about its future prospects, shifting Musk’s attention back to Tesla is considered a positive move.
Author Bram Berkowitz has no positions in the stocks mentioned, and The Motley Fool has positions in and recommends Tesla, as stated in its disclosure policy.
