Tesla Shares Rebound Amid Reports Elon Musk May Step Down from Government Post

Tesla shares experienced a notable rebound on Wednesday, driven by an unconfirmed Politico report suggesting Elon Musk might soon exit his government role as the head of the Department of Government Efficiency (DOGE). Musk's potential departure is perceived positively by investors hoping he will return his full attention to Tesla, which has struggled in recent months.

Early Trading Decline

Initially, Tesla's stock dipped sharply, falling approximately 6.4% in early trading due to disappointing first-quarter vehicle delivery numbers. However, following the publication of Politico's article—citing unnamed insiders close to former President Donald Trump—the stock reversed course and rose by roughly 5% by midday.

Elon Musk's Possible Return to Tesla

According to the report, Trump, who remains influential in Republican circles and close to Musk, was satisfied with the cost-cutting measures Musk implemented during his tenure at DOGE. However, both parties reportedly agreed recently that Musk's continued leadership of his own business ventures was crucial, prompting his expected return to Tesla.

Tesla’s Recent Market Struggles

Tesla investors have experienced volatility recently, with the stock falling more than 5% in the past month alone and plunging around 31% since the beginning of the year. The first quarter of 2025 was particularly challenging, as shares dropped by 36%, marking Tesla's worst quarterly performance since 2022.

Impact of Musk’s Government Role

Musk's role in the Trump administration has attracted criticism, protests, and even direct attacks on Tesla's global operations, contributing to investor unease. Additionally, ongoing trade tariffs instituted by Trump, affecting Tesla's critical suppliers in Mexico and China, have compounded the company's challenges.

Musk Acknowledges Financial Impact

At a political rally in Green Bay, Wisconsin, on Sunday, Musk acknowledged the financial toll his government role had taken, candidly noting, "My Tesla stock and everyone else's has essentially halved. It's an expensive job."

Political Controversies and Legal Risks

Musk's political involvement, notably his vocal support and substantial financial contributions to conservative candidates, has also drawn criticism. Recently, New York City Comptroller Brad Lander called for potential legal action against Tesla. Lander alleged Tesla had misrepresented Musk's active role in the company's daily management, accusing Musk of neglecting Tesla due to his governmental responsibilities.

Investor Outlook

As investors await official confirmation regarding Musk’s return to Tesla, the market appears cautiously optimistic, seeing potential stability and renewed focus on Tesla's operational recovery and strategic future.