Tesla’s electric vehicle business is slowing rapidly. In the first three months of 2025, its revenue fell by 9%, and its profits fell by 71% over the same period last year. Tesla’s electric vehicle sales in Europe fell 49% year-on-year in April. Despite these shocking numbers, Tesla shares have soared, with stocks nearly 23% and nearly 50% in the past month since April’s revenue report.
So what drives the rally? Most of this comes down to Elon Musk. On May 28, Tesla CEO announced on X that his role as a special government employee is about to end. The market believes Musk is returning to Tesla full-time. Stocks jumped to news, although they have been climbing in expectations of Musk’s White House export expectations.
Wedbush analyst Dan Ives, known for his stance of Tesla, praised Musk’s public announcement as “musk’s music for the ears of Tesla shareholders.”
Still, Tesla’s stock price is not as good as it looks at first glance. The S&P 500 has risen 6.2% over the past month. The “magnificent seven” tech stocks were returned 14% after political volatility and political volatility and tariff threats from President Trump’s “Liberation Day”, which was an encouragement to optimism about global trade. On a broader context, Tesla’s 23% gain is not outrageous.
However, the disconnection between Tesla’s stock and its business base is still surprising. Tesla’s reputation in Europe has been hit in part by Musk’s political alliance, including his controversial support for the German far-right AFD party. While consumers seem to be turning, investors bet on Musk’s refocus, bold commitments will trigger a shift.
One of these promises: robots. Musk said Tesla will announce its fully autonomous robot on June 12 in Austin, Texas. This is his previous claim. Still, the announcement has disturbed competitors. Uber’s stock fell.
Behind the scenes, Musk’s pressure has been increasing. The Wall Street Journal recently reported that Tesla’s board of directors quietly began a CEO search. (Tesla denies the report). This week, Tesla Chairman Robyn Denholm received a letter signed by Tesla’s affiliate of institutional shareholders calling on Musk to commit to work at least 40 hours a week at Tesla.
“Tesla’s current crisis has caused long-term problems for the company’s absence,” the letter said. “Given Musk’s leadership roles at four private companies and their foundations, the board must ensure that Tesla is not considered one of many competitive obligations.”
In addition to Tesla, Musk also partially owns and operates at least five companies, including SpaceX, X, Boring Company, Neuralink and Xai.
