Tesla’s electric vehicle business is slowing fast. In the first three months of 2025, its revenue fell 9 percent and profit plummeted 71 percent from a year ago. In April, Tesla’s EV sales in Europe fell 49 percent year-over-year. Despite these alarming numbers, Tesla’s stock has surged—up 23 percent in the past month and nearly 50 percent since its dismal earnings report in April.
So what’s driving the rally? Much of it comes down to Elon Musk. On May 28, the Tesla CEO announced on X that his role as a special government employee is ending. The market took it as a signal that Musk is returning full-time to Tesla. Shares jumped on the news, although they had already been climbing amid earlier expectations of Musk’s White House exit.
Wedbush analyst Dan Ives, known for his often bullish stance on Tesla, lauded Musk’s public announcement as “music to the ears of Tesla shareholders.”
Still, Tesla’s stock rise isn’t as outsized as it looks at first glance. The S&P 500 is up 6.2 percent in the past month. The “Magnificent Seven” tech stocks have returned 14 percent, buoyed by renewed optimism around global trade following political volatility and tariff threats from President Trump’s “Liberation Day.” In that broader context, Tesla’s 23 percent gain—while notable—isn’t outrageous.
But the disconnect between Tesla’s stock and its business fundamentals remains striking. Tesla’s reputation in Europe has taken a hit, in part due to Musk’s political alignment, including his controversial support for Germany’s far-right AfD party. While consumers appear to be turning away, investors are betting that Musk’s renewed focus and bold promises will spark a turnaround.
One of those promises: robotaxis. Musk says Tesla will unveil its fully autonomous robotaxi on June 12 in Austin, Texas. It’s a claim he’s made before—many times. Still, the announcement rattled competitors. Uber’s stock dropped on the news.
Behind the scenes, pressure on Musk has been growing. The Wall Street Journal recently reported that Tesla’s board had quietly begun a CEO search. (Tesla denied the report). This week, Tesla chair Robyn Denholm received a letter signed by a coalition of Tesla’s institutional shareholders calling on Musk to commit to working at least 40 hours per week at Tesla.
“The current crisis at Tesla puts into sharp focus the long-term problems at the company stemming from the CEO’s absence,” the letter said. “Given Musk’s leadership roles at four private companies and his foundation, the Board must ensure that Tesla is not treated as just one among many competing obligations.”
Aside from Tesla, Musk partially owns and runs at least five other companies, including SpaceX, X, The Boring Company, Neuralink and xAI.
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