Tesla (TSLA) shares rebounded sharply on Wednesday following a report that CEO Elon Musk is preparing to step back from his advisory role within the Trump administration in the coming weeks. The news, first reported by Politico, sent Tesla stock soaring 5.3% by market close, despite earlier losses triggered by disappointing first-quarter delivery numbers.
Musk to Shift Focus Back to Tesla
According to Politico’s Rachael Bade, President Trump has informed close aides and members of his Cabinet that Musk will reduce his formal engagement with the administration. While he is expected to maintain an informal advisory capacity, the decision signals a potential shift in Musk’s priorities, a move some Wall Street analysts have been calling for.
Dan Ives, an analyst at Wedbush and a long-time Tesla proponent, recently urged Musk to realign his focus on the struggling automaker, noting that Tesla’s stock has plummeted nearly 50% from its December 2024 peak. The news of Musk stepping back may help alleviate investor concerns that his political engagements have distracted from Tesla’s core business. 
Tesla Reports Weakest Quarterly Sales in Three Years
Earlier on Wednesday, Tesla reported global deliveries of 336,681 vehicles for the first quarter of 2025, significantly missing Bloomberg’s consensus estimate of 390,342. This marks the company’s weakest quarter for deliveries since Q2 2022, underscoring ongoing demand challenges.
Tesla attributed the slump to production disruptions tied to the transition of Model Y manufacturing lines across its four factories. Despite these setbacks, the company stated that the ramp-up of the refreshed Model Y is progressing well following its global launch in March.
In addition to its vehicle deliveries, Tesla reported the production of 362,615 units and the deployment of 10.4 GWh of energy storage products for the quarter. Investors are now awaiting the company’s Q1 earnings report, scheduled for April 22, for further insights into its financial health.
Declining Sales Across Key Markets
Tesla’s delivery struggles extend beyond production shifts, as sales have weakened in key global markets. Recent registration data from Europe highlights significant declines, with France seeing a 36.8% drop in Tesla registrations year-over-year, Norway experiencing a 63.9% decline, and Denmark recording a 65.6% decrease.
In the Netherlands, registrations fell 61%, and Sweden saw only a slight 1% dip, further illustrating Tesla’s cooling momentum in one of its historically strong regions for EV adoption. Industry analysts suggest that Musk’s polarizing political activity has played a role in Tesla’s brand perception, potentially impacting sales.
Investor Sentiment Remains Uncertain
While Tesla’s stock recovery following the Politico report reflects optimism about Musk’s renewed focus on the company, broader concerns persist. Ives described Tesla’s Q1 performance as “a disaster on every metric,” citing demand headwinds, ongoing protests at Tesla dealerships, and growing unease among investors about Musk’s public image.
With mounting competition in the EV sector and questions about Tesla’s long-term growth strategy, all eyes will be on the company’s April 22 earnings report to gauge its trajectory in an increasingly volatile market.
