By Aditya Soni, Kritika Lamba
(Reuters) -Elon Musk’s break with the Trump administration means investors will hope he refocuses on his sprawling empire as Tesla battles slumping sales and after SpaceX’s latest rocket launch fell short of expectations.
Musk called time on his White House stint on Wednesday, giving Tesla investors some succor after shares slumped this year in part due to the backlash to his support of U.S. President Donald Trump and right-wing parties in Europe. The billionaire also spearheaded Trump’s so-called Department of Government Efficiency, charged with cutting federal spending, which generated controversy.
As Musk’s focus shifts back to his businesses, investors will question whether he can pull Tesla out of its sales slump while giving attention to his other companies, many of which benefit from his relationship with government, including SpaceX and Starlink.
Shortly before he announced his exit from Washington, Musk criticized the hefty tax bill that is making its way through Congress. In addition, he had recently pledged to spend less money on politics after he plunked down nearly $300 million on Trump’s presidential campaign and on other Republican candidates last year.
Tesla shares were up 1.6% in afternoon trading on Thursday, but they have lost about 25% of their value since mid-December. The stock initially soared due to Musk’s relationship with Trump and expectations for swift regulatory approval for the company’s widely awaited robotaxis. They reversed course as sales dropped and protests erupted against Musk’s embrace of far-right politicians and his role in firing U.S. federal workers.
Analysts say deeper operational fixes are needed to reverse its sales slump, however, as EV buyers increasingly seek out competitors, particularly in the fast-growing Chinese market.
“Musk’s departure from DOGE will improve market sentiment, but I see no real change for Tesla,” said Morningstar analyst Seth Goldstein.
“Tesla’s deliveries decline shows its current product lineup is at market saturation and facing strong competition in all three key markets of the U.S., China and Europe.”
With a forward price-to-earnings ratio of roughly 165, according to LSEG data, Tesla remains far more expensive than other Big Tech giants like Nvidia or Microsoft, not to mention conventional auto companies. Bullish analysts, such as Wedbush’s Dan Ives, have long contended that Tesla’s future value is tied to autonomous driving, which Ives said on Thursday could be worth about “$1 trillion alone for Tesla.”
Tesla did not immediately respond to a request for comment.
RELATIONSHIP WITH TRUMP
Musk’s companies have benefited from his relationship with Trump. Reuters reported last week that Musk’s DOGE team was expanding use of his artificial intelligence chatbot Grok in the U.S. federal government to analyze data. Experts told Reuters that this could give Musk access to valuable nonpublic federal contracting data at agencies with which he privately does business, and give him an advantage over other AI service providers.
SpaceX’s launch this week failed more quickly than expected, exploding over the Indian Ocean without achieving some of its most important testing goals. The result puts another pause in Musk’s speedy development goals for the rocket, which is bound to play a central role in the U.S. space program. Federal regulators had granted SpaceX a license for Starship’s latest flight attempt four days ago, capping an investigation of a mishap that had grounded Starship for nearly two months.
SpaceX has long had its own management team led by Gwynne Shotwell, though after the latest launch, Musk said he planned to spend more time on the company. The Starship rocket is still many steps away from being able to land humans on the moon or Mars.
Musk has been quiet for months about legislation in Congress that takes aim at electric vehicles, but late on Wednesday, Tesla Energy criticized Republican plans to end energy tax credits. “Abruptly ending the energy tax credits would threaten America’s energy independence and the reliability of our grid,” Tesla Energy wrote on its X account. The Republican tax plan could cut tax breaks for electric vehicle purchases and leases, phase out battery production credits and cut clean-energy incentives for solar.
Tesla’s robotaxi launch next month is crucial to Musk’s plan to shift focus from an affordable electric vehicle to autonomous vehicles and the company’s Optimus humanoid robots.
Shortly after news of his Washington departure, Musk said Tesla has been testing driverless Model Y cars in Austin, Texas, with plans to deliver the first vehicles in June.
“Next month, first self-delivery from factory to customer,” he said.
(Reporting by Aditya Soni and Kritika Lamba in Bengaluru; Additional reporting by David Shepardson in Washington; Writing by David Gaffen; Editing by Maju Samuel and Matthew Lewis)
