Musk's Trump administration exit lifts Tesla shares on hopes of renewed focus
Tesla shares rose more than 2% on Thursday after news that CEO Elon Musk was stepping away from the Trump administration, fueling hopes that he will sharpen focus on the automaker as it gears up for its hotly anticipated robotaxi debut.
Musk's ties with U.S. President Donald Trump and his tilt toward right-wing politics in Europe had fueled waves of protests against Tesla in recent months, pushing some buyers away and rattling investors worried about brand damage.
With Tesla on track for a second straight annual sales decline after its first-ever drop in 2024, pressure was mounting on the world's richest man - who also owns SpaceX and X - to refocus on the automaker that underpins much of his fortune.
Musk signaled recently he was cutting back on his role with the Department of Government Efficiency, telling shareholders in March he would reduce his time to a day or two per week.
He also announced last week that he will cut his political spending substantially. Musk spent nearly $300 million to back Trump's presidential campaign and other Republicans last year.
Musk's departure from the administration "is music to the ears of Tesla shareholders," said Wedbush Securities analyst Dan Ives, a long-time Tesla bull who had last month called the Tesla chief's time in Washington a "code red situation" that could create lasting demand destruction.
"2025 started off as a dark chapter for Musk and Tesla," he added, "but importantly those days are in the rear-view mirror."
Tesla shares, trading at $363 before the bell, have declined 11% this year.
News of Musk's departure was shortly followed by a post on X from Musk announcing that Tesla has been testing driverless Model Y cars in Austin, Texas, with no incidents and aims to deliver the first unit in June.
The roll-out is crucial for Tesla as Musk has shifted the company's focus away from building a new, cheaper electric vehicle platform to launching the robotaxi service and its Optimus humanoid robots. Much of Tesla's valuation hangs on that bet.
"Musk's departure from DOGE will improve market sentiment for Tesla, but I see no real change for Tesla," Morningstar analyst Seth Goldstein said.
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Watch: Why did Musk have a black eye at farewell? Billionaire brushes aside drug abuse claims
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