Tesla stock rebounded strongly in May, gaining more than 22% for the month, despite a string of discouraging sales data in two of its most important markets — China and Europe.
The rally comes at a moment when CEO Elon Musk has promised to refocus on his companies, scaling back his visible role in politics and government work.
The more than 22% surge in Tesla’s stock in May helped reverse some of the damage done earlier in the year. The company is still down about 14% year-to-date, making it one of the poorer performers among major U.S. tech companies. Apple, for instance, is down more than 19%, the worst of the so-called megacaps.
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The recent bounce comes as Tesla shifts investor attention away from slumping global sales and toward its future in robotics and autonomous driving. However, the rally is also fueled by expectations that Trump’s return to power will help Tesla maintain a favorable regulatory and political environment — particularly on tariffs, EV credits, and AI policy.
Musk Steps Back From Government Role — But Not Entirely
May also marked a symbolic turning point for Musk’s political entanglements. Trump announced Friday that Musk’s time as a “special government employee” in charge of the Department of Government Efficiency (DOGE) had formally come to an end.
“This will be his last day, but not really, because he will, always, be with us, helping all the way,” Trump wrote on Truth Social. “Elon is terrific!”
The DOGE role was an informal White House post created for Musk early in Trump’s second term. Though largely ceremonial, it gave Musk direct access to senior federal officials and aligned him closely with the Trump administration’s economic agenda.
Speaking at the White House on Friday, Musk said he would no longer be spending significant time in government service but would remain on call for the president.
“I expect to remain a friend and an advisor, and certainly, if there’s anything the president wants me to do, I’m at the president’s service,” he said.
Musk said on a recent Tesla earnings call that his involvement with DOGE would be reduced to “a day or two per week” through the end of Trump’s term. He also confirmed that he plans to keep an office in the White House.
Sales in China and Europe Collapse
While the political winds in Washington may be shifting in Musk’s favor, Tesla’s business metrics continue to flash warning signs.
In Europe, Tesla’s car sales fell by more than 50% in April compared to a year earlier. In China, which has become a critical global market for electric vehicles, Tesla’s sales have declined by about 25% during the first eight weeks of the second quarter.
Analysts say the company is losing ground to more agile and aggressive competitors. In China, local giants like BYD have expanded their offerings and cut prices, eating into Tesla’s market share. In Europe, the company is now facing a potent mix of regulatory resistance and political backlash.
Protests and Political Fallout
Musk’s open support for Trump and recent endorsement of Germany’s far-right AfD party have triggered a public backlash, including organized protests at Tesla’s Gigafactory in Grünheide, Germany.
That political stance has alienated key segments of Tesla’s once-loyal customer base. What was once a brand associated with progressive innovation has, under Musk’s leadership, become polarizing.
Some U.S. consumers have turned away from Tesla over Musk’s increasingly combative public persona and political rhetoric.
Pension funds and institutional investors are growing impatient. A group of major pension fund managers recently sent a letter to Tesla’s board, urging directors to rein in Musk and require that he commit a minimum of 40 hours a week to the company. They described the current state of affairs as a “crisis” and cited a need for stronger corporate governance.
Tesla Shifts Focus to Robotaxis and AI
In an attempt to change the narrative, Tesla has been emphasizing its future in automation, robotics, and artificial intelligence. The company hopes to reignite excitement around its long-promised robotaxi service.
Bloomberg reported this week that Tesla is planning to launch the robotaxi ride-hailing service in Austin, Texas, on June 12 — although Tesla has not yet confirmed that date. Musk told CNBC’s David Faber in a recent interview that Tesla would start with a small fleet of Model Y Tesla vehicles equipped with the company’s newest, Unsupervised Full Self Driving hardware and software.
Musk has been promising investors a self-driving robotaxi since 2019, but the company has so far lagged behind Alphabet-owned Waymo, which recently passed 10 million paid, driverless rides in the U.S.
However, while investors appear encouraged by Musk’s pivot back to business, the path forward is still fraught with reputational and strategic challenges. Analysts warn that Tesla’s longer-term prospects depend less on stock performance and more on its ability to regain a customer base that has grown wary of Musk’s deepening political affiliations, especially his alignment with President Donald Trump and far-right political groups in Europe.