Tesla shares surge as Musk plans less work for Trump

London — Tesla shares surged about 5% in premarket trading on Wednesday after Elon Musk said he would spend less time working for the US administration, kindling hopes that the billionaire CEO would devote time to mending the EV maker’s brand and sales.

Musk’s participation in the so-called department of government efficiency, or Doge, where he emphasised aggressive cost savings through federal job cuts has caused fierce public and political backlash, leading to protests and vandalism at Tesla showrooms.

Musk acknowledged the blowback but brushed off concerns that the brand damage was behind the steeper-than-expected 25% decline in Tesla’s first-quarter auto sales and a 71% plunge in overall net profit.

Musk said he would cut back his work for President Donald Trump to a day or two per week from sometime next month since the “large slog of work necessary to get the Doge team in place and working with the government to get the financial house in order is mostly done.”

Investors bet that would ease some pressure off the Tesla brand and give Musk more time to focus on plunging sales, which have triggered a near 50% slump in the company’s stock price since its peak in December.

“Investors may breathe a small sigh of relief as Elon Musk said he’ll step back from Doge next month, potentially easing some of the pressure on Tesla’s brand image,” said Chris Beauchamp, an analyst at online trading platform IG.

“After a 50% fall in the stock price investors are inclined to take a different view and with Musk set to make a return, these figures can be set aside on hopes that a more secure hand is on the tiller once again.”

Morningstar analysts said, “We think the market was concerned Musk could be distracted from leading Tesla and potentially hurt Tesla’s brand. Musk’s decision to reduce his advisory role should alleviate these concerns.”

The EV maker is on track to launch an affordable car — considered a crucial avenue for future growth — in the first half of 2025 but “the ramp might be slower than we had hoped,” said Lars Moravy, Tesla’s vice-president for engineering.

Last week, Reuters reported on the delay in Tesla’s plans for an affordable car, a US-made, stripped-down version of its best-selling SUV, the Model Y.

Tesla, however, said it was on track with plans to launch a robotaxi fleet in Austin, Texas, in June.

“Investors seem willing to overlook declining auto sales for now, instead choosing to focus on the bigger prize: an autonomous future,” said Matt Britzman, senior equity analyst at Hargreaves Lansdown.

Reuters