Tesla shares surged more than 5% on Wednesday following a Politico report that Elon Musk is preparing to step down from his controversial role in the Trump administration’s Department of Government Efficiency (DOGE). The market rally came as investors welcomed the potential return of Musk’s full attention to Tesla, helping to protect the automaker’s estimated $43 billion brand value — and restore confidence in its embattled future.
While the White House dismissed the report as “garbage,” and Musk called it “fake news” in a post on X, the reaction on Wall Street told a different story. For investors who have watched Tesla’s valuation slide sharply this year, the mere suggestion of Musk stepping away from his Washington duties provided much-needed relief.
Tesla stock had initially dipped as much as 6.4% during the session, dragged down by a disappointing first-quarter delivery report that came in well below analyst expectations. But following the Politico article — which cited sources close to President Donald Trump — shares reversed course and closed more than 5% higher.
According to the report, Trump and Musk had agreed in recent days that the billionaire tech CEO would return to his business ventures, ending his temporary stint in government. NBC News later added that Musk would likely depart at the end of his 130-day appointment as a special federal employee.
This news provided a jolt of optimism during what has otherwise been a difficult chapter for the EV pioneer. Despite Wednesday’s rebound, Tesla shares remain down over 31% year-to-date and fell 36% in the first quarter alone — the steepest quarterly decline since 2022.
Much of Tesla’s market woes have been attributed to concerns about Musk’s divided focus. Since taking on a high-profile role within DOGE earlier this year, Musk has become a central — and polarizing — political figure, pushing through aggressive federal cost-cutting measures that many argue are directly harmful to the EV industry, including Tesla itself.
Musk’s close association with the Trump administration has also sparked backlash. Tesla showrooms and vehicles have been vandalized in several countries, while social media campaigns and organized boycotts have proliferated.
Activist groups and political opponents have targeted Musk’s influence, money, and policies, painting Tesla as increasingly aligned with right-wing interests.
These concerns have been echoed by shareholders.
On Sunday, at a Republican rally in Green Bay, Wisconsin, Musk publicly acknowledged the toll his DOGE role had taken on Tesla’s valuation — and on his own wealth.
“My Tesla stock and the stock of everyone who holds Tesla has gone, went roughly in half,” Musk told the crowd. “This is a very expensive job, is what I’m saying.”
It was a rare admission from Musk, known for his defiant tone, and one that underscored the financial impact of his political detour.
According to recent estimates, Tesla's brand value stands at approximately $43 billion — a figure that reflects not only its product lineup and customer loyalty, but also its reputation as a clean energy innovator. That image has taken a hit during Musk’s time at DOGE.
“Tesla used to be synonymous with the future,” said Linda Carey, a senior automotive brand strategist at Vireo Partners. “Now it’s increasingly caught in political crossfire, and that’s eroding the brand equity Elon spent a decade building.”
Investors appear to agree. Wednesday’s market rally suggests that the prospect of Musk returning full-time to Tesla — and stepping away from the divisive spotlight of Washington — is seen as a path to stabilizing the company’s value and reorienting its vision.
Musk’s involvement in federal politics may have broader implications beyond brand and investor confidence.
On Tuesday, New York City Comptroller Brad Lander urged the city to explore legal action against Tesla on behalf of its public pension funds, citing Musk’s dual roles. Lander’s office accused Tesla of misleading shareholders by portraying Musk as deeply involved in company operations, despite his ongoing political commitments.
“The basis of the potential litigation are the material misstatements from Tesla,” Lander’s office wrote. “[Musk is] spending little of his time actually managing Tesla, and promoting policies that are actively harmful to Tesla’s business.”
Legal experts say such a case could raise significant governance issues, particularly around disclosure and the CEO’s fiduciary responsibilities.
“Boards have a duty to ensure accurate reporting to shareholders,” said Jill Hanford, a corporate law professor at NYU. “If it turns out Musk’s engagement with Tesla has been overstated while he’s worked on DOGE, that could expose the company to liability.”
Even if Musk formally exits DOGE in the coming weeks, it remains to be seen how quickly he can reassert his leadership at Tesla and rebuild market confidence. The EV sector is facing mounting headwinds: rising interest rates, fading consumer subsidies, and intense competition from both Chinese upstarts and legacy automakers like Ford and General Motors.
Tesla’s recent strategy of price cuts — intended to stimulate demand — has squeezed margins without significantly boosting market share. Meanwhile, delays in product rollouts like the Cybertruck, and inconsistent messaging around Full Self-Driving technology, have left analysts questioning Tesla’s long-term growth trajectory.
Still, many believe Musk retains the vision and engineering prowess to guide Tesla through this moment — if he refocuses his efforts.
“Elon Musk is still Tesla’s biggest asset, but he’s also become its biggest liability,” said Carey. “If he can step away from politics and channel his energy back into innovation, he can still protect — and grow — that $43 billion brand.”
For now, the market is reacting positively to the possibility of Musk returning to Tesla full-time. The 5% gain on Wednesday not only clawed back recent losses but also signaled investors’ hope for renewed leadership at a company that has long been defined by Musk’s vision and presence.
But the relief may be temporary unless followed by action.
“There’s a window here for Musk to right the ship,” said Marcus Tanaka, an analyst at Greenline Research. “The brand is bruised but not broken. If he steps away from DOGE, refocuses Tesla’s mission, and starts delivering consistent results again, there’s still time to recover what’s been lost.”
For Tesla shareholders, that recovery begins with leadership — and the belief that the man who built the brand into a $43 billion symbol of innovation is once again fully behind the wheel.
The rumor of Elon Musk stepping away from DOGE has breathed new life into Tesla’s stock and helped stabilize its $43 billion brand value. While neither Musk nor the administration has officially confirmed the exit, the market reaction makes one thing clear: investors want Musk back — not just in name, but in full focus.
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