Elon Musk’s move to Washington has impacted his public perception and Tesla’s (TSLA) business outlook, according to recent polling and market data. A new AP-NORC poll shows just 33% of U.S. adults now view Musk favorably, down from 41% in December, as he leads President Trump’s Department of Government Efficiency (DOGE). The partisan divide is stark, as 70% of Republicans view him favorably, compared to 10% of Democrats and 20% of independents.
Tesla’s financial results reflect this political polarization. In Q1 2025, deliveries fell 13% to 336,681 vehicles, the lowest since 2022, with revenue dropping 9% to $20.6 billion. Analysts attribute a significant portion of this decline to the brand damage caused by Musk’s political activities.
The damage has become so severe that Tesla’s board reportedly reached out to executive search firms about a month ago to find a potential successor to Musk, according to a report by The Wall Street Journal.
Following the disappointing earnings report, Musk pledged to reduce his DOGE work to “a day or two per week” starting in May 2025, sparking a 5% stock rally. Valued at a market cap of $908 billion, Tesla is the largest automobile company in the world. However, shares of the EV maker are down 42% from all-time highs.
Let’s see if you should own TSLA stock right now.
Is Tesla Stock a Good Buy In May 2025?
In Q1 2025, Tesla reported a revenue decline of 9% while operating income fell 66% year over year. Its operating margin narrowed to 2.1% in Q1, down from over 5% in the same period last year.
The decline stems from a production line changeover for the Model Y across all four global factories, which Tesla calls “an industry first.” This strategic retooling caused several weeks of lost production but demonstrates Tesla’s evolving operational capabilities. Additional headwinds included reduced vehicle average selling prices due to mix and sales incentives, as well as increased operating expenses driven by AI and R&D investments.
Despite these challenges, Tesla maintains a strong financial position with $37 billion in cash and investments, bolstered by positive free cash flow of $700 million for the quarter. Tesla achieved milestone production numbers, with Gigafactory Texas producing its 400,000th vehicle and Berlin building its 500,000th Model Y.
Tesla’s strategic pivot toward AI and autonomous technology continues unabated. It successfully launched full self-driving (supervised) in China, its first market outside North America, without country-specific training data. Moreover, progress continues on key initiatives, including the launch of Robotaxi in Austin by June and the production of Optimus robots in 2025.
Energy storage remains a bright spot, with Powerwall deployments exceeding 1 GWh for the first time. The Services and Other segment saw gross profit grow 25% year-over-year, while the Supercharger network expanded by 17%, adding over 1,800 new stalls.
What’s Next for TSLA Stock?
Looking ahead, Tesla faces significant uncertainty due to evolving trade policies and their impact on global supply chains and cost structures. The company has adjusted its production strategy for new vehicles, including more affordable models slated for early 2025.
Rather than developing entirely new platforms, Tesla will utilize aspects of both next-generation and current platforms on existing manufacturing lines, sacrificing some cost reduction for more capital-efficient volume growth.
This approach aims to leverage the current production capacity of nearly 3 million vehicles annually, potentially enabling over 60% growth from 2024 levels before requiring new manufacturing investments.
While Tesla plans to introduce a $26,600 EV model by June and launch a robotaxi service in Austin, the company faces intensifying competition from BYD’s (BYDDY) cheaper alternatives and Google’s (GOOGL) Waymo, which has already accumulated millions of driverless miles.
Out of the 41 analysts covering Tesla stock, 16 recommend “Strong Buy,” two recommend ‘Moderate Buy,” 13 recommend “Hold,” and 10 recommend “Strong Sell.” The average target price for TSLA stock is $283.14, which is in line with the current trading price.
