Tesla (NASDAQ: TSLA) shares jumped over 2% in pre-market trading Wednesday following a high-profile show of support from U.S. President Donald Trump, who purchased a new Tesla vehicle to back CEO Elon Musk amid growing controversy.
The move came as Musk faces public backlash over his leadership of the Department of Government Efficiency (DOGE), a Trump administration initiative driving layoffs and funding cuts across federal agencies.
In a Monday evening social media post, Trump announced his plan to buy a Tesla, slamming critics of Musk. He wrote,
“The Radical Left Lunatics, as they often do, are trying to illegally and collusively boycott Tesla… in any event, I’m going to buy a brand new Tesla tomorrow morning as a show of confidence and support for Elon Musk.”
On Tuesday afternoon, Musk presented Trump with a red Tesla Model 3 in a White House ceremony.
“Number one, it’s a great product — as good as it gets — and number two, because Elon Musk has devoted his energy and his life to doing this and I think he has been treated very unfairly.”
He called Musk “a great patriot,” adding that the billionaire’s cost-saving efforts at DOGE would make the country “very strong.” Trump noted he would not drive the car due to restrictions but plans to keep it at the White House for staff use.
In comments at the White House, Musk said,
“As a function of the great policies of President Trump and his administration, and as an act of faith in America, Tesla is going to double vehicle output in the United States within the next two years.”
Trump’s move follows multiple reports of protests and vandalism targeting Tesla (NASDAQ: TSLA) facilities in the U.S. and Europe. This unrest stems from growing public outrage over Musk’s controversial actions, particularly his involvement with the Department of Government Efficiency (DOGE). His alleged ties to alt-right groups in the U.S. and Germany have further complicated matters, distancing him from Tesla’s core customer base of liberal, left-leaning, climate-conscious buyers.
This shift in brand perception adds to Tesla’s challenges, as the company recorded its first-ever annual drop in vehicle deliveries in 2024. Additionally, recent data showed a sharp decline in European sales in January, amid intensifying competition from Chinese and local electric vehicle makers.
Musk, who remains highly active on social media promoting DOGE’s efforts, addressed these challenges in an interview with Fox Business. He admitted that managing his responsibilities at Tesla alongside DOGE has become “increasingly difficult,” especially as he also oversees SpaceX and his new AI venture, xAI. Despite this, Musk stood firm on his commitment to DOGE, claiming it has “uncovered vast amounts of fraud and waste in the federal government.”
On Monday, he added that he would stick with the agency despite “tough sledding” caused by recent protests and Tesla’s declining stock price.
Tesla (NASDAQ: TSLA) stock has taken a beating in 2025, falling 45% year-to-date amid weak sales and concerns over Musk’s political involvement. However, on Tuesday, the stock saw a 4% rebound, providing some relief, thanks to Trump’s gesture and positive analyst support.
Morgan Stanley analyst Adam Jonas noted that while the stock may test their $200 “bear case,” it could bounce back to their $800 “bull case” over the next 12 months.
“Tesla shares have fallen 50% from the Dec 17th highs (and down 45% YTD) on poor sales data, negative brand sentiment, and market de-grossing,” Jonas said. “We see the pullback as a buying opportunity for an embodied AI compounded.” He also pointed to the Austin robotaxi reveal this summer and the AI/Humanoid Day later this year as key events that could drive investor interest.
Separately, Wedbush analyst Dan Ives urged Musk to refocus on Tesla (NASDAQ: TSLA) rather than DOGE, stating,
“Musk to step up as Tesla CEO now, instead of focusing all his energies on DOGE.”
Ives remains bullish on the company’s long-term prospects despite recent setbacks.
