After Tesla shares got a slight bump after CEO Elon Musk said he would spend more time running the EV maker and less day-to-day time at the White House, reality set in that damage, perhaps permanent, has set in on the Tesla brand sapping its momentum for the foreseeable future.

The share price rose on Wednesday, but Wall Street analysts are still bearish on Tesla’s share price.

A day before Tesla’s call with analysts in which it reported a 71% decline in first-quarter earnings, Wedbush Securities analyst Dan Ives termed Tesla’s situation a "code red situation." That implies that a company is at a turning point where inaction could lead to severe damage—to its brand, financials or long-term viability.

Musk must “read the room” and refocus on Tesla, or the situation could spiral into longer-term damage to valuation and growth, Ives says. He warns that unless Musk recommits fully to Tesla, the company's brand and financial performance may continue to deteriorate.

While Musk said he would be spending more time at Tesla starting in May, he also said he would stay aligned with President Trump’s radical and rapid downsizing of the federal government.

“I believe the right thing to do is to fight the waste and fraud and get the country back on the right track,” Musk said.

In other words, Musk is staying joined at the hip with the Trump agenda. That’s not what investors were hoping for. Musk has people at Tesla to keep the product cycles and day-to-day operations running. The biggest headwind on Tesla sales and profits is Musk’s role at Trump’s Department of Government Efficiency, which is continuing, albeit at what Musk says will be two days a week, and his advisory capacity with the White House and vocal identification with Trump’s agenda.

About half of Americans view Musk and Tesla negatively following his attempts to reshape the federal government with President Trump since January. Vandalism at Tesla dealerships have reached a point where the Trump Justice Department announced a Tesla investigative task force to go after vandals and protesters. There is a movement on social media, #TeslaTakedown, whose intent is to discourage people from buying Teslas. Wall Street analysts estimate this could result in at least a sustained 15%–20% decline in demand for Tesla vehicles, but it could go higher, they warn.

Earnings From Autonomous, Robotaxis and Robots?

“The future of the company is fundamentally based on large-scale autonomous cars and...vast numbers of autonomous humanoid robots,” Musk said in delivering the bad earnings news.

Tesla's Full Self-Driving (FSD) technology system remains under federal investigation due to safety concerns. NHTSA is examining whether Tesla's driver-assistance technology adequately alerts drivers when their attention wanes. Additionally, the company's plan to launch a robotaxi service using vehicles without steering wheels or pedals has raised questions about the readiness and safety of such technology.

Tesla’s revenue projections for its robotaxi business, while ambitious, are highly speculative and face significant skepticism from analysts, regulators and even some investors. Bernstein Research analysts recently wrote, “We see Tesla’s robotaxi economics as a lottery ticket—potentially lucrative, but highly uncertain.”

Tesla has said that its robotaxis could generate $30,000 to $100,000 in annual revenue per vehicle, based on ride-hailing utilization. But the market for robotaxis in cities is far from a lock to scale as city governments have been slow to embrace the technology approving them for use. And Tesla’s technology is unproved. No U.S. state has yet approved wide-scale deployment of truly driverless Tesla vehicles.

Financial analysts have expressed caution regarding Tesla's robotaxi revenue forecasts. Morningstar, for instance, raised its fair-value estimate for Tesla to $250 (compared with close of $237 on 4/22) factoring in anticipated adoption of autonomous driving software. Nevertheless, the firm noted that Tesla's stock appeared overvalued by approximately 60% relative to this estimate. The report emphasized that while progress in autonomous driving is noteworthy, the automotive sector remains Tesla's core business, and challenges such as reduced profit margins from heavy discounting and increased competition persist.

North America is far from Tesla’s biggest challenge. Tesla faces mounting competition from Chinese automakers like BYD, which have surpassed Tesla in electric vehicle sales. In Europe, Tesla's market share is eroding due to increased competition and the end of government subsidies. For instance, Tesla's sales in Germany plummeted by 76% in February 2025 compared to the previous year.

The company will also pay the price for Trump’s ongoing U.S.-China trade war, with U.S. tariffs on Chinese imports rising to 145%. This has disrupted Tesla's supply chain and led to the suspension of Model S and Model X orders in China. Musk has criticized these tariffs and publicly criticized Trump’s trade czar.

Musk seems more animated these days about selling humanoid robots, which he says will revolutionize Tesla’s manufacturing processes, with huge revenue upside by selling the AI-driven robots to other manufacturers of every stripe.

AI-driven robotics is actually the most promising new business for Tesla, with the most short-term upside. That is a business-to-business play, not dependent on consumer preferences or politics.

Tesla aims to deploy thousands of Optimus robots in its factories by the end of 2025, with plans to scale up production to one million units annually within five years, thus displacing thousands of its workers at Tesla and hundreds of thousands globally, lowering costs and drastically reducing healthcare overhead. These robots are envisioned to perform tasks that are dangerous, repetitive, or mundane, potentially transforming labor-intensive industries. Musk has suggested that Optimus could eventually surpass Tesla's vehicle business in revenue, selling the technology to other companies, with some projections estimating the overall humanoid robot market to reach $209 billion by 2035

Musk may well spend more time managing Tesla, and advancing the robotics busiess. But profit and loss and the company’s share price seems to hinge more for now on his hobby of trying to reshape the government in his adopted country.