Tesla stock jumps on a report Elon Musk could soon be out of the White House

• Tesla stock rose Wednesday at midday, reversing course after weak deliveries sparked a sell-off.
• The stock is rising as investors cheer a report that Elon Musk could soon step back from his government role.
• Musk's various side projects have been a source of great frustration for Tesla investors.

Tesla shares reversed course to rip higher on Wednesday as investors cheered the possibility that CEO Elon Musk is headed for the White House exits.

The stock gained 3.4% in late morning trading shortly after Politico published its report, reversing a steep plunge that drove the automaker down as much as 5% to an intraday low of $252.45.

Though shares initially slid on downbeat deliveries figures, investors were encouraged by a Politico report that said Musk would be stepping back from the Trump administration in the coming weeks.

Sources told the outlet that President Donald Trump and Musk have both agreed that the CEO will soon return to his businesses while taking on a smaller supporting role in Washington.

That's welcome news for investors who have been dismayed by Musk's divided attention and political involvement. Since Trump took office in January, Musk has been the face of the Department of Government Efficiency, which initiated a slate of controvertial spending cuts across the federal government.

His role has resulted in protests that Wall Street worries have damaged the Tesla brand. While consumers pull back, vandalism against Tesla vehicles and property has also spiked.

Tesla has been among the biggest market losersin the first quarter amid weak sales data, rising competition, and frustration with Musk.

Two days into the new quarter, Politico's coverage offers investors a new reason for hope that Musk could soon refocus his attention on the carmaker, but there are still headwinds to navigate.

Here's what else is top of mind for shareholders.

A big miss on Q1 deliveries

Any hope that Tesla sales might not be as bad as expected was quickly dashed on Wednesday, as the company released first-quarter deliveries data that undershot even the lowest expectations.

The firm delivered 336,000 total cars for the quarter versus estimates of 390,300 deliveries, citing weeks of lost production to factory line changes ahead of the new Model Y. That's 13% lower than the same period last year.

Tesla's justification didn't satisfy Wall Street.

"336k total cars delivered is bad even considering the model Y change. Will the new model Y really help sales in q2? I suspect not much. Tesla is on track for another year of material declines in sales. Tesla EV production capacity is running at like 65% of potential," Tesla investor Ross Gerber wrote on X. "The high end EV business has totally eroded. The cybertruck is basically not selling. The brand is broken and may not be fixable."

Grim Tesla sales data from the past few months has prepared analysts for a tough report, but even the most downbeat expectations were higher than Wednesday's figures. For instance, Deutsche Bank predicted deliveries to hit between 340,000 and 350,000.

"We are not going to look at these numbers with rose colored glasses...they were a disaster on every metric," wrote Wedbush Securities analyst Dan Ives, typically a Tesla perma-bull.

Chinese competitors grind higher

There's also new data to suggest that Tesla's business in China is under increasing pressure.

Domestic competitor BYD sold 371,419 vehicles in March, pushing sales up 58% from the same period a year ago, though not all of these were necessarily EVs.

Meanwhile, Tesla sold 78,828 EVs in March, marking an 11.5% drop year-on-year.

BYD has increasingly positioned itself as a major rival to Tesla's foothold in the country. Last month, Tesla shares fell on news that BYD had developed an electric vehicle charger that it claims can provide a 400-kilometer range on a five-minute charge. That's a step up from current charging tech, with Tesla's quickest version providing a 275-kilometer range after 15 minutes of charging.