Investing.com -- Tesla (NASDAQ:TSLA) shares gained 4% on Tuesday after U.S. President Donald Trump bought a new Tesla vehicle in a show of support for CEO Elon Musk, whom he lauded for working with his administration.
Trump’s move came amid growing public outrage over Musk’s actions under the Department of Government Efficiency (DOGE), which he leads under Trump. DOGE has spearheaded layoffs and funding cuts across several federal agencies.
“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,” Trump said in a social media post Monday evening announcing the plan.
In a ceremony at the White House on Tuesday afternoon, Elon Musk presented Trump with a new red Model 3 Tesla vehicle.
On buying the Tesla, Trump said, "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."
Trump added, "You can’t be penalized for being a patriot, and he’s a great patriot." He said our country will be "very strong" from all the money Musk is saving the government. Trump said he would not drive the vehicle, as he is not allowed to, but he would leave it at the White House for his staff to drive.
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 comes following several reports of protests and vandalism carried out against Tesla facilities in the U.S. and Europe, amid seemingly increased public outrage over the actions of DOGE.
Musk’s apparent affiliation with the alt-right- in the U.S. and in Germany- was also seen alienating a bulk of Tesla’s target demographic, which consists largely of liberals and left-leaning, climate conscious voters.
A deteriorating brand image could herald more headwinds for Tesla’s vehicle deliveries, which clocked their first annual drop in 2024. Recent data also showed that the electric vehicle maker’s European sales plummeted in January, amid heightened competition from Chinese and local players.
Musk- who has been extremely active on social media in touting the efforts of DOGE, told Fox Business that it was growing increasingly difficult to juggle his roles at the EV maker and DOGE. Musk also leads SpaceX and his new artificial intelligence venture xAI.
Musk claims that DOGE has uncovered vast amounts of fraud and waste in the federal government, and said on Monday that he would stick with the agency despite "tough sledding" amid recent protests and Tesla’s sinking stock price.
Concerns over weak sales and Musk’s political actions saw Tesla’s shares slump 45% so far in 2025.
In addition to Trump’s support for the company and stock, several analysts have defended Tesla today.
Morgan Stanley analyst Adam Jonas said while the stock might test their $200 ’bear case’, it could rebound 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 sees the Austin robotaxi ’unveil’ this summer and the AI/ Humanoid Day before the year’s end as some catalysts for investors to pay attention to.
Elsewhere, bullish analyst Dan Ives of Wedbush is calling on Musk to "step up" as Tesla CEO now, instead of focusing all his energies on DOGE.
(Ambar Warrick contributed to this article)