What Drove Tesla Stock Up 17% Last Week?

Tesla stock (NASDAQ:TSLA) has gained about 17% over the last week, although it fell by close to 5% in Wednesday’s trading. There have been several moving parts to the Tesla stock story in recent weeks. So what has driven Tesla stock of late?

Are Auto Import Tariffs a Net Positive For Tesla? 

On Wednesday, President Donald Trump announced a 25% tariff on auto imports into the U.S. as part of his effort to boost domestic manufacturing. Tesla could be a net beneficiary of these new tariffs or at least be less impacted than its competitors. Given that Tesla builds all the vehicles it sells in the U.S. at factories in California and Texas, its vehicles won’t face tariffs. Meanwhile, competitors, including GM and Ford, manufacture EVs in Mexico and could see steeper price hikes. This could make Tesla vehicles more competitively priced versus rivals and help the company gain market share. That being said, Tesla isn’t entirely immune, as it could still face higher costs due to pricier imported parts. Separately, see Is Google Stock Undervalued At $156?

Musk’s Renewed Involvement In Tesla

Elon Musk has been heavily involved with the new Department of Government Efficiency (DOGE), a high-profile role in the Trump administration that has been widely criticized. This raised concerns about his focus on Tesla. However, there were signs that he is refocusing on the company. In an all-hands meeting held last week, Musk reassured employees about Tesla’s future and urged them to hold onto their shares, emphasizing the company’s ambitious roadmap. Some of Tesla’s stock rally may be attributed to Musk’s renewed involvement in the automaker.

Europe Headwinds

Tesla is seeing sales in Europe plummet. The European Automobile Manufacturers’ Association (ACEA) indicated that in February, Tesla saw a 40% year-over-year drop in new vehicle registrations. This is in sharp contrast to the broader EV market, which saw sales grow by about 26%. The decline could be attributed to multiple factors. For one, customers may be holding off purchases in anticipation of the refreshed Model Y, Europe’s best-selling EV. Additionally, pushback from Musk’s political foray and concerns over his ties with President Donald Trump – who also appears to have a more contentious relationship with Europe – could be alienating Tesla’s typically more progressive customer base.

Tesla Stock’s Volatility

The increase in TSLA stock over the last 4-year period has been far from consistent, with annual returns being considerably more volatile than the S&P 500. Returns for the stock were 50% in 2021, -65% in 2022, 102% in 2023, and 63% in 2024. The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, is considerably less volatile. And it has comfortably outperformed the S&P 500 over the last 4-year period.

Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index, less of a roller-coaster ride as evident in HQ Portfolio performance metrics. Given the current uncertain macroeconomic environment around rate cuts and multiple wars, could TSLA face a similar situation as it did in 2022 and underperform the S&P over the next 12 months – or will it see a strong jump?

We value Tesla stock at about $250 per share, which is about 10% below the market price of $270. We remain bearish on the stock for a couple of reasons. In 2024, Tesla’s deliveries declined year-over-year for the first time in over a decade. Competition in the EV market is heating up with Chinese EV players gaining ground in international markets, while Tesla’s weakening brand image, sharply declining resale values, and saturation of early adopters in the EV market could hurt its sales in the U.S.  Tesla’s valuation after the recent rally is hardly cheap. The stock trades at a lofty 100x consensus 2025 earnings – and it might take quite a bit of time for the company to grow into this rich valuation. See our analysis on Tesla Valuation: Is TSLA Stock Expensive Or Cheap? for more details on Tesla’s valuation and how it compares with peers. For more information on Tesla’s business model and revenue trends, check out our dashboard on Tesla Revenue: How Does TSLA Make Money?

[1] Returns as of 3/27/2025
[2] Cumulative total returns since the end of 2016

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