Tesla (TSLA) shares climbed nearly 7% on Tuesday, May 27 following CEO Elon Musk’s commitment to refocus on his core businesses after recent operational challenges at his social media platform X. The billionaire entrepreneur announced plans to spend more time at Tesla, xAI, and SpaceX as they launch critical technologies. Shares are up another 1.6% on Thursday, May 29 following news that Musk is officially done with his tenure at the Department of Government Efficiency (DOGE). 

Musk’s renewed focus comes as Tesla faces mounting pressure from institutional investors who control roughly 8 million shares in the company. In a letter to Tesla’s board, pension fund managers outlined concerns about the electric vehicle (EV) maker’s declining performance and Elon Musk’s divided attention.

The investors highlighted Tesla’s volatile stock price, falling sales, and damaged global reputation as evidence of a company in crisis. They criticized Musk’s role as the head of the Department of Government Efficiency. The letter stated that Musk’s political activities have diverted crucial attention from Tesla’s operations.

TSLA stock is down more than 10% in 2025 and has declined by over 25% from its all-time highs. Moreover, the EV giant reported a 20% drop in automotive revenue and a 71% decline in net income for the first quarter.

The institutional investors are also demanding corporate governance reforms. These demands include a requirement that Musk work a minimum of 40 hours weekly at Tesla as part of any new compensation package. 

Musk recently committed to leading Tesla for the next five years, stating he needs sufficient voting control to maintain direction over the company’s future amid these mounting challenges.

Tesla Sales in Europe Continue to Fall

Tesla’s European sales crisis deepened in April as new-car registrations plummeted nearly 53% across the European Union, marking the fourth consecutive month of declining performance. Tesla registered just 5,475 vehicles in the EU last month, struggling to capitalize on a growing regional EV market where Chinese competitors are rapidly gaining traction.

Battery-electric vehicle sales across the EU surged 26% year-over-year through April, while hybrid-electric registrations grew 21%. Tesla’s persistent decline suggests that there are deeper structural challenges beyond market conditions.

Chinese automaker BYD (BYDDY) outsold Tesla in Europe for the first time, despite facing higher EU tariffs of 17% compared to Tesla’s 7.8% on China-made vehicles. BYD’s European volumes surged by 359% in April, highlighting the effectiveness of competitive pricing strategies and product diversification into plug-in hybrids.

As stated above, Tesla’s struggles extend beyond sales figures to brand perception issues linked to CEO Elon Musk’s political activities and role in President Donald Trump’s administration. Protests against the company have emerged across Europe, contributing to a slowdown in demand. 

Additionally, Chinese manufacturers are gaining market share through aggressive expansion and localized manufacturing strategies. For instance, BYD’s upcoming Hungarian production facility positions the company for sustained growth in Europe. 

What Is the Target Price for TSLA Stock?

Despite the ongoing pullback, Tesla stock has returned over 2,000% to shareholders in the past decade. However, it will be difficult for TSLA stock to replicate its historical gains due to slowing demand and rising competition. 

Out of the 41 analysts covering Tesla stock, 16 recommend “Strong Buy,” two recommend “Moderate Buy,” 13 recommend “Hold,” and 10 recommend “Strong Sell.” The average target price for TSLA stock is $292, significantly below the current trading price.