Tesla's (TSLA) Elon Mush has to step up as its chief executive as his Department of Government Efficiency efforts have now "intertwined" the company into a "brewing political firestorm," Wedbush Securities said in a note Tuesday.

"If Musk continues to head down the DOGE path 110% and showing no attention to Tesla during this turbulent time then brand damage will become more pervasive," Wedbush analysts, including Daniel Ives, said. "We have been here before with Musk many times over the last decade...and he ultimately stepped up for Tesla shareholders."

The analysts said that fundamentals are "soft" for Tesla in the near-term, but the innovation cycle "is as bright as it's ever been" in the medium and long-term.

"This speaks to why this next few months is so critical how Musk navigates the turbulence for the Tesla story," the analysts said.

Wedbush maintained Tesla's outperform rating and $550 price target.

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