Elon Musk announced he will significantly reduce his involvement with the Trump administration’s Department of Government Efficiency, or DOGE, starting in May. During Tesla’s April 22 earnings call, Musk said he plans to shift his focus back to Tesla and dedicate only one to two days a week to government matters moving forward.
Musk described DOGE’s work as “mostly done” and reaffirmed that he would continue overseeing the initiative through the remainder of Trump’s term.
How has Musk’s political activity affected Tesla?
Musk’s involvement with DOGE has drawn criticism from consumers and investors. Analysts, as reported by CBS and PYMNTS, linked his political activity to declining brand sentiment and vandalism at some Tesla locations.
Analysts at Wedbush and Vital Knowledge said Musk’s political presence has caused long-term harm to Tesla’s image, potentially leading to a 15% to 20% drop in demand. A recent CNBC survey found that nearly half of the respondents viewed Tesla and Musk unfavorably.
What happened with Tesla’s first-quarter earnings?
Tesla reported a 71% year-over-year decline in net income to $409 million, or 12 cents per share, missing analyst expectations of 39 cents. Revenue fell 9% to $19.34 billion, compared to projections of $21.11 billion.
Automotive revenue declined 20% to $13.97 billion, attributed in part to production delays caused by Model Y updates across all four vehicle factories.
How did the stock market react?
Despite the disappointing earnings, Tesla’s stock rose 4.6% ahead of the report and gained another 3.3% in after-hours trading after Musk pledged to devote more attention to the company. The rebound followed a steep 41% year-to-date decline linked to brand damage and Musk’s government role.
Are tariffs a concern for Tesla?
While Musk said Tesla is less vulnerable to tariffs due to its global supply chain, analysts warned of continued risks. About 30% of Tesla’s auto parts are imported, including key battery materials from China. Tariff retaliation recently forced Tesla to halt orders for the Model S and Model X in mainland China.
What are Tesla’s plans for growth?
Musk confirmed plans to launch autonomous robotaxi services in Austin, Texas, starting in June with 10 to 20 vehicles. He also said Tesla aims to deploy thousands of Optimus humanoid robots in its factories by the end of the year and expects production to reach one million by 2029 or 2030.
Musk believes Tesla’s long-term future lies in these advanced technologies and maintains that if execution remains strong, the company could become the most valuable in the world.
What have analysts said?
Wedbush analyst Dan Ives called the situation a “fork in the road,” urging Musk to leave the Trump administration and return full-time to Tesla to prevent further damage.
Despite recent setbacks, Ives maintains an outperform rating on Tesla, calling it one of the most disruptive technology companies globally.
