Elon Musk has announced he will significantly scale back his controversial government work under the Trump administration to redirect attention to Tesla, as the electric vehicle (EV) giant grapples with a sharp drop in sales, revenue, and investor confidence.
The billionaire CEO revealed the shift during Tesla’s quarterly earnings call on Tuesday, following weeks of public speculation and investor pressure over his extensive involvement in the Department of Government Efficiency (DOGE) — a Trump-backed initiative aimed at slashing federal jobs and government spending.
Tesla reported a 71 per cent drop in net profit and a 9 per cent decline in revenue for the first quarter of 2025, compared to the same period last year. Musk conceded that his government work had triggered blowback for both him and his company, though he continued to defend the DOGE initiative as a fight against “waste and fraud.”
Musk Promises to Refocus on Tesla
“Starting next month, I’ll be allocating far more of my time to Tesla,” Musk told investors. He confirmed that while he would still dedicate “a day or two per week” to DOGE, the bulk of his focus would return to his core companies, including Tesla, SpaceX, Neuralink, and xAI.
He acknowledged that the “slog of work” to set up DOGE was mostly complete, suggesting his reduced role in the initiative wouldn’t hinder its ongoing operations. Musk’s time in government, he claimed, had been necessary to get the “financial house in order.”
His announcement came amid growing concerns from shareholders and analysts over Tesla’s direction and brand damage. Tesla’s stock, which had already plunged 37 per cent this year, saw a slight rebound in after-hours trading, jumping nearly 5 per cent after Musk’s remarks.
Wedbush Securities analyst Dan Ives welcomed the move, calling it “a huge step forward” and noting that the market “needed to hear this.” Another investor, Shawn Campbell of Camelthorn Investments, said the focus on Tesla could stabilise the company, but a stronger signal — such as Musk fully exiting DOGE — would be more impactful.
Tesla’s Financial Woes Deepen
Tesla’s latest earnings report made for grim reading. Net profit fell by 71 per cent, while automotive revenue dipped by 20 per cent. Total revenue stood at US$19.34 billion (approximately RM85.20 billion), missing Wall Street expectations of US$21.11 billion.
Deliveries of Tesla vehicles fell 13 per cent in the first quarter, and analysts now forecast a second consecutive annual decline in sales for the EV maker — a stark contrast to the company’s once-meteoric growth trajectory. The downturn has been exacerbated by Musk’s political entanglements, growing competition from Chinese automakers such as BYD, and volatile global trade policy.
Tesla also reported a decline in automotive gross margins to 12.5 per cent, excluding regulatory credits, compared to 13.6 per cent in the previous quarter.
Chief Financial Officer Vaibhav Taneja admitted the company was facing “unwarranted hostility” due to Musk’s association with the Trump administration. The backlash has included widespread protests, consumer boycotts, and even vandalism at Tesla dealerships and charging stations globally.
Tariff Tensions and Trade Policy Uncertainty
Musk's political alignment has also placed Tesla in the crosshairs of global trade wars. Following Trump's dramatic tariff increases on Chinese goods — including a rise to 145 per cent on certain imports — Tesla paused some shipments of China-sourced components. In response, China imposed retaliatory tariffs, prompting Tesla to halt new orders for its premium Model S and Model X vehicles in the country.
"Uncertainty in the automotive and energy markets continues to increase as rapidly evolving trade policy adversely impacts the global supply chain and cost structure," Tesla wrote in a letter to shareholders.
Despite the rhetoric, Musk has repeatedly expressed opposition to high tariffs. “I’ve been on the record many times saying lower tariffs are generally a good idea for prosperity,” he said, though he conceded the final decisions rested with the president. He reiterated his intention to continue advising Trump on trade matters, adding, “It’s up to him, of course, to make his decision.”
Future Plans: Affordable Cars and the Long-Promised Robotaxi
Tesla is attempting to regain investor trust with a renewed push into affordability and autonomy. The company confirmed plans to release a more affordable EV model in the first half of 2025, built on existing production lines rather than a new platform. Vice President of Engineering Lars Moravy said these upcoming models would resemble current vehicles in form but would be priced more accessibly.
Reuters previously reported that the affordable EV would likely be a stripped-down, US-built version of Tesla’s best-selling Model Y. However, production is expected to be delayed by several months.
In parallel, Tesla is forging ahead with its long-delayed autonomous driving project. A robotaxi fleet is scheduled to launch in Austin, Texas, this June, pending regulatory approval. The self-driving vehicles — which may eventually feature no steering wheels or pedals — have been a central promise in Musk’s vision for Tesla’s future.
Musk has claimed millions of fully autonomous Teslas will be on roads by the second half of next year. However, concerns around safety, litigation risks, and government scrutiny continue to dog the initiative.
Brand Damage, Backlash, and Political Fallout
Since aligning with Trump’s administration and assuming a lead role in DOGE, Musk has faced growing criticism for helping dismantle federal programmes, including areas such as Social Security, disaster forecasting, and humanitarian aid. DOGE has been granted access to sensitive government databases and has overseen sweeping job cuts across agencies.
Activists and former Tesla supporters have launched coordinated protests under movements like “Tesla Takedown,” which claims credit for tarnishing Tesla’s brand image and impacting its sales. One organiser, Patty Hoyt from Northern California, said: “Our grassroots pressure is beginning to hit Tesla where it hurts — the company’s bottom line.”
Gene Munster, a managing partner at Deepwater Asset Management, declared 2025 a “throwaway year” for Tesla, predicting that the company’s investments in autonomy and AI will only bear fruit after Musk realigns his priorities. “This quarter was a train wreck,” he said, “but we’re betting that Musk’s renewed focus on Tesla will mark a turning point.”
A Critical Juncture for Musk and Tesla
As Tesla battles plummeting profits, internal restructuring, regulatory hurdles, and a reputational crisis, Musk’s decision to reduce his role in the Trump administration could not come at a more critical time.
Once the darling of the EV world, Tesla now finds itself in a precarious position — wedged between political controversy and mounting competition. Whether Musk’s partial retreat from government duties will be enough to stabilise the ship remains to be seen.
But for now, investors and analysts are clinging to one hope: that Tesla’s most unpredictable asset — its CEO — is finally turning his attention back to the business that made him famous.
*Sources: Visual and Reference Credits to Social Media & various cross-references for context.
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