Elon Musk, CEO of Tesla, has committed to “significantly” decrease his involvement in the US government following a substantial decline in the electric vehicle manufacturer’s profits and sales during the initial quarter of the year.
Musk, who has been leading the newly established Department for Government Efficiency (Doge) since the previous year, placing him at the center of US spending and job reduction efforts, has announced a shift in his priorities.
He stated that his “time allocation to Doge” would “drop significantly” from the following month, specifying that he would dedicate only one to two days per week to the role “as long as the president would like me to do so and as long as it’s useful.”
Musk’s political engagement has ignited widespread protests and calls for boycotts of Tesla vehicles globally.
On Tuesday, Tesla disclosed a 20% decrease in car sales for the first three months of the year, compared to the same period in the preceding year. Additionally, profits experienced a decline of over 70%.
The company cautioned investors that the challenging conditions may persist, refraining from providing a growth forecast and citing “changing political sentiment” as a factor that could significantly impact demand.
Musk’s substantial financial contributions to Trump’s re-election campaign, exceeding a quarter of a billion dollars, have further fueled public dissent and boycotts of Tesla.
He attributed the “blowback” to those who would “try to attack me and the Doge team.” However, he maintained that his work at Doge was “critical” and asserted that “getting the government house in order is mostly done.”
Trump’s imposition of tariffs on Chinese imports has also exerted considerable pressure on Tesla. Although Tesla’s vehicles sold in the US market are assembled domestically, the company relies heavily on components manufactured in China. Tesla’s quarterly update highlighted that “rapidly evolving trade policy” could disrupt its supply chain and increase costs.
“This dynamic, along with changing political sentiment, could have a meaningful impact on demand for our products in the near-term,” the update stated.
Musk has previously engaged in trade-related disputes with other members of the Trump administration, including trade advisor Peter Navarro. On Tuesday, Musk expressed his belief that Tesla was the least affected automotive company by tariffs due to its localized supply chains in North America, Europe, and China. However, he acknowledged that tariffs were “still tough on a company where margins are low.”
“I’ll continue to advocate for lower tariffs rather than higher tariffs but that’s all I can do,” he stated.
Earlier in the month, Musk publicly criticized Navarro, labeling him a “moron” in response to Navarro’s remarks about Tesla. Navarro had characterized Musk as “not a car manufacturer” but rather a “car assembler, in many cases.”
Georg Ell, a former Tesla director for Western Europe who had worked closely with Musk, told the BBC’s Today program that if the billionaire “focuses on the companies where he is extraordinary, I think people will focus once again on the quality of the product and experiences.”
“I think Elon is not someone who surrounds himself with a great diversity of opinion to challenge his thinking, he’s a pretty single-minded individual,” added Ell, who currently serves as the chief executive of translation software firm Phrase.
Tesla has indicated that artificial intelligence will be a key driver of future growth, although investors have expressed skepticism regarding such projections in the past.
Tesla’s shares had experienced a decline of approximately 37% in value year-to-date as of Tuesday’s market close. However, they saw a rise of over 5% in after-hours trading following the release of the company’s financial results.
Dan Coatsworth, an investment analyst at AJ Bell, attributed the market’s response to “rock-bottom” expectations after Tesla reported earlier in the month that quarterly car sales had fallen by 13%, reaching a three-year low.
Coatsworth also highlighted the intense competition faced by Tesla and warned of potential disruptions to global supply chains stemming from Trump’s trade war.
