Tesla CEO Elon Musk has announced a partial return to full-time leadership at the electric vehicle giant, as the company grapples with its steepest drop in quarterly performance in years—an economic downturn many analysts attribute, in part, to Musk’s polarizing role within the Trump administration.
Speaking to investors during Tuesday’s earnings call, Musk revealed that starting in May, he will dramatically scale back his duties at the Department of Government Efficiency (DOGE), a federal agency he has led since early this year.
“Beginning next month, my involvement at DOGE will be limited to just one or two days per week,” Musk said, assuring stakeholders of a renewed focus on Tesla operations.
While defending his government role as a crusade against “waste and fraud,” Musk acknowledged concerns over his divided attention and the toll it has taken on Tesla’s financials and public image.
The announcement followed Tesla’s troubling first-quarter report, which fell well short of expectations. Revenue declined 9% overall, with automotive income down 20%, and adjusted earnings slipping 39%. Net income plummeted 71% year-over-year, marking Tesla’s worst performance since 2021.
The automaker also confirmed it delivered 50,000 fewer vehicles compared to the same period last year—its sharpest sales decline in nearly three years—despite rising industry-wide demand for electric vehicles.
The timing of the downturn has drawn increased scrutiny. Musk’s tenure at DOGE has sparked protests at Tesla dealerships, reports of vandalism, and waning enthusiasm in key international markets—especially in Europe, where Musk’s vocal support for far-right political figures has sparked backlash. Sales in the region have dipped noticeably, though Tesla has not disclosed specific figures.
Musk has rebuffed accusations that his political entanglements are to blame, instead suggesting critics may be aligned with entities benefiting from the inefficiencies DOGE aims to eliminate. Still, he conceded that his dual roles have drawn criticism and hinted that his government work is nearing completion.
“The bulk of the work setting up DOGE is done. Now, I can pivot back,” Musk said, noting that he sees Tesla’s long-term future as “brighter than ever.”
Despite his optimism, Tuesday’s results reflect deep challenges. Musk stopped short of directly criticizing President Trump but distanced himself from the administration’s trade policies, particularly tariffs on auto parts, which have complicated Tesla’s supply chain.
“The tariff decision is entirely up to the President,” Musk said. “I’ll continue to advocate for lower tariffs. That’s all I can do.”
Though Tesla manufactures vehicles in the U.S., it imports many of the components used in production. The uncertainty surrounding global trade is impacting not only the company’s cost structure but also its strategic planning.
Further compounding Tesla’s struggles is intensifying competition, especially from Chinese rival BYD, which outpaced Tesla in quarterly EV sales once again. While Tesla has historically led in annual deliveries, that lead appears to be eroding rapidly, with projections indicating BYD may take the global crown by 2025.
The company reaffirmed plans to roll out lower-priced models by June, but internal documents show no sign of production readiness for such vehicles this year. Meanwhile, Musk reiterated promises of a driverless “robotaxi” launch within the next 12 months—an initiative that has yet to fulfill its earlier hype.
Even with recent losses, Musk insisted that Tesla’s setbacks are short-term.
“These bumps in the road are not unusual,” he said. “What matters is where we’re headed—and that’s toward sustainable abundance.”
Following Musk’s pledge to step back from his government role, Tesla shares rose 4% in after-hours trading—a sign that investors are hopeful his renewed focus could stabilize the company.
Whether the shift will be enough to reverse Tesla’s momentum remains to be seen, but as the company attempts to recalibrate, all eyes will be on how Musk navigates the delicate balance between political ambition and corporate stewardship.
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