Musk to step back from Doge after Tesla profits plummet
Elon Musk has vowed to spend 'significantly' less time working for Donald Trump's administration and focus on Tesla after profits plummeted to a five-year low.
The electric car company's net income slumped by 71pc to $409m in the three months to the end of March, marking its least profitable quarter since 2020.
Sales came in at $19.3bn, down 9pc and well below market estimates.
The figures lay bare the financial impact of Tesla chief Elon Musk's enthusiastic support for Donald Trump. Left-wing drivers have mounted a boycott of the company's cars in response to Mr Musk's decision to take a position in the Trump White House and the president's tariffs are also impacting the business.
On an earnings call on Tuesday evening, Mr Musk said: 'Probably in the next month, my time allocation to Doge will drop significantly,' referencing his cost cutting work for Mr Trump's Department of Government Efficiency.
Tesla shares climbed 4pc on Tuesday ahead of the results and rallied more than 5pc in the after market following the billionaire's comments.
His announcement came as Tesla warned: 'Uncertainty in the automotive and energy markets continues to increase as rapidly evolving trade policy adversely impacts the global supply chain and cost structure of Tesla and our peers.'
Tesla also admitted that 'changing political sentiment' was also damaging sales. Deliveries of its vehicles fell 13pc in the first three months of the year, Tesla reported earlier in April.
The company said the twin impact of tariffs and boycotts 'could have a meaningful impact on demand for our products in the near-term.'
The fall has prompted questions over whether the billionaire's association with Mr Trump's Maga movement has done permanent damage to the company.
The results came hours after Scott Bessent, the US Treasury Secretary, said that America's trade war with China was not sustainable, telling a JP Morgan investor summit there was 'a big deal to be done.'
The admission is a sign that officials are growing wary of the economic cost of Mr Trump's aggressive trade war, which has prompted a sell-off of US stocks, debt and the dollar.
Despite its recent rally, Tesla's stock is still down 40pc on the record levels it achieved in December in the wake of Mr Trump's White House victory.
A combination of stalled demand for electric cars, tariff fears and consumer anger over Mr Musk's zeal for Mr Trump's Maga movement have all dented investor confidence in the billionaire's electric car company.
Liberal EV buyers have boycotted the business, with sales plunging among Democrat-voting Americans and in European countries that have attracted the ire of Mr Trump's regime. Falling sales have forced the company into offering generous discounts, further hurting its profits.
Meanwhile, Mr Musk's company has been the target of repeated 'Tesla Takedown' protests by anti-Trump supporters across the US and Europe. Vandals have defaced its showrooms and burned its cars in what US officials have labelled a wave of 'domestic terrorism'.
In 2024, Tesla was surpassed by China's BYD as the biggest producer of EVs and it has faced relentless pressure from new Chinese brands, while traditional carmakers have ramped up their own efforts to produce green vehicles.
Mr Musk has since sought to re-focus Tesla on the potential of robotic taxis, humanoid robots and AI.
However, the Tesla chief's embrace of Mr Trump and role as a White House adviser, leading Doge, has prompted investor fears that he has failed to spend enough time on the $700bn company's core car business.
Dan Ives, an analyst at Wedbush Securities who has been historically upbeat on Tesla's prospects, warned last week of a 'code red' at the company and called for a 'turnaround vision' from Mr Musk.
Mr Ives has said the company faced 'permanent demand destruction' of up to 20pc among future Tesla buyers due to his association with the Trump White House.
Supporters of Mr Musk believe the company is on the brink of a fresh phrase of growth, with plans to launch a self-driving taxi service featuring a new vehicle in Austin, Texas, as soon as June.
The billionaire has also promised to begin production of its humanoid Optimus robot later this year. The bipedal robot is designed to perform mundane or dangerous tasks.
However, other analysts are sceptical about the prospects of these ventures. Gordon Johnson, an investment analyst at GJH Research, wrote in a note to clients it would take at least five to 10 years to see profitable robotaxis or humanoid robots, 'if ever'. 'Even the 'Tesla faithful' are beginning to lose patience,' he added.
Tesla is the first of the so-called 'Magnificent Seven' technology stocks - a grouping which also includes Apple, Amazon, Microsoft, Meta, Google and Nvidia - to report its results since Mr Trump's 'Liberation Day' on April 2, where the Republican unveiled sweeping tariffs on America's trading partners.
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