New York (AFP) – Elon Musk will significantly scale back his Trump administration work in May to focus on Tesla, the billionaire announced Tuesday as the electric vehicle maker reported a 71 percent drop in first-quarter profits. “Probably in the next month, my time allocation to DOGE will drop significantly,” Musk said at the outset of an earnings conference call, referring to his work for the “Department of Government Efficiency.”
The comments came as Tesla reported profits of $409 million following a drop in auto sales that analysts said reflected brand damage due to Musk’s work for President Donald Trump in slashing the US federal workforce. Revenues fell nine percent to $19.3 billion. The company retreated from its 2025 guidance, citing unpredictability over trade policy and demand. “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,” the company said. “This dynamic, along with changing political sentiment, could have a meaningful impact on demand for our products in the near-term.”
On the positive side, Tesla said it was on track to launch new vehicles “including more affordable models” in the first half of 2025. Tesla also confirmed in a press release that a planned launch of its Robotaxi for autonomous driving in Texas remained “on track” by June. Musk reiterated his bullish outlook on the long-term prospects for Tesla, highlighting its leadership in key growth areas: robotics, autonomous driving and artificial intelligence.
– DOGE work ‘mostly done’ – Musk, the world’s richest person, donated more than $270 million to Trump’s 2024 presidential campaign. Analysts have warned of significant brand damage to Tesla from Musk’s leadership role in DOGE, which has granted itself access to government databases with sensitive personal information and implemented thousands of job cuts. The shakeup to US government operations has led to questions about programs like the Social Security retirement benefit and the continuation of programs like hurricane forecasting and humanitarian aid. Since Trump returned to the White House, Tesla has been targeted for consumer boycotts and vandalism while sales have dived across many markets and prices of used Teslas have plunged in a sign of the brand’s unpopularity.
On the call, Tesla Chief Financial Officer Vaibhav Taneja described the reaction as “unwarranted hostility to our brand.” In his opening comments, Musk defended his work for DOGE, dismissing critics as “paid” beneficiaries of the “waste and fraud” he alleges. But Musk said the work for DOGE was “mostly done,” adding he would not exit government work entirely. “I think I’ll continue to spend a day or two per week on government matters, or as long as the president would like me to do so, and as long as it is useful,” Musk said. “But starting next month, I’ll be allocating far more of my time to Tesla.”
Wedbush Securities analyst Dan Ives, a longtime backer of Tesla who called on Musk to wind down his DOGE work, praised the CEO’s announcement. “Musk just made a huge step forward on call,” Ives said on X. “DOGE work basically ending (1-2 days a week)…now his focus back on Tesla. (Wall) Street needed to hear this.”
Besides its image, Tesla pointed to tariffs as another headwind for the company, while noting the EV maker is better situated than rivals that rely extensively on imported vehicles in the United States. The Trump administration has enacted 25 percent tariffs on imported autos. “I will weigh in with my advice with president, which he will listen to…but then it’s up to him, of course, to make his decision,” Musk said of Trump. “I’ve been on the record many times as saying that I believe lower tariffs are generally a good idea for prosperity.”
Shares of Tesla rose 4.7 percent in after-hours trading.
© 2024 AFP
