Billionaire entrepreneur Elon Musk has announced that he will be stepping back from his role with the U.S. DOGE Service next month to concentrate on Tesla, his beleaguered electric vehicle company. This decision comes on the heels of a startling 71 percent drop in profits reported for the first quarter of 2024. Musk's involvement with DOGE has coincided with Tesla's recent struggles, as the company faces backlash related to his controversial association with the Trump administration.
On Tuesday, Tesla reported a 9 percent decline in revenue compared to the same period last year, alongside a dramatic 13 percent drop in sales for the first three months of the year. The company's stock closed at $238 per share, reflecting a significant 37 percent decrease since the beginning of the year. Investors are increasingly concerned as Tesla navigates a shifting landscape marked by rising competition, particularly from Chinese electric car manufacturers like BYD, and the uncertainty surrounding new tariffs imposed by Trump.
Musk's entanglement in politics has drawn scrutiny, with many attributing Tesla's current challenges to his controversial political involvement. In a letter to shareholders, the company highlighted how evolving trade policies and changing political sentiments could impact demand for its vehicles in the near future. During a recent investor call, Musk indicated that he has discussed the tariffs with the President, emphasizing his belief that lower tariffs would benefit overall prosperity. However, he acknowledged that the ultimate decision rests with the administration.
Since the inauguration of Donald Trump, Musk has devoted considerable attention to running the DOGE, which stands for the Department of Government Efficiency. This agency aims to eliminate perceived waste and inefficiencies within the federal government. However, the sweeping layoffs and budget cuts mandated by DOGE have resulted in chaos and backlash in Washington. Tesla owners are increasingly trading in their vehicles, and prices for used Teslas have plummeted, exacerbated by protests against the brand worldwide. Incidents of vandalism targeting Tesla's dealerships and charging stations have also been reported.
Musk is viewed as the linchpin of Tesla's success, and investor sentiment is waning as they hold him accountable for the company's struggles. As he prepares to leave his government role when his status as a special government employee expires at the end of May, the timeline for his departure remains uncertain. Despite Musk's imminent exit, the work of DOGE is expected to continue.
The organizers of the Tesla Takedown, a group behind numerous protests against the company, have expressed satisfaction with the recent financial results, claiming they send a clear message that their efforts are having an impact. Organizer Patty Hoyt stated, “The grassroots pressure is beginning to hit Tesla where it hurts — the company’s bottom line.”
Gene Munster, managing partner at Deepwater Asset Management, has described 2025 as a challenging year for Tesla, as the company invests heavily in autonomy and artificial intelligence. Musk has repeatedly emphasized that the future of Tesla lies in autonomous driving, with plans for a fully self-driving vehicle that lacks steering wheels and pedals. The anticipated Cybercab is touted as a $30,000 lounge on wheels, set to launch in the next few years.
Despite the hurdles, Musk remains optimistic about Tesla’s trajectory. He plans to begin testing a robotaxi service in Austin by June, a venture that has faced skepticism due to previous unfulfilled promises. Investors had hoped Musk's political connections would ease regulatory pressures on autonomous vehicle technologies, but the company continues to grapple with the fallout from his political affiliations.
As Musk shifts his focus back to Tesla, many are hopeful for a turnaround. “That’s the bet we’re making,” Munster added, indicating a belief that a renewed focus on the company could restore investor confidence and stabilize Tesla's performance moving forward.
