Tesla is spiraling. Sales are slipping, protests are intensifying, and the stock has lost nearly half its value since December. Investors are fed up.
With profits collapsing and the company’s public image in freefall, a group of investors issued a blunt warning to Tesla’s board: Elon Musk’s political entanglements are dragging the company down.
Now, after a staggering 71% drop in first-quarter profits, Musk is scrambling to calm panicked investors and shift the narrative away from his controversial government role. In a high-stakes earnings call Tuesday, he said his attention is turning back to Tesla.
“Starting probably in [the] next month, May, my time allocation to DOGE will drop significantly,” Musk told shareholders, referring to his role leading President Trump’s Department of Government Efficiency (DOGE).
The announcement came as Tesla reported just $409 million in profit for the first three months of the year—down sharply from last year. Revenue also fell 9% to $19.3 billion, missing Wall Street’s expectations.
Musk opened the call by addressing the backlash over DOGE, a program responsible for sweeping federal layoffs and deep budget cuts. After three months leading the initiative, he said the “major work” is finished, freeing him up to refocus on Tesla.
“I think I’ll continue to spend a day or two per week on government matters for 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 probably more of my time to Tesla.”
That promise gave investors a sliver of hope. Tesla’s stock, which has lost nearly half its value since December, jumped 6% the next day.
“More important than numbers, this was the time Musk could pivot, speak to shareholders/employees, and take a turn away from the DOGE/Trump White House and recommit as CEO of Tesla…and he did it loudly and clearly,” analysts at Wedbush Securities wrote in a note to investors.
But the damage may already be done.
Tesla has become a political flashpoint. Protesters have targeted showrooms and charging stations across the world—sometimes peacefully, other times with violence, including arson and shootings. Sales have cratered, in what’s now Tesla’s worst performance since 2022.
Investors are rattled. Just hours before the earnings call, eight state treasurers sent a letter to Tesla’s board chair, warning the company may be suffering from “deeper governance and leadership challenges.”
“CEO Elon Musk continues to divide his attention across multiple companies and a high-profile advisory role within the federal government,” they wrote. “These external commitments raise serious questions about whether Tesla’s leadership is fully engaged in addressing the company’s core challenges.”
Musk’s government role mirrors his 2022 takeover of social media platform X, then called Twitter. Back then, he also spent less time at Tesla before eventually returning full-time. Morningstar analyst Seth Goldstein believes we’re seeing a similar pattern now.
“It’s Elon speaking to his investor base and reassuring them that he is still leading the company, that he’s still focused on Tesla,” Goldstein said. “As these questions have remained as he’s been still a key advisor, I think he just wanted to clarify that Tesla’s still his main focus.”
But not everyone is convinced.
“Negative polarization is an extremely potent political force in the modern era,” said Maxwell Shulman, an analyst at Beacon Policy Advisers. “The urge just to sort of take on the opposite of whatever your opponents are doing and Musk’s avid connection to the administration, will make it hard for prospective buyers to sort of untangle his association with Republicans and Donald Trump going forward.”
“Returning to the office one or two days a week isn’t necessarily going to fully right the ship by itself,” Shulman added.
Meanwhile, Tesla is still dealing with the impact of Trump’s trade war. Musk downplayed the effect on Tesla due to its localized supply chains but admitted low profit margins make import taxes harder to absorb.
