by Kara Carlson and Dana Hull
Elon Musk vowed to pull back “significantly” from his work with the US government and pay more mind to Tesla Inc., assuaging investors concerned about the carmaker’s worst quarter in years.
The chief executive officer will devote “far more” of his time to Tesla starting next month, saying during an earnings call Tuesday that his work establishing the so-called Department of Government Efficiency will be “mostly done.”
Investors and analysts have increasingly called for Musk to refocus on the electric-car company, which is struggling under the weight of slumping sales and rising costs from President Donald Trump’s trade war. Protests have sprung up in recent months in a consumer backlash against Musk’s government work.
“At Tesla, we’ve gone through many a crisis over the years,” Musk said. “This is not one of those times. We’re not on the ragged edge of death, not even close.”
Tesla’s stock jumped 7% in early trading Wednesday, despite first-quarter results that underscored weakness in the company’s core automotive business and tariff headwinds for its expanding energy operations. The carmaker missed analysts’ estimates for both revenue and earnings, and management backed away from earlier predictions that vehicle sales will return to growth this year.
Wall Street has soured on Musk’s political activities, which have alienated core customers and done serious damage to Tesla’s brand. The CEO’s fortune shrunk by $116 billion in the first quarter, his biggest quarterly drop on record, according to the Bloomberg Billionaires Index.
Brian Mulberry, a client portfolio manager at Zacks Investment Management, said it’s “certainly welcome news to hear that Elon will be back in his normal role as CEO of his companies soon.”
Tesla cautioned that while it’s making investments to position its vehicle business for growth, its prospects depend on factors including the broader macroeconomic environment. The company will revisit its outlook for volume when reporting second quarter results.
Musk said several times on the call that he’s pushed for lower tariffs, acknowledging differences with Trump on the topic. The president’s moves to hike duties on imported goods have spooked investors and raised concerns of higher prices for US consumers.
Musk said he’ll likely continue to work with Trump’s administration for the remainder of the president’s term, albeit on a more limited basis. He’s poised to hit the 130-day limit for his role as a special government employee as early as next month.
Trump’s tariffs have compounded Tesla’s challenges, even though all the vehicles it sells in the US are assembled domestically. Duties on auto parts shipped in from Canada and Mexico are slated to take effect next month and will hit the company’s profitability.
Musk told analysts that Tesla has been working on localizing its supply chains to help ease logistics and minimize risks of higher costs.
“We are, I think, the least affected car company with respect to tariffs,” he said. “That puts us in a stronger position than any of our competitors.”
Ben Kallo, a Baird analyst with the equivalent of a buy rating on Tesla’s stock, said the mentions of tariffs were a means to alerting policymakers of the pain the levies are causing.
“It’s a way to get the message across that tariffs are going to impact Elon without him saying that as part of the US government,” Kallo said. “He’s walking a tight rope there while part of the government with DOGE.”
Tariffs will have a bigger impact on Tesla’s energy business. The company’s Megapack energy-storage systems heavily rely on battery cells from China, which accounted for 84% of global lithium-ion battery production capacity in 2024, according to research firm Wood Mackenzie. By comparison, North America made up just 5%.
Musk’s politicking in the US and across Europe have rendered Tesla showrooms and charging stations targets for demonstrations and vandalism. Tesla Takedown, a group formed to coordinate peaceful protests on a global basis, is urging owners of the company’s cars to sell their vehicles and its stock.
Earlier this week, Wedbush Securities analyst Dan Ives wrote that Tesla faces “potentially 15%-20% permanent demand destruction for future Tesla buyers, due to the brand damage Musk has created with DOGE.”
In its earnings presentation, Tesla warned that “changing political sentiment could have a meaningful impact on demand for our products in the near term.” Musk told analysts that protests against his company are “organized and paid for,” without offering details or evidence.
In an emailed response to Musk’s statements, a representative for Tesla Takedown said the movement doesn’t pay protesters.
“Volunteer hosts and participants are stepping forward because they believe in democracy and the rule of law, not because an unknown billionaire is paying them,” the group said. “The irony is rich coming from a man who spent $277 million to get Donald Trump elected and $21 million meddling in a failed attempt to sway Wisconsin for his own benefit.”
Musk is increasingly betting Tesla’s future on autonomy and artificial intelligence, with the company developing a driverless taxi called Cybercab and the humanoid robot Optimus.
New vehicles, including more affordable models, remain on track for the start of production in the first half of this year, the company said, rebutting a Reuters report last week citing launch delays. Lars Moravy, the vice president of vehicle engineering, said the affordable vehicles will resemble other Tesla models.
Tesla said it prepared its factories for the launch of new models while switching production lines over for the refreshed Model Y early this year. The company’s launch of an autonomous vehicle ride-hailing service, scheduled for June in Austin, will start with 10 to 20 vehicles and scale from there, Musk said.
“The narrative should benefit from a re-engaged Elon on Tesla,” Dan Levy, a Barclays analyst with the equivalent of a hold rating on the stock, wrote in a report Wednesday. “With Tesla more heavily focused on AV/AI, Elon is more important than ever to keep this narrative moving forward.”
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