Musk to reduce DOGE role after Tesla profits plunge

Tesla CEO Elon Musk announced he will reduce his role in Donald Trump's administration. This decision follows a significant drop in the company's profits and revenues.

In the first quarter of 2025, Tesla reported a 20% decline in automotive revenue compared to last year. Profits fell by more than 70%. The company warned that this trend might continue, citing "changing political sentiment" as a potential threat to demand.

Musk's political involvement has drawn criticism and protests against Tesla globally. He acknowledged that his focus on Trump’s administration affected the company. Musk contributed over $250 million to Trump’s re-election campaign and leads the Department of Government Efficiency (Doge) initiative.

Starting next month, Musk plans to spend only one or two days per week on government matters. He stated this would continue as long as it is useful for the president. Despite the backlash, he called his work at Doge "critical."

Tesla's total revenue for the quarter was $19.3 billion, down 9% from last year. Analysts had expected $21.1 billion, which highlights challenges faced by the company. Price cuts were made to attract buyers amid declining sales.

Trump's tariffs on China have also impacted Tesla significantly. Although vehicles are assembled in the U.S., many parts come from China. The company warned that "rapidly evolving trade policy" could disrupt its supply chain and increase costs.

Musk has had disagreements with other Trump officials over trade issues, including trade adviser Peter Navarro. Earlier this month, he criticized Navarro for comments about Tesla's manufacturing process.

On Tuesday, Musk claimed Tesla is less affected by tariffs due to localized supply chains but acknowledged they still pose challenges for low-margin companies like Tesla. He advocates for lower tariffs moving forward.

Tesla believes artificial intelligence will drive future growth, though investors remain skeptical about this claim. As of Tuesday's market close, Tesla shares had lost about 37% of their value this year but rose over 5% in after-hours trading after earnings were released.

Investment analyst Dan Coatsworth noted expectations are very low following a reported 13% drop in car sales—the lowest level in three years. He warned that competition and potential disruptions from Trump's trade war add further risks for Tesla.

Overall, Coatsworth stated that "Tesla’s problems are mounting."