Elon Musk is in damage control mode at Tesla as the company’s disappointing earnings force the tech billionaire to reevaluate his focus between his businesses and role in the Trump administration.
Faced with a 71-percent plunge in first-quarter earnings, the Tesla CEO tried to assure investors Tuesday he will soon spend less time working on President Trump’s so-called Department of Government Efficiency (DOGE) cost-cutting efforts and focus more on his company.
“Starting probably in [the] next month, May, my time allocation to DOGE will drop significantly,” Musk said at the start of Tesla’s earnings call Tuesday.
Musk’s special government status is set to end May 30, though there have been open questions about how long his White House presence would last. The billionaire made clear Tuesday he is at a crossroads amid ongoing backlash over DOGE.
“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 in a conference call that we view as a turning point in the Tesla story,” Wedbush Securities analysts wrote in an investors note Wednesday.
Musk’s comments came about an hour after Tesla released its first quarter earnings, which totaled $409 million, or 12 cents per share, in the first three months of this year. The company’s revenue also fell 9 percent to $19.3 billion, far lower than analysts’ expectations.
Musk opened Tuesday’s earnings call immediately acknowledging the blowback he is facing over DOGE’s work, which is driving mass layoffs at federal agencies and program spending cuts.
After about three months of leading the DOGE efforts, Musk said the “major work” of establishing DOGE is done, giving him the ability to shift his time to 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,” he told investors. “But starting next month, I’ll be allocating probably more of my time to Tesla.”
While Tesla was expected to have disappointing numbers given its market performance this year, some observers said the drop was larger than anticipated.
“Everybody expected there to be some negative effect on Tesla’s brand image, but it was just sort of the scale that took many people off guard,” said Maxwell Shulman, an analyst at Beacon Policy Advisers.
Nonetheless, market analysts saw Musk’s comments as an optimistic sign for Tesla and its stock, which has dropped nearly 50 percent since December. Tesla’s shares rallied on Wednesday, jumping 6 percent following the earnings call.
William Blair & Co. analysts attributed Musk’s DOGE announcement as the “largest component” in shares rallying Wednesday morning.
Wedbush analysts predicted the move will eliminate the “brand damage” caused by Musk and DOGE in recent months, calling the tech leader’s remarks “the biggest and best possible news” for Tesla investors.
Tesla became a political target this year as demonstrators targeted their criticism of Musk and DOGE on the company, protesting at showrooms or charging stations across the country. Most of the protests were peaceful, though some involved violence, including arson attacks or shootings.
Tesla’s stock continued to plummet amid the protests and earlier this month, the company confirmed sales dropped by nearly 13 percent in its worst showing since 2022.
Investors increasingly voiced concerns about how Musk’s political involvement would pose issues for his companies.
And hours before the earnings call, a group of eight state treasurers wrote to Tesla Chair Robyn Denholm expressing concerns the company’s recent difficulties suggest “deeper governance and leadership challenges” that could ultimately affect their states.
“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.”
Morningstar analyst Seth Goldstein said Musk’s decision to reduce his DOGE role should be enough to alleviate concerns.
“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 told The Hill, adding, “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.”
Goldstein likened Musk’s involvement DOGE to his takeover of the social media platform X, then known as Twitter. Musk still owns X and uses it as a primary vehicle to voice support for Trump and his policies.
“During the first few months after that deal closed, he spent more time at Twitter, a little less time at Tesla and wanted to make sure things were running well,” Goldstein told The Hill. “And then he eventually stepped back and started spending more time with Tesla.”
President Trump said last month he expects Musk to eventually return to his companies after his work with DOGE, though a timeline for that transition was not previously given. The Hill reached out to the White House for comment on Wednesday.
Other observers like Shulman do not believe Musk’s comments are enough to reverse direction at Tesla.
“Negative polarization is an extremely potent political force in the modern era,” Shulman said. “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.
In the short term, Tesla still faces the fallout from Trump’s ongoing trade war.
Musk acknowledged on Tuesday that Tesla is the least impacted car company by the tariffs given its localized supply channels, but that the import taxes can impact a company when margins are low.
He emphasized to investors he is an advocate for lower tariffs and voices this to the president, but that the decision is ultimately up to Trump.
Despite its current headwinds, Musk said he is “extremely optimistic” about the future of the company, pointing to Tesla’s plans for large-scale autonomous cars and autonomous humanoid robots.
