Musk to Scale Back Role in Government Amid Tesla Profit Decline

As Tesla faces a 70% profit decline and 20% drop in sales this quarter, Elon Musk intends to decrease his commitments to Doge, the government's efficiency advisory group, to redirect focus toward Tesla, emphasizing continued political engagement as well.

Elon Musk, the CEO of Tesla, has made a decision to "significantly" reduce his involvement in the U.S. government after the electric vehicle company reported a significant downturn in profits and sales at the beginning of the year. As the head of the newly formed advisory group known as the Department for Government Efficiency (Doge), Musk's role has placed him squarely in the middle of initiatives aimed at reducing U.S. spending and job numbers.

In light of recent scrutiny regarding his divided attention between his government role and Tesla, Musk stated he would cut back on his commitments to Doge starting next month, intending to allocate only one to two days per week to this position. Accusations of him losing focus on Tesla have arisen amidst protests and boycotts against the company worldwide. As per regulations, temporary government roles, including Musk's, are limited to a maximum of 130 days a year, set to expire soon from the inauguration date of President Donald Trump.

Although Musk's timing for a complete exit from the government role remains uncertain—partially due to his substantial financial backing of Trump's re-election campaign—he expressed a desire to reallocate more time toward Tesla. He noted the importance of his government work and indicated his ongoing commitment to remain within the administration as long as it proves beneficial.

Tesla's performance has been troubling, marked by a 20% decrease in car sales in the first quarter compared to the prior year, and a staggering 70% plunge in profits. The company has cautioned investors about ongoing difficulties, refraining from providing growth forecasts, while attributing part of the distress to shifting political sentiments which may negatively influence demand.

Musk has pointed fingers at the boycott efforts against Tesla's vehicles, linking them to adversities he and the Doge team faced during their governmental service. As of the latest market close, Tesla's shares had experienced a decrease of nearly 37% this year, although they jumped over 5% in after-hours trading following the bleak earnings report.

Adding to Tesla's challenges are the tariffs imposed on China by Trump, which impact the company's supply chain despite vehicles being assembled domestically. Musk acknowledged the hardships these tariffs present, especially for a company with narrow profit margins, stating that advocacy for lower tariffs would remain a priority.

Dia Coatsworth, an investment analyst, remarked on the tough competition facing Tesla and the risks associated with the ongoing trade conflict instigated by Trump's policies. The anticipation surrounding Tesla's potential for future growth, including artificial intelligence involvement, has left investors recently skeptical, reflecting a broader sentiment of concern over the company’s direction as it navigates these escalating challenges.