Elon Musk has announced a reduction in his involvement with the Trump administration’s Department of Government Efficiency (Doge) initiative following a significant financial downturn for Tesla Inc. in the first quarter of 2025. Tesla reported a sharp 70% drop in profits and a 20% decline in automotive revenue compared to the same period last year, triggering concerns about the company’s strategic direction and Musk’s political commitments.
Tesla’s total revenue for Q1 2025 stood at $19.3 billion, a 9% year-on-year decrease, falling short of Wall Street expectations of $21.1 billion. The electric vehicle manufacturer has been aggressively cutting prices to stimulate demand but faced a 13% decline in vehicle deliveries, marking the lowest delivery figures in three years.
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This challenging quarter comes amid growing criticism of Musk’s political ties, particularly his leadership role in the Doge initiative aimed at cutting federal spending and reducing government staff. Musk, who contributed over $250 million to Donald Trump’s re-election campaign, acknowledged the controversy and stated he would reduce his time devoted to Doge to one or two days per week starting next month.
Tesla has faced backlash and boycott calls in major markets, with critics accusing Musk of putting political ambitions ahead of his business responsibilities. Musk defended his involvement in Doge as essential, asserting that most of the work to streamline the government is already complete.
Despite these assurances, Tesla refrained from offering a growth outlook, citing ongoing political uncertainty and volatile trade policies as potential threats to demand and supply chain stability. The report also underscored the adverse effects of new tariffs on Chinese imports imposed by the Trump administration. Although Tesla manufactures cars in the U.S., it relies heavily on components from China, making tariffs a continued risk to profitability.
Musk reiterated his stance against high tariffs, highlighting the pressure they place on industries with narrow profit margins. His public criticism of Trump’s trade adviser Peter Navarro, whom he labeled a “moron,” further underscored internal tensions within the administration.
Tesla continues to emphasize artificial intelligence as a cornerstone of its future growth strategy, though investor confidence in the company’s AI prospects remains tepid during periods of weak financial performance.
Tesla shares, which have fallen 37% in 2025, saw a brief 5% uptick in after-hours trading post-earnings. Analysts suggest that low market expectations had already been priced in, softening the impact of the disappointing results.
Industry experts warn that Tesla faces mounting challenges, including intensifying competition, waning demand, and leadership distractions. These factors raise serious concerns about the company’s future trajectory and Musk’s ability to balance political influence with corporate leadership.
