Following a significant drop in Tesla's first-quarter profits, Elon Musk has announced a shift in his priorities, signaling a renewed focus on the electric vehicle company. The move involves reducing his involvement in Washington D.C. affairs, specifically his role in the Department of Government Efficiency (DOGE). This decision comes as Tesla reported a staggering 71% year-over-year profit decline, with net income plummeting to $409 million. The company's revenue also fell short of expectations, dropping 9% to $19.3 billion. Tesla's stock has fallen more than 40% this year.
Musk's decision to dedicate more time to Tesla is seen as a response to investor concerns that his involvement with DOGE has distracted him from effectively managing the electric car company. During Tesla's earnings call, Musk stated that starting in May, he would allocate "far more" of his time to Tesla, stepping back from his role in DOGE. He clarified that he might still dedicate a day or two per week to government matters, depending on the President's wishes and the usefulness of his contributions. He was appointed as a special government employee on Feb. 3, limiting him to 130 days of government work, possibly stretching until mid-June.
The news of Musk's increased focus on Tesla was welcomed by investors, with Tesla stock rising during the earnings call. Wedbush Securities' Dan Ives called it "a big step in the right direction," emphasizing that investors wanted to see Musk recommit to Tesla.
Alongside Musk's announcement, Tesla confirmed that it would begin work on a cheaper EV line in June 2025. The company also expects to roll out a cheaper version of its Model Y SUV in the first half of this year. Tesla has also announced it plans to launch a paid driverless robotaxi service in Austin, Texas.
Musk defended his work with DOGE, asserting that it was necessary to "fight the waste and fraud and try to get the country back on the right track," arguing that "if the ship of America goes down, Tesla will go with it."
While Musk's reduced presence in Washington may ease concerns about his divided attention, his work with DOGE has already left a significant mark. The initiative has led to staffing cuts, contract cancellations, and restructuring in several federal agencies. His lieutenants will remain involved in leading the initiative.
