Musk to spend less time at DOGE as Tesla's Q1 profits drop sharply

US billionaire and Tesla CEO Elon Musk's role in the Trump administration and his drive to cut federal spending have sparked widespread criticism and global protests

Tesla CEO Elon Musk announced on Tuesday that he would spend less time running the US President Donald Trump’s Department of Government Efficiency (DOGE) from next month. The announcement came as Tesla reported a 71 per cent drop in quarterly profit and a 20 per cent decline in automotive revenue. Total revenue fell 9 per cent year-on-year to $19.3 billion in the January–March quarter.

 

“I think starting probably next month in May, my time allocation to DOGE will drop significantly,” said Musk during the Tesla earnings call. He said, “The large slog of work necessary to get the DOGE team in place and working with the government to get the financial house in order is mostly done.”

 

Backlash against Musk’s political role

 

Elon Musk’s role in the Trump administration and his drive to cut federal spending have sparked widespread criticism. Demonstrators have targeted Tesla showrooms worldwide, denouncing his involvement in federal job reductions. Several cities have reported incidents of vandalism and employee walkouts, significantly affecting Tesla’s sales.

 

During the call, the billionaire claimed that the protests were led by those benefiting from the ‘waste and fraud’ targeted by DOGE. 

 

“I believe the right thing to do is to fight waste and fraud and help get the country back on track. If the ship of America sinks, Tesla will go down with it,” Musk said. “The future of Tesla is brighter than ever. Its problems are not nearly as serious as they have been in the past. Our work on autonomous driving and humanoid robots, would produce a period of sustainable abundance for all,” he added.

 

Trade tariffs tension

 

Tesla is also facing pressure due to the shifting trade policies. Recent US tariffs on Chinese imports, now at 145 per cent, have prompted retaliation from China. In response, Tesla has paused imports of key components and halted new Model S and Model X orders in China. 

In a statement, the company said, “Uncertainty in the automotive and energy markets continues to rise as evolving trade policies negatively impact Tesla’s global supply chain and cost structure, as well as that of our peers.”

 

Tesla’s Q1 gross margin drops

 

Tesla shares have lost nearly half their value since peaking in December. Tesla’s automotive gross margin, excluding regulatory credits, decreased to 12.5 per cent from 13.6 per cent in Q4, slightly exceeding forecasts but still reflecting cost pressures. Despite efforts to cut costs, the company’s net income saw a sharp decline. Analysts have largely blamed Musk’s controversial role in DOGE for Tesla’s largest sales drop.

 

Earlier this month, Tesla reported a 13 per cent drop in Q1 deliveries. Analysts now expect a second consecutive year of declining deliveries in 2025.