Elon Musk to scale back government advisory role as Tesla faces sharp profit decline

Department of Research, Studies and International News 23-04-2025

Elon Musk has announced that he will begin reducing his involvement with the U.S. government’s so-called “Department of Government Efficiency” (Doge) starting in May, following a sharp downturn in Tesla’s financial performance during the first quarter of 2025. The electric vehicle giant reported a 71% drop in profits, triggering growing concerns among investors and analysts about Musk’s divided focus.

During a call with investors, Musk shared that his commitment to assisting the federal government with financial reform is nearing completion. “The major work is largely finished,” he stated, suggesting his active participation will soon be limited. From May onwards, he intends to dedicate only one to two days per week to Doge, continuing with what he called “mission-critical tasks,” so long as his involvement is deemed necessary by the administration.

Musk is expected to officially end his advisory role on May 30, marking the conclusion of his 130-day term as a special government employee.

The announcement coincided with Tesla’s disappointing quarterly earnings. Revenue fell 9% year-over-year to $19.3 billion, well below Wall Street’s forecast of $21.45 billion. Earnings per share stood at just 27 cents, failing to meet the anticipated 43 cents. Net income plummeted to $409 million, a drastic fall from $1.39 billion the year before.

Vehicle deliveries dropped 13%, totaling 336,681 units, making this Tesla’s weakest quarter since 2022. While Musk acknowledged recent struggles, he maintained an optimistic outlook. “Tesla’s future has never looked brighter,” he declared, emphasizing the company’s push toward affordable, AI-driven robotics and sustainable abundance.

One key component of Tesla’s vision includes the rollout of fully autonomous vehicles. Musk promised that by year’s end, select U.S. cities would see cars capable of navigating entirely on their own, even allowing passengers to sleep en route. Additionally, Tesla plans to launch its Robotaxi service in June, with Musk predicting millions of autonomous Teslas in operation by late 2026.

Despite falling short of financial expectations, some analysts remained cautiously hopeful, attributing the stock’s resilience to previously lowered forecasts. “Given the dire predictions, these results come as a relief,” said Thomas Monteiro, senior analyst at Investing.com. He noted that even in a tough climate, Tesla managed to generate a solid $19.3 billion in revenue.

However, many analysts believe that Musk’s political involvement has significantly harmed Tesla’s brand. The overlap between his government duties and his leadership at Tesla has, according to them, created confusion and concern among investors and consumers alike. The company’s brand has suffered, with reports of widespread vehicle vandalism and an uptick in Tesla owners seeking to sell. Moreover, the Vancouver International Auto Show excluded Tesla from its 2025 lineup amid growing protests, and nearly all delivered Cybertrucks, around 46,000, were recalled.

Musk attributes declining demand to broader economic conditions rather than brand perception. “People hesitate to make large purchases like cars during uncertain times,” he argued, asserting that Tesla’s demand would remain strong absent economic headwinds.

Still, skepticism lingers. A report from Wedbush Securities argued that while Musk’s full-time return to Tesla would not immediately undo the brand damage, it could help stabilize the company and refocus its strategic vision. “If he stays tied to the White House, the risks to Tesla’s brand will increase,” the note cautioned.

Tesla refrained from offering guidance for the next quarter, citing global trade volatility in the automotive and energy sectors. In its earnings report, the company emphasized that growth in 2025 would depend on several factors, including progress in autonomous vehicle development, factory output, and overall market conditions.

The report also highlighted that shifts in political sentiment could impact Tesla’s near-term sales, reinforcing the view that the company’s future may hinge as much on Musk’s decisions as on its technological ambitions.