Tesla profits plunge as Musk promises he’s ready to step away from role at DOGE

By Chris Isidore, CNN

(CNN) — Elon Musk says he’s coming back to Tesla, partly stepping away from his high profile and controversial Trump administration role that has been blamed for a plunge in profits and sales at the company.

Musk told Tesla investors on Tuesday that he would scale back his efforts at Department of Government Efficiency (DOGE) to a day or two a week starting sometime next month.

“Starting next month, May, my time allocation to DOGE will drop significantly,” Musk said during a Tesla earnings call.

But Musk defended his work with the Department of Government Efficiency (DOGE), saying that it was necessary to cut back on “waste and fraud” as he urged investors to “look beyond the bumps and potholes immediately ahead of us.”

He revealed the change after Tesla reported that its quarter fell far short of forecasts and that the escalating trade war was muddying the company’s outlook for the rest of this year.

While Tesla is less exposed to tariffs than most other automakers, it said it would have to revisit its guidance because of current trade disputes.

“It is difficult to measure the impacts of shifting global trade policy on the automotive and energy supply chains, our cost structure and demand for durable goods and related services,” the company said.

Trump slapped tariffs on auto imports on April 3 and promised to put additional ones on parts in the coming months. Tesla makes the cars it sells in the United States at American plants, so it is less exposed to tariffs on imported cars than other major automakers, but it does import parts for the cars it builds at its US factories.

Musk did not specifically blame Trump for the uncertainty about trade policy, although he did try to put some distance between himself and the administration on that issue.

“The tariff decision is entirely up to the President of the United States,” he said. “I will weigh in with my advice. I’ve been on the record many times saying lower tariffs are a good idea for prosperity. I’ll continue to advocate for lower tariffs rather than higher tariffs. That’s all I can do.”

The automaker reported its revenue fell 9%, with auto revenue falling 20%. Adjusted income tumbled 39%. Those drops were bigger than forecast. It’s net income, the strictest definition of its profitability, plunged 71% compared to a year earlier.

Tesla warned investors in early April that it had suffered its biggest drop in sales in its history during the first quarter, delivering 50,000 fewer vehicles compared to the first three months of last year. The sales plunge meant that Tesla recorded its lowest sales in nearly three years.

The decline is stunning for a company that until recently was reporting year-over-year sales growth of between 20% and 100% virtually every quarter, which was largely responsible for its lofty stock price that made it worth more than any other automaker in the world.

Analysts in recent weeks have been laying much of the blame for the biggest sales drop in company history on Musk’s controversial role in the Trump administration as the head of DOGE, which has resulted in protests outside Tesla showrooms and vandalism at its facilities. There has also been a sharp drop in sales in Europe, where Musk has also become politically active, supporting far-right political parties in Germany and the United Kingdom.

Musk claimed, without offering any proof, that those protesters were speaking out because they had been receiving the “waste and fraud” that he said DOGE has been eliminating. He also defended the work of DOGE as the right thing for the country and the company.

“I think the right thing to do is fight the waste and fraud and try to get the country back on the right track,” he said. “If the ship of America goes down, Tesla will go with it.”

He also acknowledged there has been criticism of the time he has spent at DOGE and not at his job running Tesla. But he said the work setting up DOGE is “mostly done” so he can now step away and return to focusing on Tesla once again.

Shares of Tesla (TSLA) climbed 4% in after-hours trading on Musk’s announcement that he is stepping away from DOGE.

Musk also insisted that the the long-term outlook for Tesla is strong, despite the bad results in the most recent quarter.

“The future of Tesla is brighter than ever,” he said, saying that its problems are not nearly as serious as they have been in the past. He promised that Tesla’s work on autonomous driving and humanoid robots, which have not yet lived up to Musk’s past promises, would produce a period of “sustainable abundance for all.”

“This is a happy future,” he promised.

Tesla (TSLA) shares nearly doubled between election day and a record high in mid-December on hopes that the incoming administration would implement Tesla-friendly policies. But the stock has lost all of that post-election gain, falling 50% from its high to the close of trading Tuesday.

The company reaffirmed that it still plans to come out with “more affordable models” by the end of June, although its listing of capacity for its various models and plants do not sure any production of such a model the rest of this year. It also said it that its driverless “robotaxi” will be released by next year. The company has promised it won’t have a steering wheel or accelerator or brake pedals, and that an initial service with for driverless rides will start later this spring.

Tesla problems aren’t all due to delayed products, trade and pushback on Musk’s role in the Trump administration. It also faces increased competition from other automakers’ EV offerings, including those in China. Chinese automaker BYD , for example, has pulled ahead of Tesla in EV sales for a number of quarters in recent years, including the first quarter of this year, although Tesla has always maintained the lead in full-year sales. But Tesla is poised to lose that title in 2025 given current sales trends.

China is the largest market for EVs and Tesla’s second largest market after the United States. The sales in China were not broken out in Tuesday’s earnings report.

This story has been updated with additional reporting and context.

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