Musk Plans Major Shift Away from Government Role as Tesla Faces Profit Decline

Amid a staggering 70% plunge in profits and a 20% drop in car sales, Elon Musk vows to dedicate more time to Tesla while easing his commitment to governmental duties amid increasing scrutiny.

Elon Musk has declared plans to "significantly" scale back his involvement with the US government, following Tesla reporting drastic declines in both profit and sales at the start of this year. Musk, the head of the Department for Government Efficiency (Doge), formed last year to help streamline US government operations, indicated he would reduce his time on this role to just one or two days a week starting next month.

This decision comes in the wake of accusations that Musk’s political focus has detracted from Tesla’s performance, stirring protests and boycotts against the car manufacturer globally. The typical limit for temporary government workers like Musk is 130 days per year, which aligns with President Donald Trump's inauguration timeline set to expire next month. However, uncertainty looms regarding when Musk will fully resign, despite Trump expressing a desire to retain his assistance for as long as possible.

As Tesla grapples with significant financial woes, including a alarming 20% decrease in car sales compared to the same quarter last year and profits down over 70%, Musk stated his intention to invest more time into Tesla. Nonetheless, he affirmed that he won’t completely withdraw from the administration, labeling his work as "critical" and stressing his willingness to remain as needed.

During Tesla's quarterly update, the firm voiced concerns over a downward outlook for growth, attributing part of the decline to shifting political sentiments which negatively impact vehicle demand. Musk remarked that the backlash against Tesla was, in part, retaliation against him and his Doge team. Tesla’s stock, which has plummeted nearly 37% this year, did see a slight uptick in after-hours trading following the profit announcements.

The impact of Trump's tariffs on China remains a significant concern for Tesla, given that, despite selling domestically assembled vehicles, the company relies heavily on Chinese-made components. Musk himself acknowledged that tariffs, even with Tesla's localized supply chains, pose challenges as profit margins narrow. He expressed his commitment to advocate for reduced tariffs while recognizing the difficulties they present.

The cumulative issues facing Tesla have drawn scrutiny from analysts like Dan Coatsworth of AJ Bell, who pointed out that competition is intensifying, and disruptions from the trade dynamics might exacerbate the challenges ahead. With the backdrop of an increasingly competitive automotive landscape, experts warn that Tesla’s situation could be worsening.