New York — Tesla’s sharp decline in earnings has led CEO Elon Musk to announce a pullback from his high-profile role in the US government’s efficiency department, as the electric vehicle giant faces headwinds on multiple fronts.
The Tesla profit drop, exceeding 70% year-on-year, comes alongside a 20% dip in Q1 sales — the lowest since 2021. The company cited global trade uncertainty, shifting political dynamics, and reputational backlash from Musk’s political activity.
The tech billionaire has led the Trump-established Department for Government Efficiency (Doge) since last year, but will now reportedly reduce involvement to just a couple of days weekly. “My main priority is now Tesla,” Musk stated on Tuesday.
Despite assembling its vehicles in the US, Tesla relies heavily on Chinese parts — a critical vulnerability as tariffs under Trump’s administration escalate. Tesla warned that “rapidly evolving trade policy” could raise costs and hurt demand.
Shares in Tesla had fallen 37% year-to-date but saw a slight rebound after Musk’s announcement and the earnings call.
The Tesla board faces pressure to restore focus on core innovation and operational leadership. Musk remains a polarizing figure, with analysts warning that brand perception and market competition could weigh heavily if issues persist.
“This is more than a quarterly miss. The Tesla profit drop is a wake-up call,” said analyst Dan Coatsworth. “There’s no room for distraction at the top.”
