Elon Musk is learning that influence in Washington comes with a price tag. On Tuesday, Tesla formally acknowledged what Wall Street has long suspected: the company is feeling the financial strain of Musk’s increasingly political profile.
Driving the news
Tesla CEO Elon Musk said Tuesday that he will significantly cut back his work in President Donald Trump ’s administration, acknowledging for the first time that his political role may be hurting Tesla’s bottom line.
The electric vehicle maker reported a 71% drop in net income, down to $409 million in Q1, while revenue fell 9% year-over-year to $19.3 billion - well below analyst expectations of $21.3 billion.
Tesla squarely blamed the shifting political winds, citing “changing political sentiment” and “rapidly evolving trade policy” as factors adversely impacting demand and global supply chains.
“This dynamic, along with changing political sentiment, could have a meaningful impact on demand for our products in the near-term,” Tesla wrote in its Q1 earnings presentation.
Why it matters
Musk’s Tuesday comments reflected a more measured tone - and a notable shift in time management priorities.
“Probably in the next month, my time allocation to DOGE will drop significantly,” he told investors, indicating that his 130-day initial mission to reform the federal government was “mostly done.”
He expects to spend just “a day or two per week” on government matters starting in May.
That pivot came amid mounting pressure from investors, including longtime Tesla bull Dan Ives of Wedbush, who wrote, “This was well communicated by Musk on this call… needed to hear this tone and direction.”
Musk also addressed growing criticism from Tesla customers who are wary of his political leanings:
“Absent the macro issues, we don’t see any reduction in demand,” he claimed. But he admitted that the economic uncertainty and political blowback “cause people to pause on doing a major capital purchase like a car.”
Trade war and robo taxis
The political heat isn’t just coming from Musk’s affiliations. Tesla is also caught in the crossfire of escalating trade tensions between the US and China.
Nearly 20% of Tesla’s parts are sourced from Mexico, and its Shanghai Gigafactory supplies the Chinese market - both now in the crosshairs of escalating trade tensions.
New tariffs from the Trump administration-some as high as 145%-have already forced Tesla to halt orders for its Model S and Model X in China, one of its most important markets. Tesla said in its release that tariffs would impact its energy business even more than its automotive arm.
“I’ve voiced my support for free trade and lower tariffs directly to the president,” Musk said. “But whether he takes that advice is entirely up to him.”
Musk also addressed growing concerns about Tesla’s direction by reaffirming that the company remains on track to launch a fleet of autonomous robotaxis. The first of these will hit the streets of Austin, Texas, this June, he said.
“There will be millions of Teslas operating autonomously by the second half of next year,” Musk promised.
But analysts were unconvinced. “The system is not robust enough to operate unsupervised,” said Sam Abuelsamid, an auto analyst with Telemetry Insight. “It still makes too many errors.”
The bottom line
Elon Musk’s bet on politics may be backfiring. After months of dominating headlines for his work in Trump’s government, Musk is recalibrating - not because he wants to, but because Tesla needs him to.
(With inputs from agencies)
Driving the news
Tesla CEO Elon Musk said Tuesday that he will significantly cut back his work in President Donald Trump ’s administration, acknowledging for the first time that his political role may be hurting Tesla’s bottom line.
The electric vehicle maker reported a 71% drop in net income, down to $409 million in Q1, while revenue fell 9% year-over-year to $19.3 billion - well below analyst expectations of $21.3 billion.
Tesla squarely blamed the shifting political winds, citing “changing political sentiment” and “rapidly evolving trade policy” as factors adversely impacting demand and global supply chains.
“This dynamic, along with changing political sentiment, could have a meaningful impact on demand for our products in the near-term,” Tesla wrote in its Q1 earnings presentation.
Why it matters
- Musk’s once-cult-like status as a visionary is facing a reckoning - with Tesla caught in the crossfire between politics, economics, and consumer sentiment.
- His high-profile role as the architect of the Department of Government Efficiency ( DOGE ) under Trump, where he’s slashed federal jobs and budgets, has sparked backlash globally.
- Tesla has become an unintentional symbol in the culture wars - with protests erupting across the US and Europe, showrooms vandalized, and sales slumping in key markets like California, China, and Germany.
- Tesla’s own warning that political sentiment is influencing buyer behavior is a rare admission - and a signal that even Musk sees the limits of his influence.
- Tesla’s Q1 report shows a company still innovating but struggling with brand perception, foreign retaliation, and economic headwinds:
- Automotive revenue dropped 20% to $14 billion, the sharpest fall across Tesla’s business segments.
- Energy storage and services posted gains - up 67% and 15%, respectively - softening the blow to overall earnings.
- Tesla also earned $595 million selling regulatory credits to automakers, a 34% jump from a year earlier.
- Meanwhile, gross margin fell to 16.3% (from 17.4%), and global deliveries dropped 13% - a sign that Tesla’s value proposition is eroding amid global competition.
- Musk acknowledged on the company’s earnings call that he was facing “blowback” due to his Trump alliance, but sought to reassure investors: “I encourage people to look beyond the bumps and potholes of the road immediately ahead of us... lift your gaze to the bright shining citadel on the hill.”
Musk’s Tuesday comments reflected a more measured tone - and a notable shift in time management priorities.
“Probably in the next month, my time allocation to DOGE will drop significantly,” he told investors, indicating that his 130-day initial mission to reform the federal government was “mostly done.”
He expects to spend just “a day or two per week” on government matters starting in May.
That pivot came amid mounting pressure from investors, including longtime Tesla bull Dan Ives of Wedbush, who wrote, “This was well communicated by Musk on this call… needed to hear this tone and direction.”
Musk also addressed growing criticism from Tesla customers who are wary of his political leanings:
“Absent the macro issues, we don’t see any reduction in demand,” he claimed. But he admitted that the economic uncertainty and political blowback “cause people to pause on doing a major capital purchase like a car.”
Trade war and robo taxis
The political heat isn’t just coming from Musk’s affiliations. Tesla is also caught in the crossfire of escalating trade tensions between the US and China.
Nearly 20% of Tesla’s parts are sourced from Mexico, and its Shanghai Gigafactory supplies the Chinese market - both now in the crosshairs of escalating trade tensions.
New tariffs from the Trump administration-some as high as 145%-have already forced Tesla to halt orders for its Model S and Model X in China, one of its most important markets. Tesla said in its release that tariffs would impact its energy business even more than its automotive arm.
“I’ve voiced my support for free trade and lower tariffs directly to the president,” Musk said. “But whether he takes that advice is entirely up to him.”
Musk also addressed growing concerns about Tesla’s direction by reaffirming that the company remains on track to launch a fleet of autonomous robotaxis. The first of these will hit the streets of Austin, Texas, this June, he said.
“There will be millions of Teslas operating autonomously by the second half of next year,” Musk promised.
But analysts were unconvinced. “The system is not robust enough to operate unsupervised,” said Sam Abuelsamid, an auto analyst with Telemetry Insight. “It still makes too many errors.”
The bottom line
Elon Musk’s bet on politics may be backfiring. After months of dominating headlines for his work in Trump’s government, Musk is recalibrating - not because he wants to, but because Tesla needs him to.
(With inputs from agencies)
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