Elon Musk's Double Trouble: Cutting Back on Doge as Tesla Faces Profit Plunge

Elon Musk, the CEO of Tesla, is facing a critical juncture as the company navigates plummeting profits and a precarious political climate. In a recent announcement, Musk revealed plans to significantly reduce his involvement in the Trump administration’s initiative known as Doge (Department of Government Efficiency), amidst a 20% drop in automotive revenue in the first quarter of 2025 compared to the previous year, and a staggering 70% decline in profits. This downturn has raised concerns among investors as Tesla refrained from offering optimistic growth forecasts, citing the impact of changing political sentiment on consumer demand.

Sales fell to $19.3 billion during the quarter, far below the expected $21.1 billion, correlating with Musk’s controversial political activism which has sparked widespread protests and boycotts against Tesla. Musk noted that his role in the Trump administration has diverted his attention from the company. His previously significant commitment, including a $250 million contribution to Trump’s re-election efforts, is now in question as he plans to scale back his government responsibilities to just a few days a week.

The backdrop of Musk’s struggles includes competition from other automakers and the ongoing effects of Trump’s tariffs on China, which complicate Tesla’s supply chains due to a reliance on Chinese parts. Musk argues that despite localizing much of the supply chain, tariffs still exert pressure on profit margins.

Amid these challenges, financial analysts express that investor expectations are at an all-time low, with Tesla shares suffering a 37% loss in value this year. The company’s recent updates hint at a future focus on artificial intelligence for growth, yet skepticism remains palpable among investors. Reports indicate that Tesla’s vehicle sales decreased by 13%, marking the lowest volume in three years, intensifying fears of ongoing challenges ahead.