Elon Musk is shifting gears. After a sharp drop in Tesla’s first-quarter earnings, the billionaire is signaling a recommitment to his role as Tesla CEO and a retreat from his controversial involvement with the Trump administration’s Department of Government Efficiency (DOGE).
Faced with a 71-percent plunge in earnings, Musk opened Tuesday’s earnings call with a message to concerned investors. “Starting probably in [the] next month, May, my time allocation to DOGE will drop significantly,” he said.
DOGE Backlash and Investor Unease
Musk’s special role in the Trump administration is set to expire on May 30. However, as scrutiny over his involvement in federal cost-cutting measures grows, Musk appeared to acknowledge the need to pivot.
“More important than numbers, this was the time Musk could pivot, speak to shareholders/employees, and take a turn away from the DOGE/Trump White House and recommit as CEO of Tesla…and he did it loudly and clearly in a conference call that we view as a turning point in the Tesla story,” Wedbush Securities analysts wrote in a note to investors.
Musk admitted that DOGE’s work, which includes sweeping layoffs and federal program cuts, has brought significant backlash. He stated that after three months, the “major work” of establishing DOGE is complete. “I think I’ll continue to spend a day or two per week on government matters for as long as the president would like me to do so and as long as it is useful,” Musk told investors. “But starting next month, I’ll be allocating probably more of my time to Tesla.”
Earnings Miss and Investor Concerns
Tesla reported first-quarter earnings of $409 million, or 12 cents per share—falling short of expectations. Revenue also dropped 9 percent to $19.3 billion.
“Everybody expected there to be some negative effect on Tesla’s brand image, but it was just sort of the scale that took many people off guard,” said Maxwell Shulman, an analyst at Beacon Policy Advisers.
Despite the numbers, Musk’s comments were received as a positive signal. Tesla shares jumped 6 percent on Wednesday following the earnings call. William Blair & Co. analysts noted that Musk’s DOGE announcement was the “largest component” in the rally.
Wedbush analysts said the move would eliminate recent “brand damage” caused by Musk’s political visibility and DOGE association, calling his remarks “the biggest and best possible news” for Tesla investors.
Political Blowback Hits Tesla
Tesla has been caught in the political crossfire. Demonstrators across the country have targeted the company with protests, some escalating to violence including arson and shootings.
Earlier this month, Tesla confirmed a 13 percent drop in sales—the worst since 2022. Concerns about Musk’s divided focus continue to grow.
Just hours before the earnings call, eight state treasurers sent a letter to Tesla Chair Robyn Denholm, warning that the company’s recent struggles may indicate “deeper governance and leadership challenges.”
“CEO Elon Musk continues to divide his attention across multiple companies and a high-profile advisory role within the federal government,” they wrote. “These external commitments raise serious questions about whether Tesla’s leadership is fully engaged in addressing the company’s core challenges.”
Analysts See Musk’s Shift as a Positive Step
Morningstar analyst Seth Goldstein said Musk’s reassurances could help settle investor concerns. “It’s Elon speaking to his investor base and reassuring them that he is still leading the company, that he’s still focused on Tesla,” Goldstein said.
Goldstein compared Musk’s DOGE involvement to his time spent at Twitter after acquiring the platform. “During the first few months after that deal closed, he spent more time at Twitter, a little less time at Tesla and wanted to make sure things were running well,” he said. “And then he eventually stepped back and started spending more time with Tesla.”
Trump has previously said he expects Musk to return to his companies once DOGE winds down. A timeline had not been given until Musk’s latest comments.
Skepticism Remains About Musk’s Shift
Still, some believe Musk’s pivot won’t undo the damage. “Negative polarization is an extremely potent political force in the modern era,” said Shulman. “The urge just to sort of take on the opposite of whatever your opponents are doing and Musk’s avid connection to the administration, will make it hard for prospective buyers to sort of untangle his association with Republicans and Donald Trump going forward.”
“Returning to the office one or two days a week isn’t necessarily going to fully right the ship by itself,” Shulman added.
Tesla Faces Ongoing Trade War Fallout
On the earnings call, Musk also addressed the impact of Trump’s ongoing trade war. He noted that while Tesla is the “least impacted car company” due to localized supply chains, import taxes still hurt when margins are tight.
He stressed that he supports lower tariffs and has voiced this to the president, but emphasized that “the decision is ultimately up to Trump.”
Looking Ahead: Optimism Despite Challenges
Despite the rough quarter, Musk remains confident in Tesla’s direction. He pointed to upcoming plans for autonomous cars and humanoid robots as signals of the company’s ambitious future.
“I’m extremely optimistic,” Musk said.
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