TMTPOST -- Tesla Inc. CEO Elon Musk on Tuesday signaled he is ready to cut most of his work in the Department of Government Efficiency, or DOGE, after the electric vehicle (EV) giant posted much worse-than-anticipated top and bottom line for the beginning quarter of the year.
Credit：Tesla
Musk said at an earnings call that his time allocation to DOGE will “drop significantly” starting next month. Calling his work at DOGE “critical”, Musk told analysts “getting the government house in order is mostly done.” He said he would spend only one to two days per week on government matters "as long as the president would like me to do so and as long as it's useful".
DOGE, an initiative of the Trump administration, aims to maximize governmental efficiency and productivity through job cuts and government spending reduction. The DOGE effort to massively axe the federal workforce and weed out what Musk sees as taxpayers’ money wasted has encountered legal obstacles, allegations of conflicts of interest, and fears that it will wreak serious damage.
Musk suggested he’s going to cut back his role in the U.S. government right after Tesla released financial results for the first three months of this year. Even Wedbush Securities analyst Dan Ives, a long Tesla bull, commented these results are “disaster”. In a note prior to Tesla’s financial report, Ives warned Musk’s involvement with the Trump Administration and DOGE has caused widespread brand damage and triggered a wave of negative consequences for Tesla.
Tesla revenue for the quarter ended March 31 dropped 9% year-over-year (YoY) to $19.34 billion, a huge miss considering analysts had expected revenue to be $21.37 billion. That was Tesla’s first YoY decrease in revenue since the first quarter of 2020. Diluted earnings per share (EPS) on non-GAAP basis crashed 40% YoY to $0.27, versus analysts estimated $0.43. Operating income dove 66% YoY to $399 million, missing projected $1.13 billion. Net income
Tesla’s sales miss highlighted further weakness of its automobile business, which was clouded by growing headwinds from intense competition to international backlash against Musk.
Tesla said in its report that revenue was weighed by decline in vehicle deliveries, in part due to the Model Y update across all four vehicle factories, reduced vehicle average selling price (ASP), which reflected mix and sales incentives, and negative foreign exchange impact of $300 million. However, the company reaffirmed its plan to produce more affordable vehicles by the mid-2025. “Plans for new vehicles, including the more affordable models, remain on track for start of production in the first half of 2025,” it said in the report.
Tesla’s automotive revenue plunged 20% YoY to $14 billion, hitting the lowest since the third quarter of 2021. Tesla earlier this month announced it delivered 336,681 EVs for the first quarter of the year, hitting the lowest deliveries since the second quarter of 2022. That represented a 13% YoY decline. Analyst expected Tesla’s deliveries would be between 360,000 and 370,000 units, according to StreetAccount.
Wedbush’s Ives felt the deliveries marked a fork in the road moment for Tesla. “We knew 1Q Tesla deliveries would be soft but these numbers were bad. We are not going to look at these numbers with rose colored glasses...they were a disaster on every metric. Refresh issues but brand crisis key,” Ives commented in a post on X.
In the financial report on Tuesday, Tesla underscored negative impact of sweeping U.S. tariffs, and implied U.S. President Donald Trump’s hefty tariffs on China would hit the company.
“Uncertainty in the automotive and energy markets continues to increase as rapidly evolving trade policy adversely impacts the global supply chain and cost structure of Tesla and our peers. This dynamic, along with changing political sentiment, could have a meaningful impact on demand for our products in the near-term," Tesla wrote.
Tesla’s energy business maintained robust growth for the March quarter. Energy generation and storage brought $2.73 billion, representing a 67% YoY rise. The storage deployed more than doubled to 10.4 GWh, close to a quarterly record Tesla set for the previous quarter. But the company acknowledged “the current tariff landscape will have a relatively larger impact on our Energy business compared to automotive.”
Due to the mounting uncertainty, Tesla left out return to growth forecast from earnings report. “It is difficult to measure the impacts of shifting global trade policy on the automotive and energy supply chains, our cost structure and demand for durable goods and related services,” the company wrote, adding that it will revisit its guidance for the year when the financial report for the current quarter is disclosed.