Elon Musk has announced he will now spend more time focusing on Tesla and less on government matters. During a call with investors, Musk said that with the major work of launching the Department of Government Efficiency (DOGE) nearly complete, he will return his focus to Tesla starting in May. He expects to spend just one or two days a week on government issues going forward.
Tesla’s Earnings Fall Sharply in Early 2025
Tesla‘s financial report for the first quarter of 2025 shows a significant drop in earnings. The company’s profit fell by 71%, and revenue declined by 9%. The decline comes amid protests against Musk’s government job-cutting initiative, DOGE, which has drawn mixed public reactions.
Investors Pleased with Musk’s Shift Back to Tesla
Some investors were concerned about Musk being distracted from Tesla. Dan Ives, an analyst at Wedbush Securities, said Musk’s renewed commitment is a positive move. Following his announcement, Tesla’s stock jumped over 5% in after-hours trading, though it remains down more than 40% for the year.
New Tesla Model Y and Robotaxi Updates
Tesla confirmed it will launch a cheaper Model Y SUV in the first half of this year. The company also plans to roll out a driverless robotaxi service in Austin by June. Musk said millions of Teslas will be able to drive themselves by the second half of 2025, and he even claimed users could sleep while their cars drive to the destination.
Experts Skeptical of Full Self-Driving Claims
Auto expert Sam Abuelsamid questioned Musk’s bold claims. He said the system is still prone to critical errors and not reliable enough for full autonomy. The robotaxi idea, which would remove steering wheels and pedals, faces hurdles from federal regulators still reviewing Tesla’s driver-assist technologies.
Safety Concerns Over Tesla’s Driving Technology
Tesla’s Autopilot and Full Self-Driving features are still under investigation by the National Highway Traffic Safety Administration (NHTSA). The agency is reviewing whether the systems alert drivers properly and if misleading branding has led to accidents, especially under poor visibility conditions like sun glare.
Rising Competition in the EV Market
Tesla is no longer the only strong player in the electric vehicle industry. China’s BYD has introduced a fast-charging battery, and European carmakers are launching advanced EVs. At the same time, Musk’s political comments have turned away some potential buyers, especially in Europe.
Big Drop in Profits and Revenue
From January to March, Tesla’s profit fell to $409 million (12 cents per share), down from $1.39 billion last year. Revenue also dropped from $21.3 billion to $19.3 billion, missing Wall Street expectations. The company’s gross margin also declined from 17.4% to 16.3%, showing reduced profitability.
Tesla Faces Tariffs and Trade Challenges
Although Tesla builds most of its U.S. vehicles domestically, it is still affected by tariffs from the Trump administration. These import taxes are expected to hurt Tesla’s energy storage business, and some materials still come from overseas. China’s retaliation has already led Tesla to stop taking new orders for its Model S and Model X in the Chinese market.
Regulatory Credit Sales Provide a Boost
Tesla’s business of selling regulatory credits helped soften the financial blow. The company earned $595 million from selling these credits to other automakers, up from $442 million a year ago. Tesla also improved its cash flow significantly, generating $2.2 billion, compared to just $242 million last year.
Analysts React to Tesla’s Performance
Seth Goldstein, a Morningstar analyst, said the poor earnings were expected given the drop in vehicle deliveries. However, he noted the positive cash flow as a silver lining in the results.
