Musk says he'll limit time with US government to focus on Tesla

Kara Carlson, Bloomberg News on Apr 22, 2025

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Tesla Inc. rose in late trading after Chief Executive Officer Elon Musk said he’s going to pull back “significantly” from his work with the U.S. government to focus on the EV maker.

Musk also said that he plans to keep advocating for President Donald Trump to pull back on tariffs, which have hit Tesla.

“I think starting probably next month, May, my time allocation to DOGE will drop significantly,” Musk said during a call with analysts on Tuesday, referring to the Department of Government Efficiency that he’s been leading. He predicted he’ll continue to be involved to some extent for “the remainder of the president’s term,” but he would soon be allocating more time to Tesla.

The stock rose 3.8% at 6:14 p.m. in extended New York trading, paring some of an earlier gain. His statements sparked a rally following an initial lukewarm reaction to Tesla’s first-quarter results. The company reported adjusted earnings of 27 cents per share for the first quarter, below the average analyst estimate, while omitting an earlier prediction that sales would return to growth for the full year.

Instead, Tesla said that it’s “making prudent investments that will set up” the vehicle business for growth. That will depend on factors including production increases and the “broader macroeconomic environment.”

Musk said that he had pushed for lower tariffs — underscoring his divergence with U.S. President Donald Trump on the issue. Trump’s moves to hike U.S. duties on foreign goods have spooked investors and raised concerns of higher prices for U.S. consumers. Musk added that tariff decisions are “entirely up to the president.”

The tariffs are compounding Tesla’s challenges, and threaten to upend automotive supply chains globally and drive up costs across the industry. While Tesla is expected to be relatively less affected than many carmakers due to its large plants in California and Texas, its vehicles nevertheless contain some non-U.S. components, and the company has warned of a potential impact.

Musk told analysts that Tesla has been working on localized supply chains to help ease logistics and minimize risks of higher costs.

“We are the least affected car company with respect to tariffs,” he said, but emphasized tariffs are still difficult to navigate. “That puts us in a stronger position than any of our competitors.”

‘Tight rope’

Ben Kallo, a senior research analyst with Baird, said the mention of tariffs is a way for the company to alert policy makers of the pain the levies are causing.

“It’s a way to get the message across that tariffs are going to impact Elon without him saying that as part of the U.S. government,” Kallo said. “He’s walking a tight rope there while part of the government with DOGE.”

Tariffs will have a “relatively larger impact” on the energy business compared to automotive, Tesla said. The company’s Megapack energy storage systems heavily rely on LFP battery cells from China, which accounted for 84% of global lithium-ion battery production capacity in 2024, according to Wood Mackenzie. By comparison, North America made up just 5%.

Consumer backlash

Musk’s endorsement of controversial political positions in Europe and close ties to Trump have also sparked backlash globally. Tesla showrooms and charging stations have become targets for protests and vandalism, particularly in the U.S. Tesla Takedown, a decentralized movement that accuses Musk of harming democracies around the world, is encouraging people to sell their Tesla vehicles and the company’s stock while condemning violence and vandalism.

Earlier this week, Wedbush Securities analyst Dan Ives wrote that Tesla faces “potentially 15%-20% permanent demand destruction for future Tesla buyers due to the brand damage Musk has created with DOGE.”

The company said that “changing political sentiment” is another element that “could have a meaningful impact on demand for our products in the near-term.”

Autonomy, robotics

Musk is increasingly betting Tesla’s future on autonomy, such as a driverless taxi, and robotics, including the humanoid Optimus robot.

“While we continue to execute on innovations to reduce the cost of manufacturing and operations, over time, we expect our hardware-related profits to be accompanied by an acceleration of AI, software and fleet-based profits,” the company said in its shareholder deck.

The automaker said plans for new vehicles, including more-affordable models, remain on track for the start of production in the first half of this year. That may come as a surprise to some investors after Reuters reported last week that the production launch would be delayed by a few months.

Tesla said it had already prepared its factories for the launch of new models during downtime while switching production lines over for the refreshed Model Y. It emphasized the need for more affordable options amid current economic uncertainty that has resulted from trade policies.

(With assistance from Keith Gerstein and Michelle Ma.)