Automotive revenue fell 20%, partly offset by gains in Tesla’s energy business. The company also reported US$595m from other automakers who pay Tesla for carbon credits to offset their sale of conventional vehicles.
The company’s stock – which hit an all-time high of US$488.54 in the build-up to Trump’s inauguration – closed Tuesday at US$237.97.
Shares rallied 4% in after-hours trading. Musk said on an earnings conference call, “Probably in the next month, my time allocation to Doge will drop significantly.”
In a letter to shareholders, Tesla said rapidly evolving trade policy and “changing political sentiment could have a meaningful impact on demand for our products in the near-term”.
The company reported a 2.1% operating margin for the quarter, compared with 5.5% a year earlier.
Investments in AI also weighed on profit. After several delays, the firm is aiming to launch its first fleet of robotaxis in Texas in June.
Tesla was already struggling before Musk enmeshed himself in GOP politics last year. Since President Donald Trump’s inauguration he has almost entirely shifted his focus to running the US Doge Service. Doge stands for the Department of Government Efficiency and is aggressively pursuing an initiative meant to reduce “waste, fraud and abuse” in the federal government.
A combination of increased competition from Chinese electric carmakers such as BYD, uncertainty around Trump’s tariffs (around 20% of Tesla’s components are made in Mexico and it buys batteries from BYD in China) and Musk’s declining popularity has pushed the company into turmoil.
Tesla owners are trading in their vehicles at an increasing rate; prices for used Teslas have sunk; and widespread protests against the brand have erupted around the world. Vandals have also targeted the company’s dealerships, charging stations and vehicles with Molotov cocktails, gunshots and arson.
“The more political he gets with Doge, the more the brand suffers — there is no debate,” Dan Ives of Wedbush Securities previously said in a note to investors. “This continues to be a moment of truth for Musk to navigate this brand tornado crisis moment.”
Musk has said in previous earnings calls that the future of Tesla is “overwhelmingly” autonomous driving, and he has doubled down on his vision of creating a fully self-driving car with no steering wheel or pedals.
Investors and shareholders have become increasingly frustrated with the CEO, as they attribute much of the company’s woes to the upheaval he has caused in the federal government. Sweeping layoffs and dramatic budget cuts mandated by Doge have led to chaos, confusion and backlash.
