Tesla just posted its worst quarterly results in years. Net income plunged 71% to $409 million in the first quarter.
Automotive sales tumbled 20%, and global deliveries took a hit—falling 22% in China and a staggering 62% in Germany, two of Tesla’s largest markets. Even in California, the company’s original home base, EV market share dropped from 56% to 44%.
For months, institutional investors have blamed Tesla’s troubles on CEO Elon Musk, who has been devoting much of his time to politics. On an April 22 investor call, Musk tacitly acknowledged the problem, promising that his “time allocation at DOGE will drop significantly,” referring to his Department of Government Efficiency.
Since President Trump’s inauguration, Musk’s campaign to root out government waste has devolved into a partisan spectacle, drawing mass protests and even leading to vandalism at Tesla dealerships. Many buyers have shunned the brand in reaction to Musk’s increasingly polarizing profile.
On the bright side, Tesla’s energy storage business surged 67% in the first quarter, software-subscription revenue is rising, and a June launch is planned for a robotaxi fleet along with a cheaper Model Y offering.
But the financial fallout is stark. The Austin, Texas-based company’s operating margin slid to 2.1%, down from 5.5% a year ago. Tesla also missed earnings expectations, reporting just 27 cents per share versus the 41 cents analysts had anticipated.
Eighty-five percent of investors surveyed by Morgan Stanley in March said Musk’s political activities damaged Tesla’s reputation and that they hope for a turnaround.
“In essence, this was an off ramp for Musk out of the Trump White House in our view,” Wedbush analyst Dan Ives said in a note to investors, “as the global brand damage, political firestorm, and perfect-storm chaos over the past few months will now end this volatile political chapter for Musk, and we expect minimal if any time focused on DOGE going forward.”
Trump, meanwhile, said he wants “to keep Elon for a long time.” Others in Washington may not share the same sentiment, however. Musk’s time at DOGE was reportedly rife with heated confrontations with cabinet members including Treasury Secretary Scott Bessent, Secretary of State Marco Rubio, Transportation Secretary Sean Duffy, and Trade Adviser Peter Navarro.
