Tesla CEO Elon Musk said he would soon be spending less time with the Trump administration after first-quarter earnings fell short of expectations.
Net income for the quarter was down 71% after a decline in vehicle deliveries as Tesla battled growing competition from foreign brands, shifting trade policies and growing backlash to the brand after Musk aligned himself with the Trump administration.
"There are some challenges, and I expect that this year will be, there will probably be some unexpected bumps this year," Musk said in an earnings call April 22. "But I remain extremely optimistic about the future of the company."
Tesla sales slump during Musk's time with DOGE
The slump comes as Tesla, along with other automakers, adjusts to auto tariffs imposed by President Donald Trump. In a financial report April 22, Tesla said “rapidly evolving trade policy” has eroded the global supply chain and the company’s cost structure.
While Tesla assembles its vehicles in the United States, the automaker is exposed to tariffs because it imports parts from other countries.
"I've been on the record many times saying that I believe lower tariffs are generally a good idea for prosperity, but this decision is fundamentally up to the elected representative of the people, being the president of the United States," Musk said. "I'll continue to advocate for lower tariffs rather than higher tariffs, but that's all I can do."
Tesla also noted that “changing political sentiment” could influence product demand in the near term. The company has faced backlash after Musk began work with the Trump administration's DOGE, the cost-cutting initiative that has led to the firing of tens of thousands of federal workers.
Dealerships have suffered vandalism and protests, and polls from Pew Research and CNBC show roughly half of Americans have negative views of the tech mogul. Shares had plummeted, ending April 22 about 50% down from their December peak. And first-quarter deliveries were down 13% from a year ago, although Tesla said that was in part because of the company losing production time as it updated factories to produce the new Model Y.
“There's some good long-term growth opportunities, but there’s a lot of near-term uncertainty,” Edward Jones analyst Jeff Windau told USA TODAY ahead of Tesla's earnings call.
In a note April 20, Wedbush Securities analyst Daniel Ives hinged the company’s future on Musk’s decision on when to leave the White House, calling it a “fork in the road time.”
"Tesla is Musk and Musk is Tesla," Ives wrote. "If Musk leaves the White House there will be permanent brand damage ... but Tesla will have its most important asset and strategic thinker back as full time CEO to drive the vision and the long term story will not be altered."