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Elon Musk said he's stepping back from his role in the Trump administration's Department of Government Efficiency to spend more time on Tesla (TSLA, Financials) and his other companies, just as the electric vehicle maker reported a sharp drop in first-quarter profit.
Musk told analysts Tuesday that while about 40% of his time will still go to DOGE, the bulk of the work is done. The update came as Tesla posted a 71% year-over-year decline in net income and a 20% drop in auto revenue, missing Wall Street estimates.
Tesla shares rose 5.5% in after-hours trading following Musk's remarks. The stock is still down nearly 50% from its December 2024 peak.
The company said it's sticking to plans to launch a cheaper vehicle in the first half of 2025, though production will ramp up more slowly than originally expected. Executives said new tariffs and shifting trade policies could affect growth, prompting a reassessment of the outlook in three months.
Tesla has paused some imports from China due to higher U.S. tariffs and suspended new orders for its Model S and X in the Chinese market. Musk warned tariffs will hit the company's energy business especially hard.
Gross margin for the auto business slipped to 12.5%, down from 13.6% last quarter but slightly above analyst expectations. Total revenue came in at $19.34 billion, below the $21.11 billion forecast.
Deliveries fell 13% in the quarter. Analysts expect another annual drop in 2025, despite incentives like free charging and Full Self-Driving offers.
Tesla said its planned robotaxi service in Austin is still on track for a June launch. Musk expects millions of autonomous Teslas on the road by late 2026, though regulatory hurdles remain.
This article first appeared on GuruFocus.