Political break for Musk Tesla billionaire wants to take care of his garden again

Following a dramatic slump in profits at Tesla, Elon Musk has announced that he will be devoting more time to the company in future - and scaling back his controversial role as a cost-cutter for Donald Trump.

Keystone-SDA

23.04.2025, 00:35

02.05.2025, 11:31

SDA

Tech billionaire Elon Musk wants to largely withdraw from his role as President Donald Trump's cost-cutter in Washington from May. Instead, he will spend more time managing the electric car manufacturer Tesla again, Musk announced after presenting the quarterly figures. However, he wants to continue to spend one or two days a week on government tasks - at least as long as Trump wants him to. Tesla recorded a drop in sales and a slump in profits.

Musk became a close ally of Trump last year, donating more than 250 million dollars to his campaign for the White House. As president, Trump tasked him with reducing government spending. Musk's political activities and right-wing positions made him less popular - and this also had an impact on Tesla.

Analyst Dan Ives of Wedbush Securities, who has long been very optimistic about Tesla's future, estimates that the damage to the brand from Musk's actions could permanently depress Tesla demand by 15 to 20 percent.

Clock ticking for Musk in Washington anyway

Musk formally went to Washington as a "special government employee". This status can only be held for a maximum of 130 days, so his time in the US capital should actually expire in a few weeks anyway. On the other hand, the duration can be extended if you work part-time.

Musk's position in the Trump environment has already appeared weakened in recent weeks, especially after he threw his weight into the election campaign for an important judgeship in the state of Wisconsin - and the Republican candidate he supported lost.

The tech billionaire also said in the analyst conference to present Tesla's quarterly figures that he had already achieved great success in cutting costs. He also claimed that the protests against him and Tesla were being organized by those who had previously enriched themselves by defrauding the state. The share price rose by around four percent in after-hours trading following the announcement that he would be focusing more on Tesla again.

Profit slump of 71 percent

Shortly before the announcement, Tesla reported significant declines in sales and profits. Revenue fell by nine percent year-on-year to just over 19.3 billion dollars. At the bottom line, profits plummeted by 71 percent to 409 million dollars.

Tesla's figures fell short of analysts' expectations. On average, they had expected sales of a good 21 billion dollars. Tesla's adjusted earnings per share amounted to 0.27 dollars, while the market had expected an average of 0.39 dollars.

At the same time, Tesla confirmed that production of cheaper model variants would begin in the first half of 2025. It was also confirmed that a robotaxi without a steering wheel and pedals will be produced from 2026.

Fewer cars delivered

The results come as no surprise: Tesla's deliveries fell by 13 percent to 336,681 vehicles in the first quarter. It is difficult to determine the extent to which individual reasons contributed to the decline. In addition to the controversies surrounding Musk, one factor is likely to be the switch to a new generation of the best-selling Model Y.

Tesla retooled its production lines at the beginning of the year. Production was paused for a few weeks for this. At the same time, there was less incentive for prospective buyers to purchase a vehicle of the previous Y variant.