As one of President Trump's advisors, Tesla CEO Elon Musk has become a target. JIM VONDRUSKA FOR THE NEW YORK TIMES
Tesla CEO Elon Musk stated on Tuesday that he would reduce the time he spends working for President Trump in Washington. This came after Tesla's latest earnings report showed that the automaker's profits had dropped 71% in the first three months of this year.
During an earnings call, Musk told Wall Street analysts that he would still spend 'one or two days a week' dealing with Washington affairs, likely throughout Trump's entire term. The billionaire is one of Trump's confidants and played a leading role in the president's actions to cut government spending and eliminate tens of thousands of federal jobs.
Less than two hours before he made this statement, Tesla announced that its net profit for the first quarter was $409 million, down from $1.4 billion in the same period last year. The company had previously reported a net profit of $1.1 billion but revised the figures to reflect changes in the valuation of cryptocurrency assets.
Due to fierce competition from Chinese automakers like BYD, a lack of new models, and Musk's support of far-right causes, some liberals and moderates have stopped buying Tesla cars, leading to a continued decline in sales.
Musk stated that the recent protests at Tesla stores around the globe were initiated by those whose interests were harmed, as they lost opportunities to benefit from the government due to his collaboration with the Trump administration. He said, 'The real reason is that those who benefit from waste and fraud want things to continue as they are.'
Measured by stock price, Tesla remains the most valuable car manufacturer in the world, with electric vehicle sales in the U.S. market far surpassing those of other companies.
However, since mid-December last year, due to increasing pessimism among investors about the company's prospects, coupled with concerns about Musk's role in the Trump administration, its stock price has dropped by about half. Some investors and analysts have recently urged Musk to spend more time on Tesla and reduce his time working for the Trump administration or to stop entirely.
However, even if he does reduce the time spent on government affairs, his attention remains difficult to focus. This is because Musk also runs SpaceX, the social media platform X, an AI company called xAI, and other businesses.
The profit figures are far below Wall Street's expectations. Without $400 million in interest from cash and investments, as well as $595 million from selling emissions credits to other automakers that failed to meet emissions regulations—regulations Trump planned to abolish—Tesla would have reported losses of hundreds of millions.
After releasing its quarterly earnings report, Tesla's stock price rose about 5% in after-hours trading.
Ross Gerber, CEO of investment firm Gerber Kawasaki, stated on X, 'This is the worst performance I have ever seen from Tesla.'
Tesla declined to provide its usual forecast for sales and profits for the rest of the year, citing too much economic uncertainty.
In a report to shareholders, Tesla stated, 'It is difficult to measure the impact of changes in global trade policies on the automotive and energy supply chains, our cost structure, and the demand for durable goods and related services.'
The company mentioned the 'changing political climate,' stating that it 'could have a significant impact on our product demand in the short term,' which may be an indirect acknowledgment that Musk has harmed Tesla's reputation.
Tesla's market share has gradually been taken over by Chinese automakers and established companies like General Motors, Volkswagen, and Hyundai, which are offering an increasing number of electric vehicle options.
Musk's company had hoped to achieve annual sales of 20 million by the end of this decade, double that of Toyota. However, after climbing to 1.8 million in 2023, sales have been declining. Last year, the company's sales were 1.7 million, and in the first quarter of 2025, global sales fell 13% year-over-year.
On Tuesday, Tesla executives attributed the main reason for the sales decline to a slowdown in production as the company revamped its assembly line to produce the new version of the Model Y SUV.
The Cybertruck is Tesla's latest model, which has consumed a significant amount of resources during its development, and it now appears increasingly like a failed product. According to research firm Cox Automotive, Cybertruck sales in the first quarter of this year fell by about 50% compared to the last three months of last year.
Tesla's official website recently offered up to $8,500 off the company's inventory of Cybertrucks. The starting price for the truck is $70,000 before federal and state incentives.
The automaker reiterated that it will begin producing a cheaper car by the end of June, making electric vehicles more affordable for more people, which could potentially revive sales. However, the company has yet to showcase a prototype of the vehicle or provide many details.
Analysts are skeptical about whether this new vehicle can be mass-produced in the short term. It remains unclear whether it is a completely new design or just a simplified version of the Model 3 sedan or Model Y.
Tesla stated on Tuesday that the vehicle 'will utilize next-generation platforms as well as certain aspects of our current platforms and will be produced on the same production lines as our existing models.'
Musk serves in a federal agency called the 'Office of Government Efficiency,' which has significantly cut the budgets of federal agencies and eliminated thousands of jobs, making him a target. Activists have protested outside Tesla dealerships around the world, with Tesla cars being vandalized and even burned.
Compared to other automakers, Tesla may be less affected by Trump's tariffs on cars and parts because it produces all the cars it sells in the U.S. at its factories in California and Texas. The company also has facilities in Shanghai and near Berlin to serve much of the rest of the world.
However, Tesla will also face challenges. Tariffs will be imposed on parts imported from Mexico and China used in its U.S. factories, forcing the company to either raise prices or accept lower profits.