Tesla stock rises after Musk says time at DOGE will drop 'significantly'

Tesla (TSLA) stock rose 3% in early trade Wednesday after CEO Elon Musk said he would spend more time at Tesla and less time in Washington, D.C., news that overshadowed a challenging quarter for the company that saw results come in far below Wall Street forecasts.

“Starting early next month, in May, my time allocation to DOGE [Department of Government Efficiency] will drop significantly,” Musk told investors on the company’s earnings call.

Musk said he’d continue to spend a day or two per week at DOGE, but said he will be “allocating far more of my time” to Tesla.

“While we would have preferred a full re-engagement with Tesla (as opposed to still sharing time with political efforts), we nevertheless believe the narrative should benefit from a re-engaged Elon on Tesla – simply, with Tesla more heavily focused on AV/AI, Elon is more important than ever to keep this narrative moving forward … Elon is Tesla,” Barclays analyst Dan Levy wrote in a note to clients after the earnings call.

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Tesla reported first quarter revenue of $19.34 billion, below the $21.43 billion Wall Street was forecasting and the $21.3 billion reported a year ago, according to Bloomberg estimates. Tesla posted adjusted earnings per share of $0.27, missing the $0.44 forecast by analysts. Adjusted profits in the quarter fell 40% from a year ago.

Tesla said plans for new affordable vehicles are on track for start of production in the first half of 2025 and that it still expects Robotaxi volume production starting in 2026. Along with Robotaxi testing, these were two big investor concerns heading into earnings.

The company blamed trade uncertainty as a reason behind slumping sales.

“Uncertainty in the automotive and energy markets continues to increase as rapidly evolving trade policy adversely impacts the global supply chain and cost structure of Tesla and our peers,” the company said in a statement. “This dynamic, along with changing political sentiment, could have a meaningful impact on demand for our products in the near-term.”

Musk said on the call that he told Trump that “lower tariffs” were better for the country but ultimately the decision on tariffs is up to the president.

Because of this uncertainty, Tesla said it would revisit its 2025 guidance in its second quarter financial update and removed its long-term growth forecast.

“The key [trade] headwinds are: (1) Energy business is disproportionally affected by tariffs as TSLA sources the LFP batteries from China, (2) Volume guidance was temporarily paused due to tariff uncertainty, (3) China restrictions on rare earth minerals, which are employed in permanent magnets for electric motors, may negatively affect Tesla’s business; (4) A relevant portion of manufacturing equipment is sourced from China,” BofA analyst John Murphy noted in a research report.

Tesla said its first quarter gross margin hit 16.3%, better than the 16.1% expected, with automotive gross margin ex-regulatory credits coming in at 12.5%.

In the past, Tesla had promised to launch a lower-priced electric vehicle in the first half of 2025, along with other new vehicles that the company said would allow it to return to a 50% growth rate compared to 2023.

Reuters reported on Friday that Tesla’s plans to launch an affordable EV, which include a stripped-down version of the Model Y, have been delayed until later this year. Tesla has not responded to that report.

Tesla execs on the call did not deny the Reuters report, saying only that the company was focusing on affordability and these efforts would resemble some of the existing Tesla models.

The big concern for Tesla’s bread-and-butter auto business is demand.

Earlier this month, Tesla reported first quarter deliveries of 336,681 units making it the worst quarter for deliveries since the second quarter of 2022.

Conversely, rival automakers were seeing huge sales gains as consumers pushed up purchases to avoid tariffs, which began on April 2. Tesla’s main rival overseas, BYD (BYDDY), has been eating into Tesla’s market share for some time now. And President Trump’s auto sector tariffs of 25% on foreign imports have automakers like Tesla in a bind.

Tesla CEO Elon Musk speaks at at March 21 employee town hall. · X.com

Demand concerns led to falling sales across a number of key regions for Tesla. Tesla registration data in key European regions fell in March, another sign that sales are continuing to slide as Tesla’s brand has also taken a hit due to the right-wing political activities of CEO Elon Musk.

Musk’s closeness to President Trump and embrace of right-wing politicians in Europe have seen Musk’s and Tesla’s brands suffer. Protests at Tesla showrooms in the US and abroad are growing, as are acts of vandalism on Tesla EVs.

Musk added on the call that the company was focused on deploying Robotaxi testing in Austin in June, and claimed that Tesla’s vehicles were significantly cheaper than Waymo’s EVs, which he said contained expensive sensor suites.

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Pras Subramanian is a reporter for Yahoo Finance. You can follow him on X and on Instagram.

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