Tesla CEO Elon Musk says he’s cutting back on government duties to refocus on the struggling electric vehicle maker. But after months of profits sliding, his net worth taking a wrong turn, and trade headwinds intensifying, investors argue he should have made the decision much earlier.

Tesla reported dismal first-quarter results on Tuesday. Revenue dropped to $19.34 billion, well below Wall Street’s expectations of $21.43 billion. The figure is a significant year-over-year decline from the $21.3 billion posted in the same period of 2023. Adjusted earnings per share came in at just $0.27, missing the consensus estimate of $0.44.

On the company’s earnings call, Musk admitted that his involvement in government affairs, particularly as President Donald Trump’s so-called “DOGE master,” was a distraction that affected his focus as Tesla’s leader. Musk confirmed that beginning in May, he will reduce the time he allocates to his role in Trump’s administration.

“Starting in May my time allocation to DOGE will drop considerably,” Musk said, promising to give more of his hours to Tesla.

Investors cheer Musk’s recommitment

After Musk spoke on Tesla’s earnings call, shares surged 7% in pre-market trading on Wednesday and became the most active ticker page on financial platforms. 

CNBC’s “Mad Money” host Jim Cramer reacted to the market movement on X, writing: “TSLA could be up much more than this on Musk coming back at just the right time.”

TSLA could be up much more than this on Musk coming back at just the right time

— Jim Cramer (@jimcramer) April 23, 2025

Other analysts warn that the core issues plaguing Tesla are more than Musk’s time management.

Deliveries for Q1 totaled 336,681 vehicles, well short of the 390,342 expected by analysts and the company’s worst quarter since Q2 2022. Demand for Tesla’s cars has been eroding in several markets, in part due to what executives described as “vandalism” related to Musk’s high-profile government role. 

Compounding Tesla’s challenges is the global trade situation, in which his friend, US President Trump, is imposing tariffs on European and Asian countries. 

In a statement, the company said that “rapidly evolving trade policy” and “changing political sentiment” have disrupted global supply chains and cost structures, not only for Tesla but also for its peers.

Musk revealed that he had privately advised President Trump to lower tariffs, saying he believes it will ultimately be better for the economy. But he admitted that the decision rests with the White House.

Production plans and Robotaxi

Even with a jittery Q1 2025, Tesla reiterated that several of its production activities are still on schedule. Affordable new vehicle models are expected to begin production in the first half of 2025. In addition, the company confirmed that volume production of the Robotaxi fleet is still slated for 2026.

Musk disclosed that pilot testing for a paid ride-hailing service using Robotaxis will begin in Austin, Texas, this June. However, he cautioned that the business is not expected to make a material contribution to Tesla’s bottom line until mid-2026.

Chris McNally, an analyst at Evercore ISI, said if Musk changes his focus from the government to the company and provides an “AV solution” for Robotaxis, the company’s equities will shoot up to late 2024 highs. 

Tesla’s AI investments, considered its next frontier, are also under review. The company spent between $3 billion and $4 billion on AI in 2024, but so far, returns have been minimal.

Chip Chowdry of Global Equities Research said that these investments have yielded “zero results” and are merely just lab experiments.” It is very likely Tesla will take a pause with its AI Investments,” reckoned Chowdry.

The electric car maker’s biggest competitor, Chinese EV giant BYD continues to chip away at Tesla’s market share, both domestically and internationally. 

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