Musk says he'll spend less time in Washington and more time running
Tesla after its profit plunges
[April 23, 2025] By
BERNARD CONDON
NEW YORK (AP) — Elon Musk says he’ll be spending less time in Washington
slashing government costs and more time running Tesla after his electric
vehicle company reported a big drop in profits.
Musk said on a conference call with analysts Tuesday that “now that the
major work of establishing Department of Government Efficiency is done,”
that he will be “allocating far more of my time to Tesla” starting in
May. Musk said he now expects to spend just “a day or two per week on
government matters”
Tesla struggled to sell vehicles as it faced angry protests over Musk’s
leadership of DOGE, a jobs-cutting group that has divided the country.
The Austin, Texas, company reported a 71% drop in profits and a 9%
decline in revenue for the first quarter.
“Investors wanted to see him recommit to Tesla,” said Wedbush
Securities' Dan Ives. “This is a big step in the right direction."
Investors sent Tesla shares up more than 5% in after-hours trading,
although they are still down more than 40% for the year.
The company reconfirmed that it expects to roll out a cheaper version of
its best-selling vehicle, the Model Y sport utility vehicle, in the
first half of this year. It also stuck with its predictions that it will
be able to launch a paid driverless robotaxi service in Austin in June
and have much of its fleet operating by itself next year.
“There will be millions of Teslas operating autonomously in the second
half of the year,” Musk said in a conference call after the results were
announced. He later added about the personal use of autonomous vehicles,
"Can you go to sleep in our cars and wake up at your destination? I’m
confident that will be available in many cities in the U.S. by the end
of this year.”
Auto analyst Sam Abuelsamid at Telemetry Insight said he doubts Musk's
predictions.
“The system is not robust enough to operate unsupervised. It still makes
far too many errors,” he said. “It will suddenly make mistakes that will
lead to a crash.”
The planned rollout of the robotaxi without a steering wheel or pedals
comes as federal regulators still have open investigations into whether
the technology that Tesla hopes will allow cars to drive themselves is
completely safe.
Tesla’s driver-assistance technology that can steer or stop a car but
still requires humans to take over at any time — its so-called Autopilot
— is being probed by the National Highway Traffic Safety Administration
for whether it alerts drivers sufficiently when their attention wanders.
And the company’s Full Self-Driving, which is only partial self-driving
and has drawn criticism for misleading drivers with the name, has come
under scrutiny for its tie to accidents in low-visibility conditions
like when there is sun glare.
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Tesla vehicles line a parking lot at the company's Fremont, Calif.,
factory on Sept. 18, 2023. (AP Photo/Noah Berger, file)
 Another challenge to Tesla, which
once dominated the EV business: It is facing fierce competition for
the first time.
Earlier this year, Chinese EV maker BYD announced it had developed
an electric battery that can charge within minutes. And Tesla’s
European rivals have begun offering new models with advanced
technology that is making them real Tesla alternatives just as
popular opinion has turned against Musk. The Tesla CEO has alienated
potential buyers in Europe by publicly supporting far-right
politicians there.
Tesla said Tuesday that quarterly profits fell from $1.39 billion to
$409 million, or 12 cents a share. That’s far below analyst
estimates. Tesla’s revenue fell from $21.3 billion to $19.3 billion
in the January through March period, also below Wall Street’s
forecast. Tesla’s gross margins, a measure of earnings for each
dollar of revenue, fell from 17.4% to 16.3% .
Tesla has said it will be hurt less by the Trump administration's
tariffs than most U.S. car companies because it makes most of its
U.S. cars domestically. But it won’t be completely unscathed. It
sources some materials for its vehicles from abroad that will now
face import taxes.
Tesla warned in announcing its results that tariffs will hit its
energy storage business, too.
Retaliation from China will also hurt Tesla. The company was forced
earlier this month to stop taking orders from mainland customers for
two models, its Model S and Model X. It makes the Model Y and Model
3 for the Chinese market at its factory in Shanghai.
The company’s side business of selling “regulatory credits” to other
automakers that fall short of emission standards boosted results for
the quarter.
Tesla generated $595 million from credit sales, up from $442 million
a year ago.
The company generated $2.2 billion in cash flow versus $242 million
a year earlier.
Morningstar analyst Seth Goldstein said earlier reports of plunging
sales that had tanked the stock made the quarterly results almost
predictable.
“They’re not particularly surprising given that deliveries were
down,” he said. “It was good to see positive cash flow.”
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