Elon Musk has confirmed he will significantly reduce his time commitment to the Department of Government Efficiency (DOGE), the controversial federal agency he heads, beginning next month. The news, delivered during Tesla’s first-quarter earnings call, arrived just as the electric car maker reported a steep 71% decline in profits year-over-year and missed Wall Street expectations, fueling analyst assertions that Musk’s polarizing government position has damaged Tesla’s brand.
Underscoring this sentiment, Tesla shares saw a near 5% lift in after-hours trading following the call, suggesting investor relief at Musk dialing back his Washington D.C. activities.
Tesla’s Q1 2025 financial report painted a challenging picture. GAAP net income landed at $409 million, a stark contrast to the $1.39 billion recorded the previous year. Total revenue also fell 9% to $19.34 billion, falling short of the $21.1 billion to $21.5 billion range analysts had projected.
Adjusted earnings per share came in at $0.27, missing the expected $0.41-$0.42 mark. Compounding the financial picture, vehicle deliveries decreased 13%, resulting in Tesla’s most difficult quarter since 2022.
While Musk attributed the slump to macroeconomic conditions, stating on the call, “Absent macro issues we don’t see any reduction in demand,” analysts like Wedbush’s Dan Ives were less convinced.
Prior to the earnings, Ives had described the situation as a “code red” moment, arguing “Musk needs to leave the government, take a major step back on DOGE, and get back to being CEO of Tesla full-time,” and estimating “potentially 15%-20% permanent demand destruction for future Tesla buyers due to the brand damage Musk has created with DOGE.”
Musk plans to cut his DOGE work to one or two days a week starting in May, though he stated on the earnings call, “I believe the right thing to do is to fight the waste and fraud and get the country back on track…I think it’s critical work.”
He later posted on X, his social media platform, “Not stepping down, just reducing time allocation now that DOGE is established.” His official status as a special government employee, limited to 130 days, is set to expire on May 30.
Concurrent with the DOGE news, Musk used the earnings call to promote Tesla’s future prospects, highlighting AI developments like the Optimus humanoid robot and accelerated plans for more affordable vehicle models, a move seemingly aimed at shifting investor focus away from the current turbulence.
DOGE’s Tumultuous Tenure
Since its formation under President Trump’s second term, DOGE has operated under a cloud of controversy. Its operational competence was questioned in February when its public website was found to have an openly accessible database, allowing public defacement that included a banner reading: “THESE ‘EXPERTS’ LEFT THEIR DATABASE OPEN.”
This followed the site’s initial launch displaying placeholder WordPress content. These technical missteps occurred as the administration reshaped the federal cybersecurity apparatus; CISA saw its role diminished amid budget cuts, and the State Department’s Global Engagement Center was effectively halted. A spokesman justified such moves as ensuring staff “carry out the elected commander in chief’s agenda, not weaken it.”
DOGE’s personnel choices also drew sharp criticism. Reports in late February detailed hires linked to online harassment group “The Com,” including teenager Edward Coristine and former Musk employee Christopher Stanley, who were allegedly granted access to CISA’s internal systems. Renowned security expert Bruce Schneier described the situation as “a National cyberattack,” focused on “the systematic dismantling of security measures that would detect and prevent misuse.”
Jacob Williams, an ex-NSA hacker, warned on LinkedIn that DOGE personnel “introduced code changes into multiple federal IT systems… not following the normal process for vetting and review.”
Expanding Influence Meets Internal Resistance
DOGE’s rapid expansion into sensitive government functions generated significant friction. A mid-April report described a joint DOGE-Palantir effort with the IRS to build a “mega API,” potentially centralizing access to vast amounts of taxpayer information via Palantir’s Foundry software platform, a system designed for large-scale data integration and analysis used across government and enterprise sectors.
This followed an April 7 court ruling allowing DOGE access to Treasury and OPM data. That access allegedly enabled AI systems deployed by DOGE to monitor federal communications for dissent.
An earlier, high-profile incident detailed in a February 7 report involved DOGE operative Marko Elez obtaining administrative control over critical Treasury payment systems (PAM and SPS, platforms managing trillions in federal payments annually) and making code changes. This contradicted initial statements from White House Press Secretary Karoline Leavitt, who had claimed, “DOGE’s access was read-only.” Elez’s access was reportedly revoked only after internal complaints.
This pattern of aggressive expansion eventually encountered pushback from within the federal bureaucracy. The IRS, for example, took steps to restrict DOGE’s view of taxpayer data, requiring anonymization, according to a February report citing internal documents stating, “Should access to I.R.S. systems that contain returns or return information become necessary… that access shall only be provided if it is anonymized.” By late February, multiple congressional committees had initiated inquiries or called for DOGE’s activities to be paused.
Concerns over conflicts of interest intensified following an April 18 report that Musk’s SpaceX was the leading contender for the “Golden Dome” missile defense contract. Musk denied the report on X, saying, “SpaceX has not tried to bid for any contract in this regard… If the President asks us to help in this regard, we will do so, but I hope that other companies (not SpaceX) can do this.”
Representative Donald Beyer voiced skepticism about Musk’s “inside access to non-public information and data,” concluding, “Any contracts awarded to him, or his companies, are suspicious.” The earlier March installation of “donated” Starlink satellite internet at the White House also fed into this narrative.
Global Brand Reputation Takes A Hit
The controversies appear to be affecting Tesla’s image abroad. A March 15 report detailed a 76% year-over-year plunge in Tesla’s German sales for February, which analysts linked to backlash against Musk’s public endorsement of Germany’s far-right Alternative for Germany (AfD) party.
A survey cited by German outlet T-Online found that 94% of local respondents had no intention of buying a Tesla. Significant sales drops were also reported in China and Australia around the same period. As Musk prepares to decrease his direct government engagement, the move follows a period where the convergence of his corporate interests and political involvement seems to have exacted a toll on his primary automotive venture.
