Musk cuts politics to refocus on Tesla

Tesla CEO Elon Musk announced that he will significantly reduce the time he currently spends on political engagements with the Trump administration in order to devote more attention to running the company. The news came as Tesla faced declining car deliveries and investor unease, with shares surging 5.5% in after-hours trading following Musk’s remarks.

The company's aging vehicle lineup has encountered sales challenges, particularly in California, its largest U.S. market, leading to protests, showroom vandalism, and an increase in trade-ins. Investors have grown wary amid concerns that Musk's political involvement, including his leadership in the Department of Government Efficiency aimed at reducing federal employment, has adversely impacted Tesla’s brand and operational performance.

Despite these setbacks, Tesla reported core auto business profitability that exceeded dire expectations and reaffirmed its roadmap to produce an affordable car by the first half of 2025. However, the EV maker warned that it would need to revise its growth forecast in three months due to uncertainties caused by shifting global trade policies and evolving cost structures in both the automotive and energy sectors. Tariff tensions have also complicated the situation. Following a rise in U.S. tariffs on China-sourced components to 145%, and reciprocal Chinese tariffs, Tesla halted some component imports and suspended new orders for its Model S and Model X in the country.

On a positive note, Tesla's first-quarter margins improved unexpectedly, with production and sales costs dropping by over 17% year over year. Additionally, plans for a robo taxi fleet in Austin, Texas, set to launch in June, remain on schedule despite ongoing regulatory challenges and safety concerns.

With Tesla’s stock having nearly halved from its December peak and further declines in deliveries expected in 2025, the company’s near-term outlook remains uncertain.