Could Musk’s Doge exit change Tesla’s path?

The Tesla CEO has led the Department of Government Efficiency (Doge), a Trump-era initiative aimed at cutting government inefficiency, since the start of Donald Trump’s second term as US president. Now, the billionaire has taken to X to announce that his time as a government employee is coming to an end.

“As my scheduled time as a Special Government Employee comes to an end, I would like to thank President @realDonaldTrump for the opportunity to reduce wasteful spending,” the billionaire wrote on X, his social media platform. “The Doge mission will only strengthen over time as it becomes a way of life throughout the government.”

Why is Elon Musk leaving Doge?

Musk’s 130-day term with Doge, set to expire around 30 May, is ending without direct discussion with President Trump, according to a Reuters report citing a White House official.

The Associated Press news agency reported Musk is stepping down over disagreements with Trump’s budget bill. Despite criticism over its cost-cutting methods and claimed savings, the administration says Doge’s work will continue.

Elon Musk leaving Doge comes amid loss for business

Musk’s departure comes as his businesses face growing pressure. He previously said that after his temporary government role ended, he would return his focus to Tesla and rocket company SpaceX.

His decision to leave the Trump administration follows international backlash over his political alignment with right-wing and far right figures in the US and beyond. In April, protests against Musk and Trump drew thousands across the US, Canada, and Europe.

Since taking on the government role, Musk’s support for funding cuts has sparked public outrage and appears to have affected his business interests.

Tesla sales continue to plummet

Europeans are buying fewer Tesla’s than before despite a growing demand, according to a recent study by the European Automobile Manufacturers’ Association, in keeping with trends seen in recent months.

The automotive lobbying and standards group said that just 5,475 Tesla cars were sold in April across mainland Europe, down 52.6% from the same month last year.

In the first quarter of this year, Tesla sales were down 46.1% when compared with the first four months last year. This means only 41,677 cars were sold over the course of the first four months of this year.

The study corresponds with data from earlier this month that showed that Tesla sales in Germany and the UK fell to their lowest point in more than two years in April, falling 62% and 46% year-on-year respectively.

UK drivers are buying Chinese models over Teslas

Two Chinese manufacturers, Jaecoo and Omoda, only emerged onto the UK scene last year, but they have both now outsold the once-dominant EV brand.

Tesla sold just 512 cars in the UK in April, according to new figures from the Society of Motor Manufacturers and Traders (SMMT). In contrast, Jaecoo and Omoda, both owned by Chinese automotive giant Chery, sold 1,053 and 910 cars, respectively.

Their rise reflects a broader trend in Europe, where Tesla is facing waning popularity. A mix of political controversy surrounding Musk and increasing competition from Chinese and European carmakers has pushed Tesla into what some analysts are calling a “brand crisis.”

Why has Tesla been lapped?

While Tesla focuses exclusively on electric cars, both Jaecoo and Omoda offer a wider range, including hybrids and petrol models, appealing to a broader set of buyers. Meanwhile BYD, Tesla’s more established Chinese competitor, surged ahead too – they sold 2,511 cars in the UK in April, a 650% year-on-year increase.

Across Europe, Tesla sales have been in freefall, with double-digit drops reported in several countries in April. In Germany, for example, Tesla only sold 885 cars in April, down 45.9% from a year earlier. This despite the release of an updated Model Y – its top-selling car.

Tesla has responded by offering incentives such as up to two years of free Supercharging for some Model Y cars in the UK.

Shares in the company fell 2.7% on 6 May, deepening its losses for the year to 28%.

Why is there a decline in sales?

A significant factor behind this decline seems to be the polarising effect of Musk. His political views have raised eyebrows in markets where Tesla has typically attracted a progressive, eco-conscious audience.

Tesla is also facing heightened competition from domestic EV manufacturers, especially in China. Tesla shipments dropped by 49% in February from a year earlier, largely due to the rise of BYD. This has put intense pressure on Tesla, whose dominance in the Chinese market has long been a cornerstone of its global strategy.

Another big factor to this decline in share prices is that Tesla’s stocks were arguably overpriced from the start. In May 2020, Musk himself shared his opinion on X that the company’s stock was too high.

Right after the US presidential election, Tesla’s stock shot up by 32%, adding $250bn to its market value. To put that into perspective, that’s the same as the entire value of Toyota, the second-largest carmaker in the world.

Another worry is that Tesla’s main business operations might be facing issues. In January, the company reported a 23% drop in operating profits for the last quarter of 2024 compared to the same time the previous year. Tesla attributed this decline to lower average selling prices across its Model 3, Model Y, Model X, and Model S models.

Now that Musk is leaving his US government role, the car industry is watching to see whether refocusing on his prized EV brand will revive sales.

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