Musk to step back from Trump administration role as Tesla profits plunge
April 23, 2025 by Siobhan Doyle
Car changing is a big deal
Elon Musk plans to cut back significantly on his role in the US government to focus on Tesla after the electric car firm reported a staggering 71% dip in profits.
The CEO has led the Department for Government Efficiency (Doge) since Donald Trump was sworn in as US President again back in January. Now, Musk has said his “time allocation to Doge” will drop to one to two days a week so that he can focus on Tesla.
Musk said he’ll continue to do what he referred to as “critical work” at Doge “for as long as the president would like me to do so and as long as it is useful”.
This comes after Tesla saw a 9% decline in revenue for the first quarter of 2025, while profits fell by 71% in that same period. Shares in the company had also shed about 37% of their value this year as of market close on 22 April. However, they rose by 5% after Musk said he would spend more time at his prized EV brand.
Some Tesla investors have accused Musk of being too distracted by his role at Doge to effectively run Tesla. The EV company has also faced protests over Musk’s involvement in Doge, a federal government jobs-cutting advisory body that has divided the US.
Temporary US government employees, such as the tycoon billionaire, are normally limited to work 130 days a year which, if counted from the day of Trump’s inauguration, is set to expire on 30 May. It’s unclear when Musk will step down completely, but Trump said earlier this month that he would keep Musk “as long as I could keep him”.
What’s the story so far in the Tesla saga?
“I’m going to buy a brand-new Tesla to show my confidence and support for Elon Musk, a truly great American,” Trump said on 10 March about the South Africa-born entrepreneur, following a plunge in the company’s share price.
The next day, on 11 March, the South Lawn of the White House was turned into a temporary Tesla showroom, with Trump calling the vehicles “beautiful” on camera, and paying particular praise to the outlandishly designed Cybertruck. He eventually settled on a red Model S.
Trump may claim to love Musk’s ‘baby,’ but some do not. Tesla shares dropped 15% on 10 March – its worst day on the market since September 2020. This sharp decline came amid criticism of the Tesla CEO, and his ties to right-wing figures, including British anti-Islam campaigner and far-right activist, Tommy Robinson, and the Alternative für Deutschland (AfD) party in Germany.
But is it truly all doom and gloom for Tesla because of Musk’s antics and his controversial relationships? It’s much more nuanced than that.
Year-to-date, Tesla’s stock has seen a significant 30% decline, making it the second-worst-performing stock in the S&P 500 index. This downturn is due to a range of factors – not just the frequent bad press surrounding Musk. These include increased competition, production challenges, and broader economic pressures.
Where have Tesla sales been dropping?
Tesla’s biggest sales slump comes from Europe, where its once-dominant position is now under pressure.
In Germany alone, sales plunged 76% in February compared to the previous year, with just 1,429 units sold, according to the German Federal Motor Transport Authority. Tesla’s decline in the country is even more pronounced when you consider that in February 2025, 35,949 electric vehicles overall were newly registered in Germany – 30.8% more than in the same month last year.
It’s not certain if there’s a direct correlation between Tesla sales dropping in Germany and Musk’s known support for Germany’s AfD, as sales have been declining over the past year. However, sales dropped exponentially once Trump rejoined the Oval Office. It’s hard to ignore this when overall EV sales are up across the country.
Other countries in Central Europe and Scandinavia also saw sharp declines: the Netherlands dropped by 24%, Sweden by 42%, Norway and Denmark by 48%, France by 45%, Italy by 55%, and Portugal by 53%. Even Spain, a more stable market, saw a 10% dip.
This downward spiral isn’t just confined to Europe. In Australia, the situation is even bleaker, with sales plunging by 72% in February compared to the previous year. Many Tesla owners down under are offloading their EVs or using bumper stickers to distance themselves from the carmaker.
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.
In fact, sales in Europe had already dropped by 45% in January, suggesting that Musk’s political stance may have played a role in alienating some customers, further driving this decline.
Other factors behind the decline
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, a local EV company that has gained significant traction. 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 sales 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.
Tesla stock price is too high imo
— Elon Musk (@elonmusk) May 1, 2020
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.
At its peak, Tesla’s shares were trading at 112 times expected earnings – higher than the S&P 500, which was around 25 times, and even higher than Tesla’s own five-year average of 93. For comparison, Ford’s shares are valued at only eight times its expected earnings.
This sky-high valuation came from the huge growth expectations people had for Tesla, especially with Musk’s promises of a budget electric car and a fully self-driving ride-hailing service.
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 vehicles.
Overall, new vehicle deliveries for the year were down compared to 2023, marking the first year-on-year decline the company has experienced.
Trump’s tariffs on China also weigh heavily on Tesla. Although the cars the EV brand sells in its home market are assembled in the US, it depends on many parts made in China. “Rapidly evolving trade policy” could hurt its supply chain and raise costs, according to the company.
Musk said he thought Tesla was the car company least affected by tariffs due to its localised supply chains in North America, Europe and China. But he added that the tariffs were “still tough on a company where the margins are low”.
It’s not all doom and gloom though
However, all is not lost for Tesla. Despite the struggles across much of Europe and other international markets, the company is still seeing growth in certain regions. In the UK, Tesla sales jumped by 21% in February, with 4,000 Teslas sold, defying the broader European trend.
Meanwhile in Ireland, Tesla is bucking the downward trajectory altogether. The number of newly registered Tesla Model 3 cars in the country increased by 42% during the first three months of the year, according to data from the Society of the Irish Motor Industry (SIMI). This shows there’s still a strong appetite for Teslas in some markets.
Ultimately, Tesla may need to balance Musk’s polarising persona with the need to appeal to an increasingly competitive global EV market to regain its lost shares. While setbacks in Europe and Australia are concerning, the growing success in places like the UK and Ireland give hope that the brand can weather the storm, granted it can regain customer loyalty and adapt to the changing market.
Car change? Carwow!
Looking for a new set of wheels? With Carwow you can sell your car quickly and for a fair price – as well as find great offers on your next one. Whether you’re looking to buy a car brand new, are after something used or you want to explore car leasing options, Carwow is your one stop shop for new car deals.
Click here to follow us on WhatsApp, where you can keep up-to-date with all the latest news, reviews, advice guides and videos.