Silke Mayr Elon Musk is set to reduce his political involvement after Tesla faces significant challenges, including a sharp drop in sales and profits. Musk, who has led the Department for Government Efficiency (Doge) since last year, has announced plans to scale back his role within the department. This decision comes as he aims to concentrate more on addressing Tesla’s internal issues, which have been exacerbated by global trade tensions and the ongoing effects of tariffs. Musk stated he will now dedicate only one to two days per week to his government role, with his involvement contingent on its ongoing productivity.
Musk Reduces Political Involvement Amid Tesla’s Struggles
Elon Musk’s decision to reduce his time at the Department for Government Efficiency (Doge) marks a significant shift in focus from politics to Tesla’s immediate needs. Musk, who took charge of the department last year, was responsible for leading efforts aimed at cutting U.S. government spending. However, recent downturns in Tesla’s performance have led Musk to reassess his priorities. Starting next month, he plans to reduce his time at Doge to just one to two days a week, ensuring he has the necessary time to manage Tesla’s internal challenges.
Musk emphasized that his role at Doge would continue only as long as it remains productive for the U.S. government, suggesting that his political involvement will be secondary to Tesla’s recovery efforts.
Tariffs and Trade Tensions Increasing Strain on Tesla
The challenges facing Tesla have been compounded by the ongoing impact of tariffs, particularly those imposed by former President Donald Trump. Although Tesla manufactures vehicles in the U.S., the company relies heavily on Chinese components for its production process. The tariffs have added significant strain to Tesla’s supply chain, driving up costs and squeezing the company’s already thin profit margins.
Tesla has warned that continued changes in trade policies could further disrupt its supply chains and inflate operational expenses. Musk himself has been vocal about the challenges these policies pose to Tesla, particularly as the company navigates the complexities of global trade. He has previously clashed with government officials, including trade advisor Peter Navarro, over the impact of tariffs on Tesla’s operations.
Despite these hurdles, Musk remains somewhat optimistic, noting that Tesla’s regional supply chains in North America, Europe, and China have helped mitigate some of the negative effects of the tariffs. However, he acknowledged that the company’s low profit margins make the situation increasingly difficult.
Musk Shifts Focus to Tesla Products Amid Internal Criticism
As Tesla faces increasing internal and external pressure, Musk’s attention is returning to the company’s products. In recent remarks, Musk criticized Peter Navarro for downplaying Tesla’s role in manufacturing vehicles, calling him a “moron” for suggesting that Tesla merely assembles, rather than innovates in, the automotive industry.
The criticisms reflect broader internal debates at Tesla about the company’s direction. Georg Ell, a former Tesla director in Western Europe, suggested that Musk should focus on areas where his leadership excels. Ell, who now heads a language tech company, described Musk as highly focused but resistant to outside perspectives. He believes that if Musk refocuses on Tesla’s product quality, public opinion will shift back in the company’s favor.
Tesla has also been leaning into artificial intelligence (AI) as a driver of future growth. Despite investor skepticism and a significant drop in stock value — down around 37% this year — the company saw a small rebound of over 5% in after-hours trading following its most recent financial results. This growth is being partially attributed to the company’s increased focus on AI as a key component of its long-term strategy.
Investors remain cautious about Tesla’s future, with many citing the company’s struggles with market conditions, policy pressures, and increasing competition. Dan Coatsworth, a market analyst at AJ Bell, highlighted that investor expectations for Tesla were particularly low ahead of the company’s most recent update. However, Coatsworth also warned that global supply chain risks and rising competition continue to pose serious threats to Tesla’s future.
Tesla’s stock has faced significant volatility, and with global markets becoming increasingly competitive, the company must address its internal issues to maintain investor confidence. Musk’s shift in focus to Tesla’s core business, rather than political involvement, may be seen as a necessary step toward ensuring the company’s long-term sustainability.
Elon Musk’s decision to reduce his political involvement and shift focus back to Tesla’s core operations comes at a crucial time for the company. As Tesla battles with declining sales, trade tensions, and mounting operational costs, Musk’s leadership will be pivotal in navigating these challenges. While tariffs and market pressures continue to threaten the company’s prospects, Musk’s commitment to AI-driven innovation and improving product quality may help steer Tesla toward a more stable future.