Tesla share price skyrockets 8% despite 71% drop in Q1 net profit after CEO Elon Musk vows to reduce DOGE time

Tesla share price leapt nearly eight per cent on Wednesday, April 23, after CEO Elon Musk said he would step back from his involvement in the Trump administration to focus on running his companies. Tesla announced its first quarter results yesterday reporting a 71 per cent drop in net profit, however, it's profit for its core auto business surpassed Wall Street estimates.

Tesla CEO Elon Musk vowed to pull back “significantly” from his work with the US government and pay more mind to Tesla, assuaging investors concerned about the carmaker’s worst quarter in years. The electric vehicle (EV)-maker's stock climbed over three per cent when Wall Street opened today. The stock is down 10 per cent in one month and 35 per cent year-to-date (YTD).

Musk said he will devote “far more” of his time to Tesla starting next month, saying during an earnings call Tuesday that his work establishing the so-called Department of Government Efficiency (DOGE) will be “mostly done.”

Musk said he will likely continue to work with Trump’s administration for the remainder of the president’s term, on a more limited basis. He is poised to hit the 130-day limit for his role as a special government employee as early as next month.

Tesla Q1 Results

Tesla’s stock picked a fresh uptrend despite weak first-quarter results that underscored weakness in the EV giant's core automotive business and tariff headwinds for its expanding energy operations. The carmaker missed analysts’ estimates for both revenue and earnings, and management backed away from earlier predictions that vehicle sales will return to growth this year.

Tesla posted a net profit of $409 million for the January–March period, falling short of analyst expectations. Revenue for the quarter declined nine per cent year-on-year to $19.34 billion, compared to consensus estimates of $21.11 billion. Operating income stood at $399 million for the period.

Tesla also withdrew its previous guidance for 2025, citing elevated uncertainty around trade policy and demand trends. Wall Street has soured on Musk’s political activities, which have alienated core customers and done serious damage to Tesla’s brand. Musk's fortune shrunk by $116 billion in Q1, his biggest quarterly drop on record, according to Bloomberg Billionaires Index.

Tesla will revisit its outlook for volume when reporting second-quarter results. The plan for capital expenditures this year was also pared, with the automaker warning that changes in trade policies may set back its timelines for unspecified projects.

Trump tariff's impact on Tesla

US President Donald Trump's moves to hike duties on imported goods have spooked investors and raised concerns of higher prices for US consumers. Trump’s tariffs have compounded challenges, even though all Tesla vehicles sold in the US are assembled domestically. Duties on auto parts shipped in from Canada and Mexico will take effect next month and will hit Tesla's profitability.

Musk told analysts that Tesla has been working on localizing its supply chains to help ease logistics and minimize the risks of higher costs. “We are, I think, the least affected car company with respect to tariffs,” he claimed. “That puts us in a stronger position than any of our competitors," added Musk.

In its earnings presentation, Tesla warned that “changing political sentiment could have a meaningful impact on demand for our products in the near term.” Elon Musk also told analysts that protests against his company are “organized and paid for,” without offering details or evidence.

Elon Musk is betting Tesla’s future on autonomy and artificial intelligence, with the company developing a driverless taxi called Cybercab and the humanoid robot Optimus. Tesla said it prepared its factories for the launch of new models while switching production lines over for the refreshed Model Y.

With inputs from Bloomberg and Reuters