Elon Musk's Tesla admits "political sentiment" may hurt the company
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Tesla acknowledged Tuesday that "political sentiment" may be undermining the company's financial performance and that tariffs are poised to do the same.
Why it matters: Tesla CEO Elon Musk — the world's richest person — has become a close ally and outspoken adviser to President Trump, unleashing a backlash on the company.
The automaker fell well short of expectations on earnings and sales in the first quarter amid growing signs that some customers are recoiling from the brand.
- First-quarter revenue totaled $19.3 billion, down 9% from a year earlier and short of S&P Capital IQ expectations of $21.3 billion.
- Net income was $409 million, down 71%.
Zoom in: "Uncertainty in the automotive and energy markets continues to increase as rapidly evolving trade policy adversely impacts the global supply chain and cost structure of Tesla and our peers," the company said in an earnings presentation.
- "This dynamic, along with changing political sentiment, could have a meaningful impact on demand for our products in the near-term."
The intrigue: Soon after the earnings presentation was released, Musk admitted on the company's conference call that Tesla was facing "blowback" from his Trump ties and said he'd be taking a significant step back from DOGE, likely starting in May.
- The comments addressed investor hopes coming into the day that the CEO would relinquish his role in Washington and refocus his efforts on Tesla.
What they're saying: "This was well communicated by Musk on this call in our view…needed to hear this tone and direction," Wedbush Securities analyst and longtime Tesla bull Dan Ives wrote on X.
- Ives had warned that Musk could do even worse damage to the Tesla brand by staying with DOGE longer.
Signs of the Tesla backlash are seen primarily in Tesla's automotive revenue, which was down 20% to $14 billion in the first quarter, compared with a year earlier.
- The company's generation and storage revenue rose 67% to $2.73 billion and services and other revenue increased 15% to $2.64 billion.
On tariffs, Tesla said its energy storage business would be impacted harder than its automotive business. Musk said he had voiced his belief in free trade directly to Trump but said he respected the president's decision to go in a different direction.
- "We are taking actions to stabilize the business in the medium to long-term and focus on maintaining its health," Tesla said in the presentation without providing specifics.
The big question: Will Tesla face an international backlash from China as Trump's trade war continues?
- Musk had good things to say about China on the company's earnings call. "I have a lot of respect for China. I think China's amazing actually," he said.
What we're watching: Tesla's stock has always been tied closely to the company's future ambitions.
- Musk said Tesla is on track to launch a robotaxi business in Austin, Texas, within months.
- He said the company would have "millions of Teslas operating fully autonomously" by the second half of 2026.
The impact: Tesla shares jumped in after-hours trading after Musk said he was taking a step back from DOGE.
- The stock was up 5.3% to $250.53 at 7:11pm.
Go deeper: Elon Musk says he's taking a step back from DOGE after Tesla "blowback"
