"Starting early next month, in May, my time allocation to DOGE will drop significantly," Elon Musk said during Tesla's Q1 2025 earnings call on April 22, promising, "I will be allocating far more of my time to Tesla."
The commitment came after months of criticism that Musk's political role in the White House’s Department of Government Efficiency distracted from Tesla's core operations. Though Tesla TSLA shares rallied in after-hours trading, investors say the damage may already be done—and that Tesla's deeper challenges are far from over.
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Q1 Earnings Reveal Sharp Declines
Tesla reported in its Q1 earnings release that its Q1 revenue came in at $19.34 billion, falling short of the $21.4 billion consensus estimate. Net income dropped 71% year over year to $409 million, and automotive revenue declined by 20%.
The company attributed the drop to reduced delivery volumes, higher operating costs, and increased inventory.
Tesla also confirmed that average selling prices declined due to discounting, which has become a key strategy amid rising competition in the EV market. Despite Musk’s renewed focus, no updated financial guidance for 2025 was issued.
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Reddit Investors React With Skepticism
"Too late dude. The damage is done. If you think Q1 is bad, just wait for Q2," one retail investor wrote on "r/WallStreetBets," reflecting widespread skepticism following Tesla's earnings release. Another warned that "the lack of sound fundamentals will cause regression to its P/E value," expressing concern over the company's innovation pipeline.
"He needs to focus on fixing Tesla's fundamentals," said Bilaal Dhalech, a retail investor interviewed by Business Insider on April 23, expressing cautious optimism tempered by frustration. He pointed to the need for stronger operational discipline and a more competitive product lineup.
Wall Street Slashes Price Targets
Multiple analysts cut their outlooks following the earnings miss. On April 23, Goldman Sachs TSLA lowered Tesla's price target from $260 to $235, explaining that they "lower estimates to reflect reduced vehicle volumes."
Business Insider reported that RBC Capital Markets dropped its target to $307 from $314, flagging risks from global tariffs and declining battery storage margins. Cantor Fitzgerald cut its projection to $355 from $425, referencing macroeconomic uncertainty and brand volatility.
Brand Fallout Lingers Amid Political Ties
Tesla's brand image is taking a hit, with Musk's political stances impacting sales. In Europe, Tesla lost its top spot to Volkswagen, according to JATO. In the U.S., a Pew Research Center survey conducted from Jan. 27 to Feb. 2, and published on Feb. 18 found 54% of adults view Musk unfavorably, with 85% of Democrats holding negative views.
Analysts say Musk's political alignment is polarizing consumers, hurting the brand's traditional appeal and leading to declining sales in key markets like the U.S., Europe, and the UK.
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