Elon Musk to step away from US government role as Tesla sales tumble

Elon Musk has admitted in Tesla’s most recent earnings call that revenues are down for the first time in over a decade, with experts blaming the electric car giant's drop in sales on the CEO’s own “toxicity”.

Automotive earnings fell by as much as 20 per cent last year, with overall profits down nine per cent, making the situation far more dire than some analysts were expecting. This mirrors an overall drop in sales, with the number of new Tesla models being registered in 2024 dropping to 1.79 million from 1.81 million the year prior.

Tesla blamed the dip in profits on slow deliveries, of which it stated that it would continue to streamline the production process – particularly for more bespoke models (i.e those ordered without the base colour, wheels etc.).

Despite this, Musk appealed to investors, claiming that the firm isn’t “on the ragged edge of death, not even close. But there are some challenges, and I expect that this year will be, there will probably be some unexpected bumps this year. But I remain extremely optimistic about the future of the company.”

Tesla’s dip in sales cannot simply solely be attributed to sluggish deliveries; EV demand, while growing, is not accelerating at the pace that was expected a few years ago. That’s not to mention the slew of rivals to Tesla’s line-up that are now available to buyers, offering similar levels of technology and range, which were once some of the firm’s key differentiators.

Then, of course, there’s the crater of controversy surrounding Musk himself; speaking to Auto Express, Professor of Business Economics at the University of Birmingham, David Bailey, said that “Tesla is getting a hammering, largely due to the toxicity of Elon Musk, but also the fact that the competition has heated up, especially from China and the likes of BYD.”

This is even something Musk himself admitted during the conference, stating that: “As some people know, there's been some blowback for the time that I've been spending in government with the Department of Government Efficiency. I think the work that we're doing there is actually very important for trying to rein in the insane deficit that is leading our country to destruction.”

In fact, Musk appears to be so aware of how his political actions may be impacting the success of the EV firm, he confirmed in the call that “starting next month, May, my time allocation to DOGE will drop significantly. I’ll have to continue doing it for the remainder of the President's term…but starting next month, I'll be allocating more of my time to Tesla”.

Can Tesla sales recover?

Nevertheless, Bailey believes that a recovery for Tesla “requires Musk’s departure” altogether, despite the CEO’s enigmatic personality being one of the main things that drew buyers to the brand in the first place. He continued, saying: “A recovery is possible by focusing on getting [another] mass market car to market and, like the CEO of Ryanair once said, by 'trying not to p**s our customers off so much’.”

Ultimately, it’s unfair to pin the entirety of Tesla’s recent losses on Musk himself – there are several other factors keeping the firm from extending its EV lead. That said, Tesla is putting huge emphasis on its forthcoming Cybercab self-driving taxi, which is set to make its debut in Austin, Texas, in June of this year.

Whether this will be able to stimulate interest and optimism in the Tesla brand is another question altogether, however, Musk himself predicts that there will be “millions of Teslas operating [fully] autonomously in the second half of next year”.

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