Elon Musk’s recent decision to reduce his involvement with DOGE comes amid rising tensions and controversies, including protests and vandalism at Tesla stores, making it clear that his focus is shifting back towards Tesla.
Despite this apparent change, Tesla’s electric vehicle (EV) business is in dire need of a breakthrough product, yet nothing significant seems to be on the horizon.
In fact, Tesla just posted its worst quarterly results in four years, with a 9% decline in sales and a staggering 71% drop in income, which was largely impacted by a 20% drop in automotive revenues.
Faced with tariffs and ongoing market challenges, the company chose not to provide sales targets for the remainder of the year.
Interestingly, Tesla’s stock has rallied, increasing by 9% since earlier this week, as investors appeared optimistic about Musk stepping back into a full-time CEO role at Tesla, moving away from his recent commitments to the federal government and DOGE—while still juggling his roles at SpaceX, xAI, and Neuralink.
However, many see this change as not the panacea that investors might hope for.
Tesla’s current challenges—including declining profit margins, increased competition, and a damaged brand image—seem deeply rooted and not easily resolved just by Musk’s increased presence at the helm.
Some experts imply that Musk has exhausted his innovative ideas for addressing these issues, instead focusing on the uncertain future of robotaxis and humanoid robots.
For now, Tesla continues to generate most of its profits from selling cars and battery storage systems, both of which are facing precarious futures.
The company lacks successors to its popular models, with the Cybertruck—its latest offering—considered one of the biggest flops in automotive history.
On top of this, the upcoming 145% tariff on imported Chinese battery cells threatens to significantly impact Tesla’s battery pack business, one of the few bright spots reported last quarter.
During the recent earnings call, Musk attempted to downplay the company’s struggles, insisting, “We’re not on the ragged edge of death, not even close.
There are some challenges, and I expect that… there will probably be some unexpected bumps this year.”
Brand experts suggest that the current issues with Tesla go beyond product offerings; they are deeply intertwined with Musk’s public persona and actions.
Sue Benson, CEO of The Behaviours Agency, commented, “It’s too late to separate man and brand. In the meantime, it’s lost its EV advantage.”
Concerns are mounting as Musk’s political forays have taken considerable time, especially since Trump’s return to office.
Recent surveys conducted show that a considerable portion of the public—60%—holds an unfavorable view of Musk, and 58% disapprove of his work with DOGE.
A YouGov/Yahoo News survey further revealed that 67% of Americans wouldn’t consider buying or leasing a Tesla, with many attributing their sentiments directly to Musk’s controversial reputation.
Sue Benson drew parallels between Tesla’s situation and Volkswagen’s infamous emissions scandal, which profoundly impacted VW’s finances and image.
“That’s where Tesla is now… except this time, it’s not about the product. It’s about the person.”
Musk’s commitments to multiple companies—like SpaceX, The Boring Company, Neuralink, and now his recent responsibilities with DOGE—have raised questions about his availability for leadership at Tesla.
“He said what he thought people wanted to hear,” noted Ross Gerber, CEO of Gerber Kawasaki Wealth and Investment Management, who holds shares in Tesla but has pushed for Musk’s resignation.
“But he’s still going to go run xAI, still be involved with DOGE… What’s changed?”
Currently, Tesla’s most urgent task is reversing its recent sales decline, notably a 13% drop in its EV sales during the first quarter.
Alarmingly, the company’s automotive revenue decreased by 20%, indicating fewer vehicle sales at lower price points.
Tesla’s reported profit of $409 million was primarily due to regulatory credits, which it earns from other automakers complying with pollution rules.
Without the $595 million in credits sold during the quarter, the company would have reported a net loss.
Instead of launching new models to reverse these trends, Musk and his engineering team are preparing to release refreshed, cheaper versions of existing models like the Model Y and Model 3.
These new variants, set for a 2025 launch, will only have minor upgrades, essentially being refreshes rather than entirely new designs.
Experts argue that without dramatic changes in design, Tesla risks becoming stagnant, as pointed out by Glenn Mercer from GM Automotive.
He argues that treating existing models simply as refreshing iterations means they are merely “zombies” in the automotive marketplace.
Current industry competition is stiff—from domestic brands like General Motors and Hyundai to rising stars like BYD in China—making it clear that Tesla’s market share has plummeted from 75% to 43% over recent years.
Historically, Musk boasted that Tesla would sell 20 million EVs annually by the end of the decade, but he has quietly abandoned this ambitious target, now redirecting focus on robotaxi rides and other AI services.
Musk reiterated this week, “The future of the company is fundamentally based on large-scale autonomous cars and large-scale, large volume, vast numbers of autonomous humanoid robots.”
Yet, the challenge remains that Tesla has yet to prove it can achieve these ambitious technological feats.
Counterparts like Waymo have established themselves as leaders in the robotaxi sector with vehicles that possess advanced sensor and computing technologies, far surpassing what Tesla intends to implement.
Additionally, Tesla’s venture into humanoid robotics with its Optimus robot has raised skepticism regarding its viability and effectiveness compared to established competitors.
Amid these challenges, some investors believe that a renewed focus on producing new products is essential.
Gerber envisions that the Cybercab model Tesla revealed could have been designed as an affordable EV rather than a robotaxi without practical controls.
He emphasized, “Cybercab should have just been a two-door, small $25,000 Tesla. It’s a cool-looking car, which could attract newcomers.”
The looming tariffs introduced by President Trump add further uncertainty to Tesla’s operational landscape.
While Tesla benefits compared to other automakers that source vehicles from outside the U.S., it still relies on imported materials and components from abroad, meaning higher costs are unfortunately on the horizon.
These tariffs will likely hit Tesla’s energy generation and storage business directly, which saw a remarkable 67% revenue increase in Q1, amounting to $2.73 billion.
However, the 145% tariff on Chinese goods, specifically lithium-iron-phosphate battery cells, threatens to increase costs significantly for Tesla, who relies heavily on these products.
Currently, the company plans to manufacture LFP cells domestically through a partnership with CATL at its Nevada gigafactory—but these efforts are hindered by the abrupt tariff impositions.
Tesla’s CFO Vaibhav Taneja acknowledged the hurdle, stating they’re working on establishing local manufacturing for LFP cells but are constrained by current capabilities.
Worse still, the imposition of tariffs could mean skyrocketing prices for Tesla’s energy products, making the market less appealing for utilities, who may shy away from purchasing products at inflated rates.
As concerns swirl around Musk’s ability to effectively steer Tesla back onto a profitable course, many wonder if his newfound focus will yield meaningful results.
As Gerber stated, “I just don’t see this as any big change for the better at Tesla. It’s not going to solve their problems.”
image source from：https://www.forbes.com/sites/alanohnsman/2025/04/25/elon-musk-is-running-out-of-ideas-to-save-tesla/
