Elon Musk Commits to Significantly Reduce His Work in the U.S. Government, Refocusing on Struggling Tesla, Easing Investor Concerns, TSLA and Dogecoin Surge
(Background: DOGE no longer? Musk drastically lowers 2026 budget cut target, from 2 trillion to 150 billion)
(Additional context: Musk’s live streaming of playing “Path of Exile 2” resulted in a backlash, leading to his abrupt exit with critics commenting “You will die alone.”)
Tesla’s Soul Figure Elon Musk Finally Responds to Departure from DOGE
According to Bloomberg, Musk recently announced that he will “significantly” reduce his involvement with the U.S. government’s Department of Government Efficiency (abbreviated as DOGE), starting next month, which has triggered a surge in both TSLA and Dogecoin.
Musk Returns to Tesla
Recently, Musk’s involvement with DOGE has severely undermined investor confidence in Tesla. In a recent earnings call, he vowed to invest “far more time than ever” into Tesla, stating that his phase of work in the government department would be “substantially completed”.
In recent years, besides leading Tesla and SpaceX, Musk has also made headlines by acquiring and managing the social media platform X (formerly Twitter) and accepted an invitation from the Trump administration to lead the newly established Department of Government Efficiency. Many investors and analysts believe that Musk’s work in Washington has distracted him from managing Tesla, especially as the company has been grappling with declining sales, rising costs, and pressures from Trump-era tariff policies. Additionally, Musk’s involvement in Trump’s political activities and stances has sparked backlash and protests from consumers.
Market Reaction
The market reacted positively to Musk’s commitment to return, despite Tesla’s first-quarter earnings report (adjusted earnings per share of 27 cents) falling short of analysts’ expectations, and the company reportedly abandoning plans to mass-produce an affordable version of the Model Y in 2026, leading to a missed expectation of sales recovery in 2025. However, after Musk announced his refocus on Tesla, the company’s stock price rose by 5.1% in after-hours trading in New York, briefly surpassing the $250 mark.
In the cryptocurrency sphere, Dogecoin, which is associated with Musk, also surged by 12% today, indicating that the crypto market views Musk’s return to Tesla as a potentially better choice for the DOGE token than remaining in the U.S. efficiency department (also referred to as DOGE).
Analysts’ Perspectives
Several market analysts welcomed Musk’s decision to shift his focus back to Tesla. Gene Munster, managing partner at Deepwater Asset Management, remarked that in the context of declining automotive demand, Musk’s exit from government work is “a fairly simple math problem”. “The core element needed to heal the Tesla brand is his withdrawal from DOGE; this is a truly necessary move,” he stated.
Brian Mulberry, client portfolio manager at Zacks, also expressed that hearing Musk would soon “return to his normal role as CEO of the company” is undoubtedly “welcome news,” reflecting a general sentiment on Wall Street: the challenges facing Tesla require the full dedication of its founder and CEO.
During his prior political period, Dan Ives, an analyst at Wedbush Securities, wrote in an early report this week that due to the brand damage caused by Musk (and his DOGE work), Tesla might face “permanent demand destruction of 15%-20% among potential future buyers,” indicating a potential loss of customers politically.
Future Outlook
Despite facing numerous challenges, Tesla and Musk continue to bet the company’s future on technological innovation, particularly in autonomous driving, artificial intelligence, and robotics. With ongoing advancements in Full Self-Driving (FSD), many potential Tesla investors still see a promising outlook. Ark Invest founder Cathie Wood has increased her stake during this year’s stock slump, demonstrating that despite Musk being mired in criticism, tech enthusiasts still rate the company’s prospects highly.
Tesla reiterated that new vehicle plans, including more affordable models, are still on track, with production expected to begin in the first half of this year, countering earlier reports about delays. Although details about the upcoming models remain sparse, VP of Vehicle Engineering Lars Moravy stated that these new vehicles will be similar to other Tesla models, and the company noted that it has utilized the downtime from the Model Y redesign to prepare the factory for the launch of new models.
Additionally, the highly anticipated Robotaxi (autonomous taxi) program is expected to launch in June in Austin, Texas, with an initial rollout of 10 to 20 vehicles, while the development of the humanoid robot Optimus is also underway. In summary, regardless of whether Tesla’s business is on track, Musk’s return is what makes investors believe that “Tesla remains strong”.
