NEW YORK (AP) 鈥� Elon Musk says he鈥檒l be spending less time in Washington slashing government costs and more time running Tesla after his electric vehicle company reported a big drop in profits.
Musk said on a conference call with analysts Tuesday that 鈥渘ow that the major work of establishing Department of Government Efficiency is done,鈥� that he will be 鈥渁llocating far more of my time to Tesla鈥� starting in May. Musk said he now expects to spend just 鈥渁 day or two per week on government matters鈥�
Tesla struggled to sell vehicles as it of DOGE, a jobs-cutting group that has divided the country. The Austin, Texas, company reported a 71% drop in profits and a 9% decline in revenue for the first quarter.
鈥淚nvestors wanted to see him recommit to Tesla,鈥� said Wedbush Securities' Dan Ives. 鈥淭his is a big step in the right direction."
Investors sent Tesla shares up more than 5% in after-hours trading, although they are still down more than 40% for the year.
The company reconfirmed that it expects to roll out a cheaper version of its best-selling vehicle, the Model Y sport utility vehicle, in the first half of this year. It also stuck with its predictions that it will be able to launch a paid in Austin in June and have much of its fleet operating by itself next year.
鈥淭here will be millions of Teslas operating autonomously in the second half of the year,鈥� Musk said in a conference call after the results were announced. He later added about the personal use of autonomous vehicles, "Can you go to sleep in our cars and wake up at your destination? I鈥檓 confident that will be available in many cities in the U.S. by the end of this year.鈥�
Auto analyst Sam Abuelsamid at Telemetry Insight said he doubts Musk's predictions.
鈥淭he system is not robust enough to operate unsupervised. It still makes far too many errors,鈥� he said. 鈥淚t will suddenly make mistakes that will lead to a crash.鈥�
The planned rollout of the robotaxi without a steering wheel or pedals comes as federal regulators still have open investigations into whether the technology that Tesla hopes will allow cars to drive themselves is completely safe.
Tesla鈥檚 driver-assistance technology that can steer or stop a car but still requires humans to take over at any time 鈥� its so-called Autopilot 鈥� is by the National Highway Traffic Safety Administration for whether it alerts drivers sufficiently when their attention wanders. And the company鈥檚 Full Self-Driving, which is only partial self-driving and has drawn criticism for with the name, has for its tie to accidents in low-visibility conditions like when there is sun glare.
Another challenge to Tesla, which once dominated the EV business: It is facing fierce competition for the first time.
Earlier this year, Chinese EV maker BYD announced it had developed an electric battery that can . And Tesla鈥檚 European rivals have begun offering new models with advanced technology that is making them real Tesla alternatives just as popular opinion has turned against Musk. The Tesla CEO has alienated potential buyers in Europe there.
Tesla said Tuesday that quarterly profits fell from $1.39 billion to $409 million, or 12 cents a share. That鈥檚 far below analyst estimates. Tesla鈥檚 revenue fell from $21.3 billion to $19.3 billion in the January through March period, also below Wall Street鈥檚 forecast. Tesla鈥檚 gross margins, a measure of earnings for each dollar of revenue, fell from 17.4% to 16.3% .
Tesla has said it will be hurt less by the Trump administration's tariffs than most U.S. car companies because it makes most of its U.S. cars domestically. But it won鈥檛 be completely unscathed. It sources some materials for its vehicles from abroad that will now face import taxes.
Tesla warned in announcing its results that tariffs will hit its energy storage business, too.
Retaliation from China will also hurt Tesla. The company was forced earlier this month to stop taking orders from mainland customers for two models, its Model S and Model X. It makes the Model Y and Model 3 for the Chinese market at its factory in Shanghai.
The company鈥檚 side business of selling 鈥渞egulatory credits鈥� to other automakers that fall short of emission standards boosted results for the quarter.
Tesla generated $595 million from credit sales, up from $442 million a year ago.
The company generated $2.2 billion in cash flow versus $242 million a year earlier.
Morningstar analyst Seth Goldstein said earlier reports of plunging sales that had tanked the stock made the quarterly results almost predictable.
鈥淭hey鈥檙e not particularly surprising given that deliveries were down,鈥� he said. 鈥淚t was good to see positive cash flow.鈥�
Bernard Condon, The Associated Press
