Tesla is backed into an uneasy spot as CEO Elon Musk juggles his core roles at the electric vehicle-making company and his expanding portfolio of government responsibilities at the Department of Government Efficiency (D.O.G.E).
Tesla stocks have fallen by about 20% since Trump’s inauguration and over 30% from a closing high of $480 per share in December 2024.
As President Donald Trump’s administration intensifies its effort to reduce government costs through D.O.G.E, critics worry that Musk’s focus on reforming federal bureaucracy may distract him from Tesla’s operational imperatives.
TSLA dips as Elon Musk’s D.O.G.E role grows
Investors and industry analysts alike are increasingly concerned about the political risks and bureaucratic controversies swirling around Musk’s involvement in the Department of Government Efficiency (D.O.G.E), which could negatively impact Tesla’s revenue performance.
TSLA initially surged following its fourth-quarter earnings report on January 29 but has since reversed course.
Tesla stocks (TSLA) look poised to end a five-day losing streak, rising 1% to 332.60 at the market open. However, on Tuesday, the shares dropped 6.3% to 328.50, reaching its lowest level since late November 2024.
After last week’s sell-off, the stock has fallen below the recent consolidation. Analysts are now reevaluating their price target, citing Tesla’s Q4 result and Musk’s political involvement with the Trump administration as reasons for the tempered projections.
Musk’s ventures include Tesla, SpaceX, and xAI. He also heads D.O.G.E, the government agency tasked with slashing wasteful government expenditure and modernizing federal technology. On top of all that, he recently placed a $97.5 billion bid for OpenAI.
Musk’s ability to multitask has often been applauded as one of his strengths. However, the extent of his current commitments is unprecedented. Tesla, which has been on a decline, now faces queries that its CEO’s divided attention could further weaken its competitive edge and profitability.
Analysts have likened his current political engagement and recent bid for OpenAI as distractions, likening recent events to how Musk’s publicly chronicled acquisition of Twitter negatively impacted TSLA’s performance.
On the other hand, another set of investors argue that his involvement in D.O.G.E could help break regulatory barriers.
D.O.G.E may be a tool for bureaucratic overreach
DOGE’s operational tactics have raised questions. A former Tesla engineer, Tom Krause, now a DOGE operative, reportedly sought administrative access to critical federal technology, a move which could breach standard security protocols and risks exposing sensitive government systems.
Officials said the request was unusual and goes against established safeguards, warning that such overreach would erode the essential cybersecurity measures put in place to protect taxpayer data.
A federal judge issued a temporary restraining order, which prevents political appointees and special government employees from accessing sensitive and confidential information stored in the Treasury Department.
White House spokesperson, Harrison Fields responded to the restraining order saying it is absurd and judicial overreach.
This comes amid aggressive federal workforce cuts mandating that agencies hire no more than one new employee for every four that leave, which has unsettled many government workers. The combination of security lapses and drastic downsizing intensifies concerns that Musk’s crusade for efficiency may destabilize government operations, potentially impacting companies like Tesla that rely on a stable regulatory environment. On the other hand, access to core technological services could be a form of industrial espionage, which would bring Tesla’s ethics into question.
