Elon Musk Faces ‘Code Red Situation’ Before Tesla Earnings Call

Analysts believe Elon Musk is at a crossroads, with his role in government and the direction of his core business in focus as Tesla prepares to report its first-quarter results on Tuesday.

Why It Matters

Since Musk took on his role as de facto chief of the Department of Government Efficiency (DOGE), Tesla’s brand has been collaterally linked with the department’s sweeping cost-cutting efforts and President Donald Trump’s administration more broadly. This has led to vehicle boycotts, protests at dealerships across the country and, alongside increased competition within the electric vehicle (EV) space, has been credited with the company’s declining sales and share price over the past few months.

Analysts are eagerly awaiting Tesla’s Tuesday earnings release, and pointing to Musk’s subsequent conference call as an opportunity for the CEO to reignite faith in the Tesla brand and outline his future involvement with the Trump administration.

What To Know

In a recent note, Wedbush Securities analyst Dan Ives warned that the Tesla CEO faces a “code red situation” if his position as figurehead of DOGE continues to damage the brand image and sales of the electric vehicle giant.

“If Musk leaves the White House, there will be permanent brand damage…but Tesla will have its most important asset and strategic thinker back as full-time CEO to drive the
vision and the long term story will not be altered,” Ives wrote.

“If Musk chooses to stay with the Trump White House, it could change the future of Tesla…brand damage will grow….A huge week ahead for Musk, Tesla, and investors.”

Newsweek has reached out to Tesla via email for comment.

Tesla’s fourth-quarter results released in late January came in below analysts’ estimates, with revenue increasing just 2 percent year-on-year to $25.7 billion, automotive revenue falling 8 percent to $19.8 billion, and net income plummeting 71 percent to $2.3 billion.

Tesla’s investors and analysts are given an early insight into the company’s upcoming financial results, as it releases data on delivery numbers weeks ahead of its full earnings. In early April, Tesla announced a 13-percent drop in first-quarter vehicle sales, with global deliveries dropping to 336,681 vehicles between January and March from 387,000 a year prior. This marked Tesla’s worst quarter for deliveries since 2022.

Some analysts are expecting a similarly gloomy set of results to be announced after markets close on Tuesday, with those polled by London Stock Exchange Group giving a revenue estimate of $21.2 billion, a drop of 0.5 percent from $21.3 billion in the first quarter last year. Analysts polled by FactSet anticipate revenue landing slightly higher at $21.45 billion.

In his note, Ives described the upcoming earnings release as a “a fork-in-the-road time” for the carmaker, adding that Musk’s conference call would represent an opportunity for the CEO to outline his “turnaround vision” for Tesla.

Among Tesla’s numerous issues, Ives cited the fact that the company has, thanks to Musk, “become a political symbol globally of the Trump administration/DOGE,” and the impact of this on Tesla’s sales and stock, which has fallen nearly 47 percent since Trump’s inauguration and erased the company’s post-election gains.

“Tesla is Musk and Musk is Tesla,” Ives wrote. “And anyone that thinks the brand damage Musk has inflicted is not a real thing… spend some time speaking to car buyers in the U.S., Europe, and Asia… you will think differently after those discussions.”

Tesla’s foreign sales have tumbled amid Musk’s involvement at the White House, as well as his interventions into European politics. This has added to a longer-term decline in Tesla’s “brand desirability” in its main markets, according to a recent study by Electrify Research.

“Tesla slipped from being the most desirable EV brand back in July 2023 to the seventh most desirable as of January 2025, now trailing behind Audi, Mercedes, BMW, Toyota, Porsche and VW,” the firm wrote in analysis released last week.

In addition, it found that the appeal of Chinese rival BYD has risen by an average of 75 percent across the U.K., Germany and France over the same period.

Despite the “brand damage” Musk’s role in DOGE has caused, and the potential impact of Trump’s 25-percent tariffs on cars and automotive parts, Ives said he remains bullish on Tesla due to the promise of autonomous driving and the “unparalleled innovation” the company still demonstrates. He stressed that the timeline for Tesla’s rollout of full self-driving features (FSD) will be a key question going into Tuesday’s conference.

In the earnings call in late January, Musk confirmed that the company would begin deploying “robotaxis” on a “toe-in-the-water” basis in June. He said that the initial “unsupervised full self-driving” service would begin in Austin, Texas, with plans to expand to several other cities by the end of the year. He added that the long-awaited arrival of full self-driving features was expected “in almost every market this year.”

Professor Jack Stilgoe of University College London’s Department of Science & Technology Studies told Newsweek he was skeptical of Tesla’s goal of full self-driving, describing this as “magical thinking.”

Investors will also be anticipating an update on Tesla’s new low-cost model, announced by Musk last year. During the Q1 earnings call in April 2024, Musk said that the carmaker would begin producing the new affordable models in “early 2025,” but no official date for the release of the “Model 2” has yet been set.

Ives gave Tesla an “outperform” rating, and assigned it a 12-month price target of $315. This sits slightly above the average analyst target set for Tesla—$311.27, according to Yahoo Finance. Tesla shares stood at $227.42 ahead of Tuesday’s market open, having shed 6 percent on Monday.

What People Are Saying

Wedbush Securities analyst Dan Ives, in a note released Sunday, wrote: “We believe Tesla along with Nvidia are two of the most disruptive technology companies on the globe over the coming years. The unparalleled innovation, engineering scale, autonomous road map, and robotics future will unleash massive valuation upside over the coming years in our view. BUT… Musk needs to leave the government, take a major step back on DOGE, and get back to being CEO of Tesla full-time.”

He continued: “On the call Tuesday, Musk needs to lay out for investors the timing/rollout of unsupervised FSD in Austin this summer, when does the new lower cost vehicle hit the production line and does it depend on tariff relief, how will Tesla pivot and turn the growth story for 2025 in a positive direction after a disastrous 1Q, and it’s time to lay out the timeline/hard facts around autonomous and robotics/Optimus rollout over the next six to 12 months.”

Professor Jack Stilgoe, University College London, told Newsweek: “Until now, Tesla’s valuation has priced in Elon Musk’s claim that what he calls ‘full self-driving’ is just around the corner. And he’s even been charging customers thousands of dollars for a feature with the same name, which the company says it will deliver as soon as the software is ready.

“It’s a story that seems to have worked pretty until now, even though anyone close to the technology knows that it doesn’t work as promised. And, strictly speaking, it can never work as promised. There’s no way a Tesla will be able to drive itself in all possible circumstances. It’s a form of magical thinking that has kept the company going for years.

“As actual self-driving vehicles from companies like Waymo start becoming a reality for some customers, the Tesla story seems more and more fanciful. In reality, Tesla’s system is a really good driver-assistance system. If it was marketed and used responsibly, it could make roads safer. As it is, the irresponsibility is causing new hazards.”

What Happens Next?

Tesla is scheduled to release its first-quarter earnings after markets close on Tuesday. The earnings call is scheduled to take place at 5:30 p.m. E.T.

Musk has recently hinted at stepping away from his role in DOGE, telling Fox News in early April that he expects the unofficial department to complete its core mission of cutting $1 trillion in federal spending by the end of May.