Musk says he'll spend less time in Washington and more time running Tesla after its profit plunges

NEW YORK (AP) — Elon Musk says he’ll 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 “now that the major work of establishing Department of Government Efficiency is done,” that he will be “allocating far more of my time to Tesla” starting in May. Musk said he now expects to spend just “a day or two per week on government matters”

Tesla struggled to sell vehicles as it faced angry protests over Musk’s leadership 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.

“Investors wanted to see him recommit to Tesla,” said Wedbush Securities' Dan Ives. “This 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 driverless robotaxi service in Austin in June and have much of its fleet operating by itself next year.

“There will be millions of Teslas operating autonomously in the second half of the year,” 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’m confident that will be available in many cities in the U.S. by the end of this year.”

Auto analyst Sam Abuelsamid at Telemetry Insight said he doubts Musk's predictions.

“The system is not robust enough to operate unsupervised. It still makes far too many errors,” he said. “It will suddenly make mistakes that will lead to a crash.”

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’s driver-assistance technology that can steer or stop a car but still requires humans to take over at any time — its so-called Autopilot — is being probed by the National Highway Traffic Safety Administration for whether it alerts drivers sufficiently when their attention wanders. And the company’s Full Self-Driving, which is only partial self-driving and has drawn criticism for misleading drivers with the name, has come under scrutiny 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 charge within minutes. And Tesla’s 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 by publicly supporting far-right politicians there.

Tesla said Tuesday that quarterly profits fell from $1.39 billion to $409 million, or 12 cents a share. That’s far below analyst estimates. Tesla’s revenue fell from $21.3 billion to $19.3 billion in the January through March period, also below Wall Street’s forecast. Tesla’s 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’t 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’s side business of selling “regulatory credits” 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.

“They’re not particularly surprising given that deliveries were down,” he said. “It was good to see positive cash flow.”

People pass by a Tesla sign at the Manila International Auto Show in Pasay city, Philippines Friday, April 11, 2025. (AP Photo/Aaron Favila)

Demonstrators protest against Elon Musk and Department of Government Efficiency cuts outside a Tesla dealership, Saturday, April 12, 2025, in Kansas City, Mo. (AP Photo/Charlie Riedel)

Elon Musk and his son X Æ A-Xii walk on the South Lawn upon their arrival to the White House in Washington, Sunday, April 13, 2025. (AP Photo/Jose Luis Magana)

Elon Musk, left, carries his son, X Æ A-Xii, down the stairs of Air Force One upon President Donald Trump's arrival at Joint Base Andrews, Md., Sunday, April 13, 2025. (AP Photo/Luis M. Alvarez)

FILE - Elon Musk flashes his T-shirt that reads "DOGE" to the media as he walks on South Lawn of the White House, in Washington, March 9, 2025. (AP Photo/Jose Luis Magana, File)

FILE - Tesla and SpaceX CEO Elon Musk walks to the stage to speak at the Butler Farm Show, Oct. 5, 2024, in Butler, Pa. (AP Photo/Alex Brandon, file)

FILE - Tesla vehicles line a parking lot at the company's Fremont, Calif., factory on Sept. 18, 2023. (AP Photo/Noah Berger, file)

MONTGOMERY, Ala. (AP) — Alabama legislators passed a bill on Thursday that would strip Birmingham of control over the state's largest water board and transfer power to the governor and surrounding suburbs, reigniting a decades-long, polarizing debate.

Proponents of the bill point to frequent rate hikes and say that the move will prevent catastrophic events that have happened in cities like Jackson, Mississippi, or Detroit, Michigan. Opponents of the bill say that it is a power grab that diminishes the power of Black residents in Birmingham, Alabama.

Birmingham city officials currently appoint six of the nine board members' seats, giving Birmingham leadership unrivaled influence over the decisions affecting the city's water. Board members approve rate hikes and manage infrastructure projects.

If signed into law, SB330 would make the board just seven people. The mayor of Birmingham and the Birmingham city council would appoint two board members, while the governor, lieutenant governor and three neighboring county commission presidents would each appoint one board member.

Five counties rely on the Birmingham Water Works Board, but over 40% of the utility's 770,000 customers are concentrated in the city of Birmingham, and 91% are in Jefferson County. The new system would give more weight to Birmingham's neighboring counties that house the reservoirs that supply the system.

Republican lawmakers from the Birmingham suburbs sponsored the bill, saying that it will improve the efficiency of the system. They say aging infrastructure and lack of investment means residents pay for water that just gets leaked out of old pipes.

“So many elected officials have been getting so many complaints, and I’m sure yours have too, about the quality and the price of Birmingham water,” said Republican Rep. Jim Carns, who represents Blount County, one of the places that will now appoint a board member.

The water board had approximately $1 billion in debt in 2023, according to the most recent financial statements, and the board has the second highest credit score, according to bond rating agencies.

Carns said that the regional board would make the utility more frugal. AL.com reported that the utility has been accused of lacking transparency in recent years and has sometimes made costly errors in distributing bills. Trust in the board was further undermined in recent years after high-profile ethics scandals.

Many in Alabama’s vocal Democratic minority conceded that the board wasn't perfect, but they also condemned the move as a political takeover that would wrest power from Birmingham’s majority Black residents and redistribute it to customers in the city's mostly white suburbs.

“Frankly the language used today was insulting, with words like competence being thrown around as if the city of Birmingham is not growing by leaps and bounds,” Democratic Rep. Kelvin Datcher of Birmingham said after the bill passed. He questioned how the new board's composition would address any of the bill sponsor's concerns about efficiency.

Democratic legislators also took issue with the fact that they were excluded from the overall process.

“Each of us in this chamber would be rightfully concerned if outside representatives attempted to dictate how water systems operate in our districts without consulting us or even including us at the table, or, hell, even the room where this legislation was created,” Rep. Neil Rafferty of Birmingham said.

Birmingham Mayor Randall Woodfin joined Birmingham city council members for a press conference to echo those concerns.

“The ratepayers deserve to be at the forefront of this conversation, and they have not been,” Woodfin said. “Let’s call it what it is. This is a political power grab. This is not in the best interest of our citizens.”

The bill passed along party lines 66 to 27. It now goes to Republican Gov. Kay Ivey's desk.

Democratic Alabama State Representatives Patrick Sellers and Kelvin Datcher at the Alabama statehouse, speaking out against a bill that would strip Birmingham of control over the state's largest water board. Montgomery, Ala., May 1, 2025. (Safiyah Riddle/Associated Press).