Elon Musk’s Government Reform and Its Impact on Tesla’s Future

Recently, I saw a post on social media claiming that Elon Musk had submitted his resignation, saying he couldn’t continue working for the federal government and had fallen out with Trump. It made me chuckle because the misunderstanding around Musk seems to be growing, with people adding their own drama to the situation. This is definitely not true. On April 3rd, there was some news suggesting that Musk had stepped down from his role in the government’s efficiency department. But Musk quickly clarified on X (formerly Twitter) that it was fake news. The speed at which such stories spread these days is mind-blowing—one minute, they’re big headlines overseas, and the next, they’re in Chinese, causing all sorts of confusion. Without careful fact-checking, it’s easy to get misled.

On April 4th, a journalist interviewed Trump, discussing Musk’s role and the future of Dogecoin. Trump’s response was clear, and I’ve translated the key points here: Trump praised Musk, saying, “He loves his country, and I think a lot of people don’t appreciate what Tesla has done. It’s a great car, a great product. I like smart people, and Musk is a smart guy. After working with him, I got to know him better. Elon will stay with the federal government for a while longer, but eventually, he’ll have to return to his businesses. He’s done a great job uncovering fraud, misuse, and waste.” Trump also added, “I hope he stays as long as possible, but at some point, the ministers will take over Dogecoin.”

As you can see, the reality is much different from the noise online. Musk hasn’t resigned, and Dogecoin is still on track. However, Musk has been in the spotlight lately, and Tesla’s stock has dropped about 40% since the start of the year, partly due to his involvement with Dogecoin. Some people might not be familiar with the connection between Musk and Dogecoin, so let me quickly explain.

After Trump became president, Musk was appointed as a special government employee, and he launched a department called DOGE, aimed at improving the efficiency of the federal government. From Musk’s perspective, the government was slow and bloated—if a company were run like the government, it would go bankrupt. Musk wanted DOGE to bring Silicon Valley’s best practices to the government, a reform effort on a scale never seen before in U.S. history. This is why the team behind DOGE includes high-profile people like Steve Davis, the president of the tunneling company, Joe Gebbia, the co-founder of Airbnb, and former Tesla engineer Anthony Armstrong. These people aren’t hurting for money or job opportunities, so why would they work for the government? It’s Musk’s connections and personal charisma that brought them on board, but it hasn’t been easy to implement.

Just like past reform efforts in China, any significant change inevitably bumps into vested interests, and resistance is strong. Musk’s hands-on approach, including aggressive layoffs, has caused some serious friction. By March, about 105,000 federal employees had been let go, which naturally upset many people. When you’re cutting jobs and impacting people’s livelihoods, it’s hard to expect them to appreciate the broader mission. Some even took to the streets, protesting the DOGE team’s actions, claiming they violated the law. Musk, however, dismissed these accusations, saying, “If you can point to something illegal I’ve done, I’ll listen. But if not, all this talk is just venting frustration without substance.” The DOGE team has been transparent, and all their measures and data are publicly available for scrutiny.

Despite the controversies, the team has made some significant improvements. In Pennsylvania, for example, DOGE digitized a massive system that previously took months to process retirement paperwork, reducing it to just days. The government had considered digital solutions before but lacked the know-how, which left the process inefficient and prone to fraud. For example, small business loans had been issued to people under 11 or over 120, simply due to outdated systems. DOGE’s digital solutions aim to address such issues and prevent fraud.

Musk believes he can cut 15% of the government’s expenses without compromising essential services, but time is running out. On one hand, investors are pressuring him to focus on his businesses, while on the other hand, U.S. regulations limit his tenure as a special government employee to 130 days per year. If we calculate from January 20th, his term should end by July.

Musk may be seen as idealistic or even reckless, but I admire people like him who push for change, even when it’s tough. As the Chinese writer Chai Jing once quoted a Soviet author: “Don’t rush to judge whether something is right or wrong. After ten years, we’ll revisit this conversation.”

Now, turning to $TSLA's stock, the sharp drop in price can’t be ignored. While Musk’s involvement with DOGE and the controversy surrounding it have certainly added pressure, the market reaction likely stems from broader concerns about his attention being divided. Tesla investors, who were already dealing with various challenges, may be further unsettled by the distraction Musk’s government involvement has caused. With the stock down around 40%, many are questioning Musk’s ability to balance these dual commitments. The risk is that Tesla’s long-term performance may be influenced more by his outside ventures than by core business improvements. The real test will be whether Musk can refocus on Tesla and stabilize its growth, as the company has always been a leader in innovation, but even innovation needs consistent leadership.

In conclusion, while Musk’s time with the federal government has sparked controversy, the results of his reforms in government efficiency might be more significant in the long run. As for Tesla, its stock price will likely continue to be volatile as Musk navigates these competing priorities. The question remains: how long can Musk balance both his passion for innovation and his responsibility to shareholders?