TMTPOST -- Rumors about Tesla Inc. CEO Elon Musk’s leaving the Trump administration swirled on Wednesday after the U.S. electric vehicle (EV) giant posted steeper-than-expected sales decline amid mounting backlash against Musk.

Credit：Tesla

U.S. President Donald Trump told his cabinet members and other his inner circle people that Musk will be “stepping back” as the head of the so-called Department of Government Efficiency (DOGE), “in the coming weeks”, reported Politico, citing Trump insiders. It was reported that Trump is still pleased with Musk and the DOGE spending cuts, but the two people agreed that it will soon be time for Musk to return to his businesses and take on a supporting role.

It was said that Musk could remain an informal role as an adviser of the government and continue to visit the White House occasionally. Anyone who thinks Musk will disappear entirely from Trump’s orbit is “fooling themselves”, one of the aforementioned insiders said.

Following Politico, NBC News reported Trump last week told his cabinet that Musk will leave his administration at the end of a the end of a 130-day stint as a special government employee (SGE). The SEG status temporarily exempts Musk from some ethics and conflict-of-interest rules during a 130-day period. His SEG cap will be reached in late May considering his special status began on January 20.

White House press secretary Karoline Leavitt later Wednesday dismissed the report. Calling the Politico’s scoop “garbage”, the spokesperson said in a post on X: "Elon Musk and President Trump have both *publicly* stated that Elon will depart from public service as a special government employee when his incredible work at DOGE is complete." Musk forwarded Leavitt’s post, adding that “Yeah, fake news.”

The reports about Musk’s possible leave came right after Tesla released the worst quarterly performance by delivery in almost three years. The company delivered 336,681 EVs for the first quarter of the year, hitting the lowest deliveries since the second quarter of 2022. That represented a 13% year-over-year (YoY) decline. Analyst expected Tesla’s deliveries would be between 360,000 and 370,000 units, according to StreetAccount.

Tesla produced 362,615 vehicles for the first quarter, down 16.3% from a year ago.

Wedbush Securities analyst Dan Ives, a long Tesla bull, felt the report marked a fork in the road moment for Tesla. “We knew 1Q Tesla deliveries would be soft but these numbers were bad. We are not going to look at these numbers with rose colored glasses...they were a disaster on every metric. Refresh issues but brand crisis key,” Ives commented in a post on X.

The data showcased how disrupting that Tesla’s business is experiencing this year. Bloomberg pointed out part of the disruptions came from the retooling of factories to make the redesigned Model Y, and Musk’s involvement in global politics is another disctinctive factor. In response to Musk’s right-wing activism, Tesla cars and dealerships have become targets for vandalism. The Federal Bureau of Investigation (FBI) has formed a task force to investigate attacks aiming at Tesla, FBI director Kash Patel confirmed last week.

Statistics for February showed Tesla sales bucked electric car sale trends not just in Europe but in China, the world’s top EV market, highlighting growing headwinds from intense competition to international backlash against Musk.

The wholesale deliveries of Tesla China dived to 30,688 vehicles in February, representing a 49% YoY decrease, according to the preliminary data from the China Passenger Car Association (CPCA). That suggested Tesla’s China-made wholesale deliveries hit their lowest monthly volume since July 2022, and plunged 51.5% from a month ago. CPCA said overall wholesale volume of new energy vehicle (NEV) in China in February rose 82% YoY to 840,000 units. In the first two months of this year, Tesla China sold 93,926 vehicles, down 28.74% YoY.

Tesla sales in Europe recorded steeper decline than China. Tesla sold 1,429 EVs in Germany in February, a YoY drop of 76% larger than the 60% decline a month earlier, according to Germany’s road traffic agency. The overall sales of EVs in the No.1 European economy popped 38% to 35,949 units. Tesla sales in Italy crashed 55%, in Portugal, France, Sweden, Netherlands down 53%, 45%, 42% and 24%, respectively, and down 48% in both Norway and Denmark

According to data for March released earlier week, New Tesla vehicle registrations in France fell 37% to 3,157 in a market down 15%. In Sweden, Tesla sales slumped 64% to 911 units. Registrations in Denmark and Norway were down 66% and 1%, respectively. In Spain and Portugal, Tesla sales reversed the decline with increases of 34% and 2%, but for the first quarter, down 12% and 26%, respectively. Tesla registrations in Italy rose 51% in March, but they still decreased 6.8% for the full quarter.