Elon Musk has announced he will reduce his involvement in government-related work and shift his attention back to Tesla, after the electric vehicle giant reported a sharp fall in profits and revenue for the first quarter of the year.

Speaking to analysts on a conference call Tuesday, Musk said he plans to spend “far more” time on Tesla starting in May, now that the initial phase of work on the Department of Government Efficiency (DOGE) is complete. “I’ll be allocating just a day or two per week to government matters,” Musk said, following months of public scrutiny over his role in the controversial agency.

Tesla’s financial results reflected the challenges Musk now faces. The company posted a 71% drop in profits, with net income falling from $1.4 billion to $409 million. Revenue declined 9% to $19.3 billion, missing Wall Street expectations. Tesla shares, which are down over 40% this year, rose more than 5% in after-hours trading following Musk’s remarks.

“Investors wanted to see him recommit to Tesla,” said Dan Ives, senior equity analyst at Wedbush Securities. “This is a big step in the right direction.”

Autonomous Future Still the Focus

Despite the weak earnings, Tesla reaffirmed ambitious plans for autonomous driving. The company confirmed it will launch a budget version of its Model Y SUV in the coming months and aims to begin a commercial robotaxi service in Austin by June. Musk claimed “millions of Teslas” could be operating autonomously by year-end.

“Can you go to sleep in our cars and wake up at your destination? I’m confident that will be available in many U.S. cities by the end of this year,” he said.

However, industry experts remain skeptical. “The system is not robust enough to operate unsupervised,” said Sam Abuelsamid, an analyst at Telemetry Insight. “It still makes far too many errors.”

U.S. regulators are also watching closely. Tesla’s Autopilot system and “Full Self-Driving” software are both under investigation by the National Highway Traffic Safety Administration over safety concerns.

Rising Global Pressure and Tariff Concerns

Tesla is also contending with fierce competition from Chinese automakers like BYD and growing backlash in Europe, where Musk’s political statements have alienated potential buyers. At home, new tariffs introduced by the Trump administration could affect Tesla’s supply chain and energy storage business, though the company emphasized its mostly domestic manufacturing footprint as a buffer.

Tesla has also halted orders for two models in mainland China amid trade tensions. Nonetheless, it saw a boost from regulatory credit sales, which brought in $595 million for the quarter—up from $442 million a year ago. Positive free cash flow of $2.2 billion provided one bright spot in an otherwise turbulent period.

Looking ahead, Tesla will need to deliver on its autonomy promises and win back market share in a rapidly evolving EV landscape.

China has issued a strong warning to countries negotiating trade agreements with the United States that come at Beijing’s expense, vowing to take countermeasures to defend its economic interests. The statement follows reports that the Trump administration is pressing US trading partners to distance themselves from China during ongoing tariff negotiations.

In a statement released by the Ministry of Commerce, Beijing said it respects efforts by other countries to resolve trade disputes with Washington through “equal consultation.” However, it emphasized that China would “respond resolutely and reciprocally” to any deals that harm its national interests, adding that it will not tolerate being sidelined in global trade talks.

China accused the US of engaging in “unilateral bullying,” warning that if international trade descends into a system where the strong dominate the weak, “all countries will become victims.” The remarks came amid growing concern that secondary tariffs could be imposed on nations maintaining close trade ties with China.

Last week, reports surfaced that the US is exploring such penalties as part of its broader strategy to isolate China economically. In response, Chinese President Xi Jinping made a high-profile tour of Southeast Asia, visiting Vietnam, Malaysia, and Cambodia. The visits were widely interpreted as a move to solidify regional partnerships and push back against growing US protectionism.

Meanwhile, the tariff battle between Washington and Beijing appears to have plateaued. The US currently imposes 145% duties on Chinese imports, while China has retaliated with 125% tariffs on US goods. Both countries have suggested they are unlikely to raise tariffs further. However, tensions have shifted to non-tariff measures.

Beijing recently introduced export restrictions on a variety of critical minerals essential to US industries. In response, President Trump signed an executive order to investigate mineral imports, calling the resources “essential for economic and national security.” Additionally, the US imposed new fees on Chinese-built vessels docking at American ports, following an investigation launched under the Biden administration.

Despite Trump’s repeated assertions that China will return to the table for a deal, there is little sign from Beijing that negotiations are moving forward.

Markets React to Rising Trade Tensions

Global markets showed clear signs of unease as tensions escalated. During early Asian trading hours on Monday, haven assets surged amid widespread risk aversion. Gold futures jumped 1.8% to a record $3,389 per ounce, while spot prices reached $3,376 per ounce. The euro also strengthened significantly, surpassing $1.50 against the US dollar for the first time since 2021. The Japanese yen and Swiss franc also gained as investors sought safe havens, while US stock futures extended their decline.

Investors are preparing for a pivotal week marked by crucial economic indicators and high-profile earnings reports, even as global financial markets experience a shortened trading schedule due to Easter holidays in the United States and Europe.

Attention will center on fresh economic data from the manufacturing and services sectors, with S&P Global scheduled to release preliminary Purchasing Managers’ Indices (PMIs) for April on Wednesday. These indices, which reflect business activity based on orders, employment, and confidence, are seen as early indicators of economic trends. Readings above 50 suggest expansion, while those below indicate contraction.

Europe: Slowing Momentum Expected

In the eurozone, business activity showed signs of stabilizing in March, with the manufacturing PMI improving to 48.6—its best reading since early 2023. Germany and France both reported notable gains. However, geopolitical tensions and cautious spending continue to weigh on sentiment.

April forecasts suggest a modest pullback, with the eurozone manufacturing PMI expected to dip to 47.4. Germany and France are projected to post similar declines at 47.5 and 47.9, respectively. Meanwhile, services activity is expected to expand for a fifth consecutive month, though at a slower pace. The eurozone services PMI is forecast to ease to 50.4.

Germany’s Ifo Business Climate Index, due Thursday, will provide additional insight into Europe’s largest economy. The index rose to 86.7 in March, buoyed by major fiscal reforms, but is expected to edge lower amid uncertainty over new US tariffs.

UK Outlook: Manufacturing Under Pressure

In the UK, manufacturing remains a point of concern. March’s PMI fell to 44.9—its weakest in 17 months—and April is forecast to decline further to 44.0. The services sector fared better, with March’s revised PMI at 52.5, though April is projected to moderate to 51.4 as cost-of-living pressures and geopolitical risks weigh on sentiment.

US Forecasts Mixed Ahead of Earnings Season

In the United States, March data revealed a sharp drop in manufacturing PMI to 50.2, with expectations of a return to contraction in April at 49.3. Meanwhile, services activity remains robust, though the PMI is projected to dip from 54.4 to 52.9. Business confidence has also weakened, reflecting concerns over federal policy changes and trade tensions.

All Eyes on Big Tech

Adding to the week’s significance, major US tech firms—including Tesla, Microsoft, and Alphabet—are set to release first-quarter earnings. These results could be pivotal for markets, particularly amid growing concern over the impact of newly imposed US tariffs on global supply chains.

Tesla, in particular, faces scrutiny. While revenue is expected to grow 2.6% year-on-year, earnings per share are forecast to decline, partly due to factory retooling and a slowdown in demand, exacerbated by CEO Elon Musk’s recent political interventions.

As market participants digest a busy week of data and earnings, uncertainty surrounding trade policies and global economic conditions is expected to keep volatility elevated.