Elon Musk quits Trump's DOGE as Tesla stock crashes 15% in single day

Tesla shares crashed 15% on Mar. 10, 2025—the worst single-day drop since Sep. 2020—as investors panicked over Musk dividing attention between his CEO role and running Trump's Department of Government Efficiency. The stock fell to $215, erasing roughly $150 billion in market value and marking Tesla's seventh consecutive week of losses since Musk joined the White House.

On Apr. 22, 2025, during Tesla's earnings call after reporting a devastating 71% profit collapse, Musk promised to scale back DOGE work to one or two days per week starting in May. Deliveries had dropped 13% year-over-year—Tesla's biggest quarterly sales decline ever—while the stock had lost 50% from its post-election Dec. peak.

Musk formally resigned from DOGE on May 29, 2025, hitting the 130-day legal limit for special government employees. Within a week, his relationship with Trump exploded: on Jun. 5, Trump publicly threatened to strip Musk's companies of federal subsidies, sending Tesla shares down 17% and wiping out $267 billion in market value—the largest single-day loss in Tesla's 15-year public history.

Fourteen Democratic state attorneys general sued DOGE and Musk in Feb. 2025, arguing his "sweeping powers" violated the Constitution's Appointments Clause by creating an unofficial federal agency without Senate confirmation. U.S. District Judge Tanya Chutkan denied DOGE's motion to dismiss in May, writing the executive branch cannot "commandeer the entire appointments power" by disguising a principal officer as an "advisor in name only."

DOGE claimed to have eliminated 260,000 federal jobs (a 12% workforce reduction) and saved $175 billion during Musk's tenure. Independent audits disputed these figures: POLITICO found DOGE saved less than 5% of claimed contract savings, CBS News reported DOGE overstated savings by $1.96 billion, and one analysis estimated the cuts actually cost taxpayers $135 billion through lost productivity and rehiring expenses.

While cutting government spending, Musk's companies continued collecting billions in federal contracts. A Washington Post analysis found Musk's businesses received over $38 billion in government support since 2003, with SpaceX alone holding $22 billion in active contracts. In just the first months of 2025, SpaceX secured $845 million for national security launches and $100 million from NASA.

The SEC sued Musk in Jan. 2025 for allegedly saving $150 million by failing to disclose his 2022 Twitter stock purchases 11 days late. The lawsuit claims Musk crossed the 5% ownership threshold on Mar. 14, 2022, but didn't file until Apr. 4—during which he spent another $500 million buying shares at artificially low prices before disclosure sent Twitter stock up 27%.

Tesla lost $15.4 billion in brand value (36% decline) in 2025, according to Brand Finance research, marking three consecutive years of brand erosion. Wedbush analyst Dan Ives—a longtime Tesla bull—estimated Musk's political activities caused permanent 10% demand loss and warned "the brand damage caused by Musk in the White House/DOGE will not go away."

Cabinet secretaries pushed back against Musk's authority after he emailed over one million federal workers demanding lists of accomplishments and threatening firings. Director of National Intelligence Tulsi Gabbard and FBI Director Kash Patel ordered staff to ignore the email; more than half of cabinet secretaries followed suit, prompting Trump to direct cabinet members to retake control of workforce decisions.

Tesla's board, including Chair Robyn Denholm and Elon's brother Kimbal Musk, agreed in Jan. 2025 to return up to $919 million in a shareholder lawsuit settlement for excessive compensation. The deal requires returning $277 million in cash and $459 million in stock options, plus forgoing $184 million in future compensation, though directors admitted no wrongdoing.