Tesla Rises as Musk Signals DOGE Work ‘Mostly Done’

Summary

WSJ What’s News: "Tesla Rises as Musk Signals DOGE Work ‘Mostly Done’" – April 23, 2025

Hosted by Luke Vargas, The Wall Street Journal's "What’s News" episode delves into significant developments in the financial markets, presidential policies, and corporate strategies shaping today’s economic landscape.

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Market Rally Amid Presidential Signals

[00:37] Luke Vargas opens the episode by highlighting a positive shift in global stock markets. This rally was fueled by President Trump's indications of a softened stance on China tariffs and his surprising declaration that he has no intentions of firing Federal Reserve Chair Jerome Powell.

[01:16] Donald Trump elaborates on his position:

“No, I have no intention of firing him. I would like to see him be a little more active in terms of his idea to lower interest rates. This is a perfect time to lower interest rates. If he doesn't, is it the end? No, it's not.”
(01:16)

These comments marked a significant pivot from Trump's previous fierce criticism of Powell, which had previously led to a downturn in American assets and a surge in safe-haven investments like gold.

Tesla’s Stock Surge and Elon Musk’s Strategic Shifts

A focal point of the episode is Tesla’s impressive stock performance. Despite reporting a 13% decline in vehicle deliveries and a 70% drop in net income in the first quarter, Tesla shares surged over 5% in after-hours trading. This uptick is attributed to Elon Musk’s comments about winding down his involvement with the Department of Government Efficiency (DOGE).

[02:15] Stephen Wilmot, The Journal's European autos reporter, discusses Musk's future role:

“Musk was speaking in quite glowing terms about its automotive business, promising that a driverless taxi service from the company would be launching this summer... [Musk] putting some dates on when he thought this would all start to benefit the company's bottom line.”
(04:16)

Musk’s strategic realignment suggests a renewed focus on Tesla’s core automotive and emerging AI sectors, including the anticipated driverless taxi service slated for release in the summer.

Investor Confidence and Future Prospects

[03:15] Consulting Industry Analyst attributes the stock rise to investor relief over Musk reallocating his efforts back to Tesla:

“Investors are happy that he's going to be spending a bit less time in Washington, a bit more time on Tesla... the company confirmed that it was on track to produce a more affordable model in the first half.”
(03:15)

Despite Tesla’s recent challenges, its $750 billion market value—double that of traditional automakers like Toyota—remains a testament to investor confidence, driven by expectations of future innovations and profitability from AI and robotics ventures.

Judicial Pushback on Immigration Policies

Shifting focus, Luke Vargas reports on judicial resistance to the Trump administration’s aggressive immigration crackdown. Three federal judges from Colorado, New York, and Maryland criticized the administration's expedited deportation strategies and mishandling of detainee cases, particularly spotlighting the wrongful deportation of Kilmar Abrego Garcia.

Stalled US-Brokered Peace Talks for Ukraine

The episode also covers the faltering of U.S. brokered peace negotiations for the Ukraine conflict. Ukrainian President Volodymyr Zelensky rejected a U.S. proposal to recognize Russia’s control over Crimea, categorizing it as a "non-starter" and reaffirming Ukraine's sovereignty over the region.

[07:16] Luke Vargas summarizes:

“Zelenskyy added that Ukrainian officials in London today would have a mandate to discuss a partial or full ceasefire, which Ukraine agreed to last month but Moscow rejected.”
(07:16)

Restructuring the State Department

In a significant administrative overhaul, Secretary of State Marco Rubio announced plans to restructure the State Department, aligning it with the administration’s “America First” policies. This reorganization includes the elimination of 700 positions and the closure of 132 offices, aiming to streamline operations without affecting international diplomatic missions.

Consulting Firms Respond to Federal Contract Cuts

The Trump administration’s pressure has led seven of the ten largest consulting firms—including Accenture, Deloitte, and Booz Allen Hamilton—to propose $20 billion in federal contract cuts. These firms are responding to demands for deeper price concessions or face potential contract terminations.

[10:31] Consulting Industry Analyst explains:

“There's been a lot of anti consultant rhetoric throughout the Trump administration... department plans to cut $5.1 billion in consulting contracts affecting firms like Accenture, Deloitte and Booz Allen.”
(10:31)

This trend underscores the administration’s intent to reduce government expenditure on external consulting services, despite the industry's claims of adding significant value through modernization and technological advancements.

Elimination of Artificial Food Dyes

The episode concludes with Robert F. Kennedy, Jr.’s initiative to remove artificial food dyes from the American diet by the end of 2025. The Health and Human Services Department and FDA will collaborate with the food industry to phase out petroleum-based synthetic dyes, despite industry resistance citing safety approvals.

[11:09] Jesse Newman, Food Reporter, highlights consumer implications:

“If dyes are, in fact, going to come out, then you know our food is going to start to look different.”
(11:52)

Conclusion

Luke Vargas wraps up the episode by reaffirming the intertwined nature of political decisions and market responses, emphasizing how leadership and policy shifts can drive significant changes across various sectors.

Production Credits:

• Produced by Kate Bullivant and Daniel Bock
• Supervising Producer: Sandra Kilhoff

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For listeners seeking a comprehensive understanding of today's pivotal news, this episode of "What’s News" provides valuable insights into the dynamic interplay between government actions, corporate strategies, and market reactions.

Transcript

[Viking Advertiser]

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[Luke Vargas]

Stock markets rally as President Trump says he has no plans to fire the Fed chair plus Tesla stock surges after Elon Musk says his work in D.C. could be winding down and federal contractors offer billions in cost cuts to win over an administration skeptical about their contributions.

[Consulting Industry Analyst]

Within the consulting industry, this has been a real source of stress. Companies have thrown hundreds and hundreds of people at these reviews trying to figure out how do we describe our work, how do we justify it?

[Luke Vargas]

It's Wednesday, April 23rd. I'm Luke Vargas for the Wall Street Journal and here is the AM edition of what's news, the top headlines and business stories moving your world today. Markets around the world are breathing a sigh of relief this morning with stocks gaining after President Trump last night signaled a softer tone on China tariffs and said he isn't planning to fire Federal Reserve Chair Jerome Powell.

[Donald Trump]

No, I have no intention of firing him. I would like to see him be a little more active in terms of his idea to lower interest rates. This is a perfect time to lower interest rates. If he doesn't, is it the end? No, it's not.

[Luke Vargas]

Those Oval Office comments came after Trump lashed out at the Fed chair last week, writing in a social media post that Powell's termination cannot come fast enough, prompting a sell off in American assets like the dollar and US Treasuries and pushing safe haven assets like gold to a new record high. Trump also said that the 145% tariff on China was too high. That boosted Japanese and Korean stocks in particular as tech companies with large exposure to the US Market like TSMC and Foxconn, rallied on the prospect of a de escalation in hostilities between Washington and Beijing.

[Stephen Wilmot]

Shares of Tesla are up more than 5% in off hours trading after the EV maker reported first quarter earnings. That included word of a 13% slide in vehicle deliveries and a more than 70% decline in net income. But the headline news is that CE Elon Musk signaled that his work with the Trump administration could be coming to an end. Stephen Wilmot is the Journal's European autos reporter. Stephen, I think the best way for us to understand Tesla's situation now is to hear from Musk himself. So I'm going to play a few clips here from yesterday's earnings call, starting with Musk explaining his early work setting up the Department of Government Efficiency was mostly done here.

[Donald Trump]

He was and I think starting probably and next month May, my time allocation to Doge will drop significantly.

[Stephen Wilmot]

Steven, was that the answer investors were looking for that might explain Tesla's stock gaining after these results?

[Viking Advertiser]

Well, I think it almost certainly has something to do with it. With the positive share price reaction. The worry that Musk isn't dedicating enough time to Tesla isn't new, of course, but it's been turbocharged by Doge and the fact that he's spent so much time in Washington. There's also obviously the fact, and this is new, that unlike the time he spent historically on other projects such as SpaceX, his time on Doge has been hugely politically contentious and therefore has carried a bit of a brand risk for Tesla. So I think for both reasons, investors are happy that he's going to be spending a bit less time in Washington, a bit more time on Tesla. Another factor was that the company confirmed that it was on track to produce a more affordable model in the first half. There had been some rumors that the project was off track, so I think that also was a relief. Coming against the backdrop of very poor delivery numbers, the need for a kind of more affordable model has never been.

[Stephen Wilmot]

More obvious about Tesla's future. Musk was speaking in quite glowing terms about its automotive business, promising that a driverless taxi service from the company would be launching this summer. And he also talked of other business units like the company's AI products. It's pivot into robotics. These are things that Tesla has touted for a long time. It's non automotive work. And yet Musk did try to get more specific here, putting some dates on when he thought this would all start to benefit the company's bottom line. Let's hear that.

[Donald Trump]

That's probably around the middle of next year, second half of next year. And then once it does start move the financial needle in a significant way, it will really go exponential from there.

[Stephen Wilmot]

What of that, Stephen? Is the market buying that these future profits, this major jump up in valuation is just around the corner?

[Viking Advertiser]

Well, to some extent it clearly is buying it because Tesla still, even after a 40% plus share price fall this year, has a $750 billion market value, which is more than twice than other carmakers like Toyota. It is valued like a tech company, not a car company. And that's because investors do give Musk some credit for these pronouncements. And the one that really moves the needle for Tesla's VAL is AI Robotics. Anything he says about Optimus, the humanoid robot, and most particularly what he says about Robo taxis. But his scope for continuing to punt hopes down the road is getting a bit narrower and he's now saying that they will deliver actual functional robo taxis with unsupervised self driving software this summer. Presumably it will be very limited, backed up by remote drivers in some way. This is deliverable. What might be less deliverable is an actual profitable, exponentially growing business line, which he's also obviously just promised. He's saying that will happen next year, next summer. So Tesla doesn't actually have that long to come up with a functional robo taxi business that actually makes profits.

[Stephen Wilmot]

A key spring for Tesla giving way to a key summer. Stephen Wilmot is the Journal's European autos reporter. Thanks so much for stopping by.

[Viking Advertiser]

Thank you.

[Stephen Wilmot]

Coming up, US Brokered peace talks for Ukraine falter after Kyiv pushes back on the proposed terms of a deal and the Trump administration moves to phase out artificial food dyes. We've got those stories and more after the break.

[State Farm Advertiser]

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[Luke Vargas]

Three federal judges criticized the Trump administration yesterday over its immigration crackdown, throwing up new legal roadblocks to the White House's no holds barred approach. Two judges in Colorado and New York sharply questioned the legality of the administration's use of wartime measures to speed up deportations of alleged gang members and criticized the lack of legal protections for individuals who've been detained and are slated for removal. At the same time, a judge in Maryland accused the administration of bad faith in the case of Kilmar Abrego Garcia, a man mistakenly deported to El Salvador on Monday. The administration declined to answer questions posed by Abrego Garcia's lawyers following a judge's order to facilitate facilitate his return, with government lawyers citing attorney client privilege, state secrets and diplomatic concerns, and telling the court that questions about his whereabouts and the administration's legal basis for his continued detention are an absurdity. U.S. district Judge Paula Zinnis has ordered the government to provide full responses by 6pm today. President Trump's efforts to bring an end to the war in Ukraine are on shaky ground after Ukrainian President Volodymyr Zelensky pushed back on a U.S. proposal to recognize Russia's control of Crimea as part of a ceasefire agreement. American officials had presented a series of ideas for ending the war to Ukrainian officials last week and expected an answer today as Ukrainian, U.S. and European officials gather for a summit in London. Speaking in Kyiv, Zelensky said the Crimea proposal was a non starter. Ukraine does not legally recognize the occupation of Crimea. There is nothing to talk about. It is outside of our constitution. This is our territor territory of the people of Ukraine. Zelenskyy added that Ukrainian officials in London today would have a mandate to discuss a partial or full ceasefire, which Ukraine agreed to last month but Moscow rejected. Secretary of State Marco Rubio has announced a major plan to reorganize the State Department and shrink what he called a bloated bureaucracy and bring it in line with President Trump's America first priorities. The overhaul will result in the elimination of 700 positions and the closure of 132 of the agency's offices. However, this restructuring doesn't cover the network of U.S. diplomatic missions abroad. Seven of the ten largest consulting firms to the U.S. government are offering to cut up to $20 billion from their federal contracts after being pushed by the Trump administration to locate deeper price concessions or face consequences. We exclusively report that the proposed cuts include terminating existing contracts and reducing the scope their work within federal agencies, with some firms offering discounts on their labor costs, credits towards their work or AI services free of charge. Journal reporter Chip Cutter said that if the proposed cuts satisfy the government, it would lift some pressure off the likes of Booz Allen Hamilton, which makes nearly all of its $11 billion in annual revenue from contracts tied to the government, but that the industry isn't in the clear just yet.

[Consulting Industry Analyst]

There's been a lot of anti consultant rhetoric throughout the Trump administration. You've heard some Trump administration officials say that they saw consultants as just pushing PowerPoints and creating decks and spreadsheets and not offering much value. The industry of course would say that that's false and they do a lot to sort of modernize the government and to roll out new technology and all of that. But you've seen the Department of Government Efficiency regularly announce new cancellations of consulting contracts. The Department of Defense earlier this month said it planned to cut $5.1 billion in consulting contracts that affected firms like Accenture, Deloitte and Booz Allen. So you really just see it across the government right now, this real crackdown on the consulting industry. It's still a little unclear where it all goes from here.

[Luke Vargas]

Accenture and Deloitte didn't immediately comment, while a Booz Allen spokesman said the company was working productively with the government for the benefit of the American taxpayer. And Robert F. Kennedy, Jr. Has unveiled plans to strip artificial food dyes from the American diet by the end of 20. The health and Human Services Department and Food and Drug Administration will work with the food industry to eliminate petroleum based synthetic dyes, which Kennedy has blamed for a litany of health problems. Industry groups say the dyes used in their food products have been deemed safe, but are nevertheless going along with the Order Journal. Food reporter Jesse Newman has more.

[Jesse Newman]

These dyes are pretty ubiquitous in American grocery stores. There's products that you sort of expect to see them in, like candies and cake frosting, but then they're in tons of other categories and products. So this is a pretty huge deal for food companies and for consumers who are used to seeing a lot of products look a certain way. If dyes are, in fact, going to come out, then you know our food is going to start to look different.

[Luke Vargas]

And that's it for what's news for this Wednesday morning. Today's show was produced by Kate Bullivant and Daniel Bock. Our supervising producer is Sandra Kilhoff. And I'm Luke Vargas for the Wall Street Journal. We will be back tonight with a new show. Until then, thanks for listening.