Tesla (TSLA, Financial) just reported one of its worst quarters in recent memory—net income cratered 71% to $409 million, dragged down by sagging demand, missed expectations, and a reputational firestorm tied to Elon Musk's deepening role in Trump's administration. Core sales slipped, Cybertruck orders dropped 50%, and the company leaned heavily on $400 million in interest income and nearly $600 million in regulatory credits to stay afloat. Musk told analysts he'll scale back his time in Washington, but with his hands still in SpaceX, xAI, and X, investors remain skeptical he's focused enough on righting the ship.

Still, Wall Street wasn't ready to abandon the EV giant. Tesla stock spiked over 7.15% at 11.27am today after the call, likely buoyed by a few bright spots: a planned rollout of a lower-cost EV by midyear and Musk's ongoing push into AI-powered autonomous driving. Tesla reaffirmed that the next-gen vehicle will blend new and current tech platforms, and be built on existing lines—a move that could help manage costs and speed up delivery. But with no prototype shown, and production timing unclear, analysts aren't convinced it'll meaningfully move the needle in the short term.

Longer-term risks are mounting. Tesla is losing ground to Chinese EV makers and legacy auto brands, while Waymo—Google's (GOOG, Financial) autonomous unit—now runs 200,000 paid rides per week across four U.S. cities. Tariffs under Trump's trade agenda are another headache. Tesla may build in the U.S., but it still imports key components from Mexico and China—now subject to higher duties. Musk admitted he couldn't talk Trump down on that front. Bottom line: Tesla's core narrative is shifting. It's no longer just about EV dominance—it's about whether Musk can refocus, execute, and navigate an increasingly political and competitive landscape.