Steve Davis left DOGE in May, but officials say he’s still running the show

Steve Davis, former top lieutenant at the Department of Government Efficiency (DOGE) and a close Elon Musk ally, reportedly continues to exert influence within the department despite his official departure, dismissing it as "fake news." This ongoing, behind-the-scenes involvement suggests continued influence by Musk's associates within government operations, creating internal tension at DOGE amidst White House efforts to shrink its power. Critics express concern that this sustained engagement, including a push for a "DOGE 2.0," primarily serves to benefit Musk's various business interests, such as SpaceX, Tesla, and X.

Analysis

A Wall Street Journal report indicates that Steve Davis, a key Elon Musk ally and former official at the Department of Government Efficiency (DOGE), maintains significant influence within the department despite his formal departure in May. Davis reportedly continues to issue directives to current staff and has privately dismissed his exit as "fake news," suggesting his engagement is more substantial than publicly perceived. This situation creates a complex political and governance risk for Musk's associated companies, including Tesla (TSLA), as critics cited in the report believe this continued involvement is primarily aimed at benefiting Musk's commercial interests. The dynamic is further complicated by internal tensions at DOGE, where staff reportedly face loyalty tests between Musk and President Trump, and by White House efforts to curtail the department's authority. The push by Musk allies for a "DOGE 2.0," with a focus on government IT systems, could be a vector for this influence, raising concerns about potential conflicts of interest and regulatory scrutiny.

Key Decisions for Investors

• Investors in Tesla (TSLA) should monitor for any increased political or regulatory scrutiny stemming from the reported unofficial influence of Musk's allies within government, as this creates a potential headline and governance risk.
• The ongoing tension between Musk and the White House, coupled with these allegations, represents a tangible political risk factor that could indirectly affect Musk-led companies; a prudent approach would be to factor this into risk assessments for related holdings.
• Pay close attention to any developments regarding the proposed "DOGE 2.0" initiative, as its implementation could either lead to beneficial government contracts for Musk's companies or trigger formal investigations into conflicts of interest.