Tesla’s board is actively searching for a leadership change, perhaps as soon as March, following growing concerns regarding increasing politicization of CEO Elon Musk and the company’s deteriorating financial performance. The Wall Street Journal, quoting sources close to the situation, reported on April 30 that the board has become increasingly disturbed as Elon Musk spends more time on political activity, including his stint in the Trump administration’s Department of Government Efficiency (DOGE).
Investor Confidence Jolted by Stock Drop
The talks follow Tesla’s stock plunging by up to 45% at some point earlier this year. Shares have somewhat recovered with overall market trends, but investor confidence remains tenuous. CNN says that the sustained dip in Tesla’s share price has angered board members, who are concerned that Musk’s outside activities are distracting him from the core business of the company.
As the mounting criticism came, Musk announced last week plans to reduce his government work. “I will back away from Washington responsibilities and concentrate more on Tesla,” Musk said, driven by investor criticism of his efforts at DOGE. Reuters noted that his activities in federal employment reductions had triggered intense controversy.
Aging Lineup and European Backlash Create Pressure
To add to the pressure, Tesla’s product lineup has grown old without significant refreshes, and car sales continue to fall. Musk’s public endorsement of far-right political agendas in Europe has also incited protests and vandalism at Tesla stores throughout the U.S. and Europe.
WSJ sources indicated that Tesla’s board had pushed Musk to issue a public promise to commit Tesla’s business to a top priority. Although there are discussions on a succession plan, it is not known if Musk, as a member of the board, was made aware of them.
Weak Earnings Drive Urgency for Change
Tesla’s recent financials have added urgency. The company recorded a breathtaking 71% plunge in first-quarter earnings, sales, and profits plunging precipitously. The earnings release overlapped with Musk’s pronouncement that he would restore focus on Tesla.
Tesla appears to be gearing up for a leadership change as it tackles political distractions, poor performance, and shaken investor confidence.
