Did Tesla try to replace Elon Musk behind the scenes?

Tesla’s board of administrators has come beneath scrutiny following a report from The Wall Avenue Journal that claimed the corporate had initiated an government search to switch its CEO, Elon Musk.

The report, citing unnamed sources accustomed to the matter, alleged that Tesla board members had contacted recruitment corporations as early as March to discover potential successors as a consequence of rising concern over Musk’s rising involvement in authorities affairs beneath the Trump administration.

In response, Tesla’s Chair Robyn Denholm issued a categorical denial. Writing through the corporate’s official X account, Denholm known as the report “completely false” and asserted the board’s full backing of Musk.

“The CEO of Tesla is Elon Musk and the Board is extremely assured in his capability to proceed executing on the thrilling development plan forward,” she said.

Musk himself responded sharply, calling the article a “intentionally false article” and later posting, “It’s an EXTREMELY BAD BREACH OF ETHICS that the @WSJ would publish a DELIBERATELY FALSE ARTICLE and fail to incorporate an unequivocal denial beforehand by the Tesla board of administrators!”

Regardless of these denials, The Wall Avenue Journal maintained its place. “Tesla was given the chance to supply a press release earlier than publication, which they didn’t do,” a spokesperson mentioned.

A risky interval for Tesla

The controversy comes at a pivotal time for Tesla, each financially and by way of public notion. Over the previous a number of months, Elon Musk has devoted a major period of time to the Trump administration,
overseeing the Division of Authorities Effectivity (Doge) .

His political commitments — mixed with provocative commentary, vocal assist for far-right events in Europe and public clashes with establishments — have drawn criticism and sparked client backlash.

Musk’s visibility in Trump’s Cupboard conferences, together with a current second the place he joked, “Effectively, Mr. President, you understand they are saying I put on a number of hats,” highlights his twin roles.

Trump, in the identical assembly, thanked Musk for his service and prolonged an open invitation to proceed his authorities work: “You’ve been handled unfairly, however the overwhelming majority of individuals on this nation actually respect and respect you… You’re invited to remain so long as you need.”

However Musk introduced final week that he can be “allocating way more of [his] time to Tesla,” decreasing his close to full-time position at DOGE. “My time allocation to DOGE will drop considerably,” he informed traders. “Beginning subsequent month, I’ll be allocating way more of my time to Tesla.”

This modification seems to be a response to mounting strain. In accordance with the Wall Avenue Journal report, board members had urged Musk to publicly reaffirm his dedication to Tesla. Musk reportedly didn’t object.

Shareholder frustration at Tesla

Tesla’s financials have raised extra concern. The corporate reported a
71 per cent year-on-year drop in web earnings for the primary quarter — its worst quarterly efficiency in current historical past.

The hunch was pushed by declining electrical car (EV) gross sales, with deliveries dropping 13 per cent in comparison with Q1 of 2022. Earnings fell to their lowest margin in almost six years, prompting the corporate to droop its full-year steering.

Throughout the identical interval, Tesla delayed submitting its 2025 proxy assertion and had but to announce a date for its annual shareholder assembly, including to investor anxiousness.

Tesla’s Chief Monetary Officer Vaibhav Taneja acknowledged the damaging influence of controversy on gross sales, telling traders: “The unfavorable influence of vandalism and unwarranted hostility in direction of our model and our folks had an influence in sure markets.”

April gross sales numbers revealed the dimensions of that influence: Tesla’s deliveries plunged 59 per cent in France and 67 per cent in Denmark in comparison with a 12 months earlier.

Protests, showroom vandalism, and client boycotts within the US and Europe have change into more and more frequent.

Musk’s politics price Tesla

Musk’s political alignment and involvement with the Trump administration seem to have alienated segments of Tesla’s buyer base. As soon as a darling of environmentalists and progressives, Tesla has seen reputational harm.

Some institutional traders have been spooked by Musk’s public assist for controversial figures and causes. One fund supervisor disclosed that Jewish shoppers requested divestment from Tesla as a consequence of Musk’s assist for Germany’s far-right nationalist get together, which is beneath state surveillance, reported Fortune.

His criticisms of the US judicial and legislative branches, coupled with perceived interference in regulatory issues, have solely heightened scrutiny. Musk additionally drew fireplace for spending 1 / 4 billion {dollars} of non-public funds in assist of Trump’s re-election.

Nonetheless, Musk remained undeterred, proclaiming throughout a televised cupboard assembly: “I feel this could possibly be the best administration for the reason that founding of the nation.”

Tesla board makes an attempt to challenge stability

Regardless of the wave of criticism, the Tesla board has sought to challenge stability. In accordance with the Journal, some administrators — together with firm co-founder JB Straubel — have been assembly with main traders to affirm their continued confidence in Musk’s management.

On the similar time, the board has reportedly explored including an impartial director and has shaped a Particular Committee to guage issues associated to Musk’s compensation.

The Tesla board’s composition itself has drawn scrutiny. It contains Musk’s brother Kimbal Musk and James Murdoch, the son of media magnate Rupert Murdoch.

Denholm, who was handpicked by Musk and defended his huge pay bundle, has confronted her personal criticism. In March, she bought roughly $33.7 million in Tesla inventory, elevating additional questions on board independence.

In a regulatory submitting, Tesla confirmed: “The board has established a Particular Committee to think about sure compensation issues involving Mr. Musk.”

Musk obtained no compensation as an officer or director final 12 months, and his landmark pay bundle — initially the most important ever for a public firm CEO —
has been overturned twice by a Delaware decide .

Even so, Musk stays Tesla’s largest particular person shareholder, proudly owning 410 million shares (12.8 per cent of excellent shares). If the disputed compensation bundle have been reinstated, his management might improve to 22.2 per cent.

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With inputs from businesses