A rough week for Elon Musk was capped Friday when institutional shareholders in Tesla admonished the company’s board of directors to rein in an “over-committed” CEO in an open letter.
The letter follows the midair explosion of the SpaceX Starship rocket in its first test flight Thursday and a first-quarter Tesla earnings report Wednesday that saw net income decrease more than 20% from the prior year on narrowing margins. The report sent Tesla shares down almost 10% Thursday and erased nearly $13 billion from Musk’s net worth, according to the Bloomberg Billionaires’ Index.
Musk also waded into controversy with Twitter again, eliminating verified status from the accounts of most nonpaying subscribers and eliminating markings for government officials and accounts, raising the specter of impostors running rampant on the platform.
What the letter says
The Tesla investors, who say their holdings amount to more than $1.5 billion, want the board to bring in more independent members and work harder to solve issues at the company that can pose “substantial legal, operational, and reputational risks” to the electric vehicle maker, “jeopardizing its long-term value.”
The investors are particularly concerned with Musk and Tesla’s handling of human rights and workers’ rights. Their letter recounts many lawsuits in which Tesla has been sued over racial discrimination, union-busting, wage theft, sexual harassment and unsafe working conditions.
“Tesla appears to be embracing a broader culture of being ‘above the law,'” they wrote, adding that Tesla now faces criminal probes by the U.S. Department of Justice, the National Highway Traffic Safety Administration and California’s Department of Motor Vehicles over its Autopilot technology and claims about self-driving.
“Instead of working to address problems with regulators, CEO Musk has made derogatory tweets and comments, fueling tensions,” they wrote.
Nia Impact Capital’s Kristin Hull told CNBC the letter is meant as a “call to action” and she is hoping that Tesla Chair Robyn Denholm will take the time to write a meaningful reply, at a minimum. “We want to see the board take their job seriously — we don’t see them doing a good job at being Elon Musk’s boss.”
Eroding margins, exploding rockets
While shares of Tesla were ticking higher in early trading Friday, the company’s first-quarter earnings update this week revealed ballooning inventory levels and eroding profit margins.
According to the company’s investor presentation for the first three months of 2023, Tesla owes vendors $7.32 billion, and holds $14.38 billion in inventory after ramping up production in its factories and implementing price cuts through the first quarter.
While Tesla raised prices on Model S and X vehicles in some markets Friday, those models represent a minor slice of overall sales and production for Tesla today. The modest price hikes were also accompanied by an incentive — three years of free Supercharging on the company’s electric vehicle charging network.
Tesla’s stock price slide has a direct effect on Musk, whose personal wealth is mostly derived from his Tesla holdings, as he lost approximately $13 billion of his on-paper net worth the day after Tesla’s first-quarter earnings.
Also on Thursday, Musk’s U.S. defense contractor, SpaceX, launched its Starship Super Heavy vehicle in an orbital test flight from its Boca Chica, Texas, facility.
As CNBC previously reported, the rocket made it off the launch pad — a triumph of sorts — but it also exploded, resulting in the Federal Aviation Administration grounding the program for the time being until further evaluation.
Before the explosion, local environmental and indigenous rights groups protested the launch, anticipating harms to wildlife, people’s health and property.
CNBC reached out to the Texas regional office of the U.S. Fish and Wildlife Service and the FAA for more details. A spokesperson for the FWS said the agency is now gathering information about any impacts from the explosion to habitat and wildlife in the area, and the FAA did not immediately respond to a request for comment.
Meanwhile, Musk continues to make controversial moves with Twitter, the social media platform he bought last year for $44 billion, selling billions of dollars worth of Tesla stock to help fund the purchase.
This week, Twitter removed verified status from public figures and government accounts, including President Joe Biden, the pope, and even transit agencies, including San Francisco’s BART.
Musk-led Twitter also removed “government-funded” and “China state-affiliated” labels from the Twitter accounts of a myriad of global media organizations. The labels implied government involvement in editorial decisions by those outlets. Most notably, Reuters first reported, Twitter dropped the “China state-affiliated media” label from the accounts of Xinhua News, and from the accounts of journalists associated with those publications.
Demonstrators hold a banner reading “Liberated Zone” during a protest at the Microsoft campus in Redmond, Washington, on Aug. 19, 2025. Microsoft Corp. employees rallied at the company’s Redmond, Washington, headquarters in an effort to ratchet up pressure on the software maker to stop doing business with Israel over its war in Gaza.
David Ryder | Bloomberg | Getty Images
A Microsoft engineer is resigning after 13 years at the software giant, claiming the company continues to sell cloud services to the Israeli military and that executives won’t discuss the war in Gaza.
Scott Sutfin-Glowski, a principal software engineer, informed colleagues at Microsoft on Thursday that this will be his last week at the company.
“I can no longer accept enabling what may be the worst atrocities of our time,” he wrote.
In the letter, he referred to a February Associated Press article that said the Israeli military had at least 635 Microsoft subscriptions, and he claimed the vast majority of them remain active.
Microsoft declined to comment.
Sutfin-Glowski’s announced departure comes a day after President Donald Trump said Israel and Hamas committed to the first phase of a peace plan two years into the latest conflict. The AP reported on Thursday, citing government officials, that the U.S. is sending roughly 200 troops to Israel to help support the ceasefire deal.
The conflict has been a matter of ongoing tension at Microsoft.
For months, employees have protested the company’s cloud business from the Israeli military. Five employees were fired.
In September, Microsoft said it had stopped providing certain services to a division of the Israeli Ministry of Defense, though it didn’t provide specifics. That decision came after Microsoft investigated an August report from The Guardian saying the Israeli Defense Forces’ Unit 8200 had built a system for tracking Palestinians’ phone calls.
Sutfin-Glowski said the company cut off communication systems that allowed employees to bring up their concerns regarding the Israeli military’s use of Microsoft products.
Outside a building at Microsoft headquarters in Redmond, Washington, on Thursday, employees and community members opened up banners calling on the company to drop ties with Israel, according to a statement from No Azure for Apartheid. The group has been asking Microsoft to listen to the more than 1,500 employees who petitioned the company to endorse a ceasefire.
“Today, the ceasefire in Gaza finally takes effect after two years of genocide, but the atrocities, human rights abuses, war crimes, apartheid, and occupation continue,” Sutfin-Glowski wrote.
Tesla is facing a federal investigation into possible safety defects with FSD, its partially automated driving system that is also known as Full Self-Driving (Supervised).
Media, vehicle owner and other incident reports to the National Highway Traffic Safety Administration showed that in 44 separate incidents, Tesla drivers using FSD said the system caused them to run a red light, steer into oncoming traffic or commit other traffic safety violations leading to collisions, including some that injured people.
In a notice posted to the agency’s website on Thursday, NHTSA said the investigation concerns “all Tesla vehicles that have been equipped with FSD (Supervised) or FSD (Beta),” which is an estimated 2,882,566 of the company’s electric cars.
Tesla cars, even with FSD engaged, require a human driver ready to brake or steer at any time.
The NHTSA Office of Defects Investigation opened a Preliminary Evaluation to “assess whether there was prior warning or adequate time for the driver to respond to the unexpected behavior” by Tesla’s FSD, or “to safely supervise the automated driving task,” among other things.
Read more CNBC tech news
The ODI’s review will also assess “warnings to the driver about the system’s impending behavior; the time given to drivers to respond; the capability of FSD to detect, display to the driver, and respond appropriately to traffic signals; and the capability of FSD to detect and respond to lane markings and wrong-way signage.”
Tesla did not respond to a request for comment on the new federal probe. The company released an updated version of FSD this week, version 14.1, to customers.
For years, Tesla CEO Elon Musk has promised investors that Tesla would someday be able to turn their existing electric vehicles into robotaxis, capable of generating income for owners while they sleep or go on vacation, with a simple software update.
That hasn’t happened yet, and Tesla has since informed owners that future upgrades will require new hardware as well as software releases.
Tesla is testing a Robotaxi-brand ride-hailing service in Texas and elsewhere, but it includes human safety drivers or valets on board who either conduct the drives or manually intervene as needed.
In February this year, Musk and President Donald Trump slashed NHTSA staff as part of a broader effort to reduce the federal workforce, impacting the agency’s ability to investigate vehicle safety and regulate autonomous vehicles, The Washington Post first reported.
Commander Jared Isaacman of Polaris Dawn, a private human spaceflight mission, speaks at a press conference at the Kennedy Space Center in Cape Canaveral, Florida, U.S. August 19, 2024.
Isaacman, who has close ties with SpaceX CEO Elon Musk, was at the White House in September for Trump’s dinner for tech power players. Musk did not attend.
Trump and Isaacman have had multiple in-person meetings in recent weeks to talk about the Shift4 founder’s vision for the space program, according to Bloomberg, citing a person familiar with the meetings.
After a fiery back-and-forth between Musk and Trump over government spending, the president pulled Isaacman’s nomination for the post, saying he was a “blue blooded Democrat, who had never contributed to a Republican before.”
“I also thought it inappropriate that a very close friend of Elon, who was in the Space Business, run NASA, when NASA is such a big part of Elon’s corporate life,” Trump wrote in a Truth Social post on June 6.
Trump named Transportation Secretary Sean Duffy interim head of NASA in July.
Isaacman, who declined to comment, was initially nominated in December to lead the space agency.
Isaacman is a seasoned space traveller, having led two private spaceflights with SpaceX in 2021 and 2024. Shift4 has invested $27.5 million in SpaceX, according to a 2021 filing.
Read more CNBC tech news
Isaacman stepped down as CEO from Shift4, the payments company he founded in 1999 at the age of 16, after his nomination was pulled, and now serves as executive chairman.
“Even knowing the outcome, I would do it all over again,” Isaacman wrote about the NASA nomination process in a letter to investors announcing the Shift4 change.
Now, it looks like he gets to do it all over again.
Tensions between Musk and Trump have cooled in the months since, but big challenges face the U.S. space program..
Trump has proposed cutting more than $6 billion from NASA’s budget.
As a result of Trump’s Department of Government Efficiency initiative, which Musk led in the first half of 2025, around 4,000 NASA employees took deferred resignation program offers, cutting the space agency’s staff of 18,000 by about one-fifth.
During the October government shutdown, NASA has made exceptions that allow employees to keep working on missions involving Musk’s SpaceX and Jeff Bezos’ Blue Origin.