Tesla board is reportedly floating replacing Elon Musk as CEO

According to a new report from The Wall Street Journal, Tesla’s board has taken steps toward potentially seeking a new CEO to replace Elon Musk.

To say the least, Tesla’s board of directors has been extremely favorable to Elon Musk, Tesla’s largest single shareholder and long-time CEO.

They have backed his every move, granted him a $55 billion CEO compensation package, and remained silent when he threatened Tesla shareholders that he would not develop AI products at Tesla unless given a larger, more controlling share of the company, or decided to fire Tesla’s entire charging team to make an example out of the head of the team.

Tesla’s then-third-largest individual shareholder, after Musk, Leo KoGuan, told Electrek last year that he couldn’t get his concerns about Musk heard by the board.

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Most recently, they have not addressed the protests at Tesla stores and product boycotts, which are attributed to Musk’s involvement in politics, angering a significant portion of the population and Tesla’s consumer base.

Many people, including myself, deduced from the board’s silence that it did not plan to take action against Musk’s negative impact on the brand.

Now, a new report from The Wall Street Journal suggests that the board started to move against Musk for the first time last month.

The report brings several new information to light. Here are the main points with quotes from WSJ:

• According to unnamed sources, Tesla’s board reached out to executive search firms to look for a new CEO:
  • “Board members reached out to several executive search firms to work on a formal process for finding Tesla’s next chief executive, according to people familiar with the discussions.”
• The board reportedly met with Musk and asked him to spend more time on Tesla:
  • “Around that time, Tesla’s board met with Musk for an update. Board members told him he needed to spend more time on Tesla, according to people familiar with the meeting. And he needed to say so publicly.”
• After Musk committed to spending more time at Tesla, it’s not clear what is the current status of the search for a potential new CEO:
  • “The board narrowed its focus to a major search firm, according to the people familiar with the discussions. The current status of the succession planning couldn’t be determined. It is also unclear if Musk, himself a Tesla board member, was aware of the effort, or if his pledge to spend more time at Tesla has affected succession planning. Musk didn’t respond to requests for comment.” 
• Additionally, Tesla’s board has been looking at adding a director, and JB Straubel, whose role on the board has mostly gone under the radar, has reportedly been meeting with investors:
  • “The eight-person Tesla board has been looking to add an independent director, according to people familiar with the process. Some directors, including Tesla co-founder JB Straubel, have been meeting with major investors to reassure them the company is in good hands.”
• WSJ has reportedly seen text messages that Musk sent to someone telling them that he doesn’t wish to be CEO at Tesla anymore:
  • “Last spring, he told that person that he no longer wanted to be CEO of Tesla, but that he was worried that no one could replace him atop the company and sell the vision that Tesla isn’t just an automaker, but the future of robotics and automation as well.”
• The report mentioned a Tesla manager who shared frustration about Musk’s negative impact on the business who has reportedly been let go since his comments were reported in the media:
  • “Eliah Gilfenbaum, a Tesla executive in California, told his team that it was getting more challenging to hire and retain talent, according to one person who was present. He told them Tesla would be better off if Musk resigned. That was unlikely to happen, he told them, and employees needed to reconcile the boss’s politics with the company’s mission. He advised them to try to compartmentalize and just keep going.”
• The board reportedly told investors that Musk wasn’t as well aware of what’s happening with Tesla as he used to:
  • “In recent meetings with investors, board members told them that despite Musk’s government work, he was involved in Tesla meetings remotely. One board member told people that sometimes Musk wasn’t as well prepared and that he needed to be briefed more about what is happening with Tesla. The board members continued to say they believed Musk’s proximity to Trump and the White House would benefit the company over the long term.”

The report provides some insight into how the board is addressing the current situation with its controversial CEO.

During Tesla’s earnings call last week, Musk said that he would scale back his time at DOGE to spend more time at Tesla.

It encouraged some investors, but the CEO still claimed that he would “spend a day or two per week on government matters”:

“I think starting probably next month, May, my time allocation to DOGE will drop significantly. I’ll have to continue doing it for, I think, probably the remainder of the President’s term, just to make sure that the waste and fraud that we stop does not come roaring back, which will do if it has the chance. So, I think I’ll continue to spend a day or two per week on government matters for as long as the President would like me to do so and as long as it is useful. But starting next month, I’ll be allocating probably more of my time to Tesla and now that the major work of establishing the Department of Government Efficiency is done.”

In addition to these duties, Musk serves as CEO of SpaceX and the de facto leader of X/xAI, as well as being involved in Neuralink and The Boring Company.

Musk didn’t respond to WSJ’s request for comments, and as of the time of writing this article, he didn’t seem to have directly addressed the new report on X, but he did share a couple of memes about him “wearing many hats”:

He appeared at Trump’s cabinet meeting today wearing two hats simultaneously.

Electrek’s Take

I’d take the report with a grain of salt. A lot of it makes sense, but there are unnamed sources, and this could be as simple as the board floating the idea of replacing Musk.

Also, I want this to happen, so I’m certainly biased in the sense that I want to believe it’s true.

I think the board and shareholders would have a tough time removing Musk. Shareholders are not sufficiently incentivized by the current stock price, which is resisting Tesla’s declining growth and struggling fundamentals.

And they still believe Elon’s lies about self-driving and humanoid robots soon bringing Tesla back to rapid earnings growth.

I think we might need a few more people to get the “Elon realization moment” before there’s enough motivation from shareholders to push him out.