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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.

The open letter to Tesla’s board comes after Tesla shares have declined more than 15% over the past month.

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.

Elon Musk's Starship rocket explosion: What you need to know

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China blacklists major chip research firm TechInsights following report on Huawei

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China blacklists major chip research firm TechInsights following report on Huawei

In this photo illustration a Huawei logo is displayed on a smartphone with a Chinese flag in the background.

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Beijing has banned semiconductor research firm TechInsights from working with or receiving data from Chinese entities, in a move that could add to the opaqueness of the country’s chip industry. 

China’s Commerce Ministry, citing national security concerns, announced Thursday that TechInsights was designated an “unreliable entity,” which prohibits Chinese individuals or organizations from sharing information with the Canadian-based company. 

TechInsights is well known in the global tech space for its in-depth coverage of Chinese-made chips and was among the first to report breakthroughs by companies like Huawei Technologies.

Beijing’s crackdown on TechInsights came less than a week after the firm revealed that a breakdown of Huawei’s latest artificial intelligence chips found components sourced from outside mainland China.

TechInsights didn’t respond to a request for comment from CNBC outside normal office hours, while Huawei didn’t immediately respond to an inquiry about TechInsights’ report.   

The findings by TechInsights about Huawei’s latest “Ascend” AI chips were consistent with those from other research firms like SemiAnalysis, which said that the Chinese company relies on technology from memory chipmakers like Samsung Electronics and contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC). 

These companies are under U.S. export controls, restricting them from selling their most advanced technologies to Chinese customers. Moreover, Huawei has been on a U.S. trade blacklist since 2019, barring chip makers that do business with the U.S. from working directly with it. 

China will come 'very close' to achieving AI self-sufficiency in next 5 years: UBS GWM

In response, Beijing and its chipmakers have stepped up efforts to build a self-sufficient semiconductor supply chain. 

Huawei, one of China’s leading players in these efforts, has been developing alternatives to U.S. chip giant, Nvidia, though TechInsights’ latest findings may be seen by some as a knock on such efforts. 

Despite its prominence in China’s chip space, few details are disclosed about Huawei’s chipmaking efforts outside of what third-party research firms uncover.

For example, reports have said that Huawei works closely with China’s leading chip foundry SMIC — a competitor of TSMC — though both companies have been silent about any collaboration since Huawei was placed on the U.S. trade blacklist.

Last year, TechInsights reportedly found that a Huawei product contained a chip component from TSMC, triggering questions about the effectiveness of U.S. export controls. The research firm’s latest findings on Huawei’s AI chip could further fuel such concerns.

Analysts say Chinese chip companies have exploited loopholes in U.S. restrictions and drawn on stockpiles of imported chips and components before certain restrictions kicked in.

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Microsoft engineer resigns over cloud business from Israeli military

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Microsoft engineer resigns over cloud business from Israeli military

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.

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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.

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Microsoft is trending toward a $5T market cap, says Wedbush's Dan Ives

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Tesla faces U.S. auto safety probe after reports FSD ran red lights, caused collisions

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Tesla faces U.S. auto safety probe after reports FSD ran red lights, caused collisions

The tablet of the new Tesla Model 3.

Matteo Della Torre | Nurphoto | Getty Images

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.

Read NHTSA’s Tesla FSD traffic safety violations investigation filings here.

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