The latest Musk drama underscores the unique dilemma Tesla’s board faces in managing him as he oversees five other companies and, more recently, has focused primarily on advising Republican US President Donald Trump – alienating Tesla’s politically liberal customer base.
Tesla’s board on Thursday rushed to defend its chief executive, Elon Musk, assuring he had the board’s confidence amid rising investor worries about his prolonged absences, polarizing politics and the EV maker’s plunging sales and profit.
The board reacted after a Wall Street Journal report that it had considered replacing Musk, which board chair Robyn Denholm denied. Denholm herself has taken heat for her high compensation and perceived failures to hold Musk accountable to shareholders.
The latest Musk drama underscores the unique dilemma Tesla’s board faces in managing him as he oversees five other companies and, more recently, has focused primarily on advising Republican US President Donald Trump – alienating Tesla’s politically liberal customer base.
Yet seldom have a company’s fortunes depended more heavily on the persona of its CEO, making even the notion of replacing him an enormous risk, according to investors, analysts and three people with knowledge of debates about Musk among Tesla executives.
Many analysts have attributed about three-fourths of Tesla’s outsized stock-market value – which far outpaces its current earnings – to autonomous-driving technology and humanoid robots that Musk has promised but failed to launch for years.
Tesla bulls view Musk as the singular genius who can deliver that future despite intensifying global competition on such technologies, especially from China, where automakers led by BYD have already blown past Tesla in producing low-cost EVs.
Denholm seemed to address the Musk faithful as she denied the Journal report, saying the board was “highly confident” he could execute “the exciting growth plan ahead.” The growth cannot come soon enough, as the fundamentals of Tesla’s automotive business continue to deteriorate. Its EV sales declines have been especially sharp in Europe, where Musk’s and Trump’s politics have proved especially toxic.
Company insiders have suggested to Musk for years that he replace himself in a different way – by hiring a top executive as a day-to-day manager while Musk continues as more of a figurehead, two people familiar with the discussions told Reuters. Other Musk companies operate that way, most notably rocket-maker SpaceX, where Gwynne Shotwell serves as president and COO.
