Musk Stays: Tesla Denies Reports of CEO Succession Planning

TDT | Manama

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Tesla Chair Robyn Denholm has categorically denied a Wall Street Journal report claiming that the company’s board had launched a search for a new CEO to replace Elon Musk.

The Journal, citing unnamed sources, reported that Tesla’s board had approached executive placement firms as early as March to begin exploring succession plans. In a firm rebuttal posted to Tesla’s official account on X, Denholm said the story was “absolutely false,” emphasizing that the board retains “high confidence in [Musk’s] ability to continue executing on the exciting growth plan ahead.”

The speculation emerged amid a turbulent period for the electric carmaker. Musk, who has been leading the U.S. government’s Department of Government Efficiency (DOGE) in a temporary role, had spent less time focused on Tesla, prompting investor concerns. Tesla’s stock (TSLA) has dropped nearly 45% in 2024, recovering slightly in recent weeks with a broader market rebound.

In its Q1 earnings report, Tesla posted a 71% year-over-year decline in profits and a notable drop in sales, marking one of the steepest quarterly setbacks in the company's history. On the same day, Musk announced he would reduce his involvement with DOGE and shift his focus back to Tesla operations.

It remains unclear whether Musk’s return altered any succession planning. The Journal reported that Tesla directors urged Musk to spend more time at the company earlier this year. According to the report, Musk did not object to the request.

Financial analysts, including Dan Ives of Wedbush Securities, praised Musk’s renewed commitment to Tesla, saying in a research note that he is likely to remain CEO for “at least five years.” The note added, “This situation with Musk at DOGE was reaching a breaking point, but cooler heads have now prevailed.”

At a recent Cabinet meeting, President Donald Trump publicly thanked Musk for his government service, which is set to wind down. “You’ve really been a tremendous help,” Trump said. “You’re invited to stay as long as you want.” Musk, wearing “a hat on top of another hat,” responded humorously, “You know they say I wear a lot of hats.”

Despite the light-hearted exchange, tensions remain high. Musk recently clashed with Treasury Secretary Scott Bessent in a publicized dispute, and protests outside Tesla showrooms have become increasingly common. Once heralded by environmentalists, Tesla’s brand image has been dented, in part due to Musk’s vocal political affiliations and controversial remarks, particularly on X (formerly Twitter), which he acquired in 2022.

Critics argue that Musk's time and attention have been stretched thin. Alongside Tesla and X, he remains at the helm of SpaceX, a major U.S. government contractor, and has faced backlash for platforming far-right figures and engaging in conspiracy theories on social media.

Tesla also finds itself at the center of trade tensions with China, a key market for the automaker. While Musk has advocated for tariff relief, he has seen limited progress. However, a recent softening in Trump’s auto tariff policy could benefit Tesla’s U.S. operations, potentially reducing costs on imported components.

In an investor call last week, Musk acknowledged concerns about his government commitments:

“There’s been some blowback for the time I’ve been spending in government with DOGE,” he admitted, promising to scale back to “only a day or two a week.”

Despite publicly stating his renewed focus on Tesla, reports persist that Musk has confided to associates about his desire to eventually step down. The Journal noted that he fears a successor may not deliver on his long-term vision of transforming Tesla into a leader in autonomous vehicle technology. His frustrations may also stem from legal battles over his historic compensation package.

Musk currently owns 410 million Tesla shares, amounting to 12.8% of the company. He has also been awarded options for another 304 million shares—pending court approval—representing the largest compensation package in corporate history. Twice struck down by a Delaware judge, the outcome of that legal challenge may influence Musk’s future with the company.

Meanwhile, Tesla’s Chief Financial Officer Vaibhav Taneja acknowledged during the recent earnings call that recent controversies had harmed the brand and sales, noting that “vandalism and unwarranted hostility” impacted several key markets.

Whether Musk will remain at the helm long-term remains to be seen. For now, the board insists he is staying—and so does he.