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Tesla (TSLA) is on the hunt for the successor to CEO Elon Musk, according to a report from the Wall Street Journal. Members of the board contacted several search firms to work on a process for finding the next Tesla CEO, amid falling car sales and profit in the company’s first quarter. While Tesla strenuously denied the report, with chair Robyn Denholm posting a statement refuting it on X, Musk’s focus on the controversial Department of Government Efficiency (DOGE) and his decreased focus on Tesla may not have sat well with investors or consumers.
According to the Journal, Tesla’s board met with Musk recently to urge him to spend more time at Tesla and told him he needed to make a public statement saying as much. Musk did not disagree, says the report, and ultimately last month he announced that he would cut back his time at DOGE to just a day or two per week for the remainder of President Donald Trump’s term in office. Notable investing analysts had called for Musk to refocus on Tesla given the company’s first-quarter challenges.
All the furor comes amid a decline in Tesla shares that exceeded more than 50 percent from the stock’s recent high late last year. It was a rapid plunge, after the stock enjoyed a boost following an election victory for Trump on expectations of a benefit to the Trump-aligned Musk.
The decline also had some poor optics, as the CEO’s brother and other insiders sold Tesla stock at higher levels. Kimbal Musk offloaded some $43 million in stock in late 2024 and early 2025.
Musk continues to present significant risks to Tesla
The ability of Elon Musk to make Tesla into a “story stock” is undeniable. For years, Musk has been able to keep investors focused on what he promises will be a bright future, helping turn what is typically a low-margin car business into a trillion-dollar company and worldwide acclaim. Musk has long promised full-self-driving vehicles and a fleet of autonomous robo-taxis, while more recently he’s hyped up the potential of Tesla’s development of humanoid robots.
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But Musk also presents some significant risks to Tesla investors, too. Investors are seeing one of the largest risks play out since Trump took office in late January, when Musk began working at DOGE. With Musk as the face of the agency, DOGE has slashed various government programs and taken aim at Social Security, generating significant rancor among the public.
Those efforts have created reputational backlash against a car company that has previously been lauded for its environmental friendliness. Consumers protested, not just in the U.S. but also in Europe, and sales dipped significantly in major E.U. countries in the first quarter. The press was bad in the U.S., too, with consumers boycotting the brand and vandalizing cars and dealerships.
Even Musk’s reduced involvement with the Trump administration may be too little, too late, having already hurt Tesla’s brand. While this outcome may become clearer in time, it’s damaging the company right now, presenting a key risk to shareholders. It seems unlikely that Musk’s reduced time away from DOGE actually solves this problem, since he’s still tied to Trump.
Beyond that, Musk has also pledged about one-third of his holdings of stock to backstop the purchase of the social media network formerly known as Twitter. Those shares are worth about $67 billion at recent pricing. If Musk has to unload his shares for some reason — such as if a lender wanted repayment — then he might need to sell a significant number of shares, a move that could come at an inopportune moment for the stock (that is, when it’s down), pushing shares still lower. In fact, the risk is significant enough that it’s included in the company’s 10-K filing.
Those are a few ways that Musk presents some major key-man risk to Tesla and why the company may be planning a successor for the world’s richest man. If your investment thesis for Tesla relies on Musk being in charge, then you’ll want to be sure that he remains in his CEO role. So those looking to buy Tesla stock should pay careful attention to the risks here, including the stock’s potentially significant overvaluation, as news emerges about a potential Musk successor.
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