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Tesla backers demand full-time CEO commitment from Musk again amid slumping sales and political distractions
A coalition of activist investors calls on Tesla’s board to rein in Elon Musk’s outside commitments and prioritize leadership succession as the EV maker faces falling profits, lagging sales, and reputational damage.
The letter cited a 71% drop in profits and a 13% decline in sales in Tesla’s most recent quarter as evidence of Musk’s distraction, particularly his work with the controversial U.S. Department of Governmental Enterprise (DOGE) Service.
A group of activist Tesla shareholders has issued a sharp rebuke to CEO Elon Musk, urging him to dedicate at least 40 hours per week to the electric vehicle company, warning that his divided focus - particularly his involvement with the Trump administration - has undermined Tesla's performance and public standing, according to media reports.
In a letter sent Wednesday to Tesla board chair Robyn Denholm, the coalition expressed growing frustration with the company, according to a report by The Washington Post.
The group, led by the labour-backed SOC Investment Group and including several small investors, controls just under 8 million Tesla shares - a small portion of the company's 3.2 billion outstanding shares.
"The current crisis at Tesla puts into sharp focus the long-term problems at the company stemming from the CEO’s absence," the shareholders wrote, the report added.
The letter cited a 71% drop in profits and a 13% decline in sales in Tesla's most recent quarter as evidence of Musk's distraction, particularly his work with the controversial U.S. Department of Governmental Enterprise (DOGE) Service, which has dominated his schedule over the past year.
The investors accused the board of failing to act in the best interests of shareholders, pointing to deteriorating financials, human rights controversies, and the erosion of Tesla’s global image. Since peaking in December 2024, Tesla’s stock has fallen roughly 24%, though it has slightly rebounded as Musk hinted at stepping back from his federal commitments.
Beyond calling for Musk’s increased presence, the letter urged the board to develop both short- and long-term leadership succession plans and push for governance reform. It recommended appointing at least one new independent director with no ties to current board members and limiting external obligations among directors, the report added.
The letter also referenced the recent ruling by a Delaware judge that invalidated Musk’s $56 billion pay package, citing insufficient board independence. That decision prompted Musk to start relocating Tesla’s legal headquarters from Delaware to Texas
While The Wall Street Journal reported this month that Tesla’s board had quietly begun a CEO search, Denholm dismissed the speculation on X, stating, “The Board is highly confident in [Musk’s] ability to continue executing on the exciting growth plan ahead.”
Still, the letter marks a continuation of shareholder unrest. Several of its signatories had previously opposed ratifying Musk’s 2018 compensation package, citing concerns over his multitude of ventures, the report added.
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