Tesla board starts process to remove Elon Musk as CEO of the company

The Tesla board has started the process of replacing Elon Musk as chief executive, after a month of internal pressure and public backlash over his continued absence from the company.

This happened as sales fell, profit collapsed, and investors lost patience with Elon’s obsession with the White House. Board members contacted many top recruiting firms to begin the official search for a new CEO, according to The Wall Street Journal.

Meetings were held behind the scenes. At one of them, directors told Elon he had to spend more time at Tesla, and that he should say so publicly. Elon didn’t argue. The company had just posted a 71% plunge in first-quarter profit.

Elon told shareholders on the earnings call, “Starting next month, I’ll be allocating far more of my time to Tesla.” Days later, President Donald Trump thanked Elon during a cabinet meeting. “You know you’re invited to stay as long as you want,” Trump said. “I guess he wants to get back home to his cars.”

Elon’s absence triggered leadership crisis inside Tesla

No one knows if Elon was aware of the CEO search or whether his promise to return to Tesla made a difference. But some board members already picked a search firm. Elon didn’t respond to questions. The company hasn’t shared anything publicly.

If a new CEO is named, it would be the end of Elon’s two-decade reign running the electric car maker. He gave up the chairman seat in 2018 but stayed in charge of everything else.

The eight-person board also wants to add a new independent director. JB Straubel, the company’s co-founder, has been meeting big investors to convince them that Tesla isn’t collapsing. But Elon’s political shift came at the worst time.

In 2024, Tesla’s car sales dropped for the first time in more than ten years. Price cuts destroyed profit margins. The Cybertruck rollout was a disaster. It became a joke on late-night shows for its design.

After Trump won re-election, Tesla’s value shot up to $1.5 trillion. Then it crashed to $900 billion. Elon texted someone last year that he was tired of nonstop work, especially after a Delaware judge rejected his huge pay deal.

He reportedly said he didn’t want to be CEO anymore, but he was scared nobody else could push Tesla’s idea that it wasn’t just a car company but the future of automation and robotics.

Elon also complained that even though he owns 13% of Tesla, he hasn’t been paid in seven years. The board made a new compensation committee to deal with that. More than 20 execs report directly to him, based on company records.

Since the election, he’s mostly lived in D.C. and spent weekends at Mar-a-Lago. When he did talk to his staff, it was remote. Employees said the first time they saw him in months was at a March meeting streamed live.

Tesla investors question leadership as product issues mount

At first, employees were glad Elon was away because they said he micromanaged too much, per the Journal’s report. But things changed fast.

Some workers wanted confirmation that Elon still believed in Tesla’s mission. In November, Mike Snyder, who leads the solar and energy team, told his staff, “It’s obviously been a turbulent and emotional season, I acknowledge that. I’d rather have Elon next to Trump than an enemy of Trump.”

He told them Elon still responded to messages. “People concerned that Elon is not engaged or interested, I can assure you that’s not true.”

Executives also reportedly say Tesla is now focused on artificial intelligence and robots. The company is pivoting away from its old growth model. The new Cybercab has no pedals or wheel. The Optimus robot is the center of Elon’s next pitch: a $30 trillion company. But the core EV business is falling apart.

Instead of rolling out a low-cost model this year, Tesla made cheaper versions of existing ones. The Model Y got a facelift in March.

Meanwhile, the company is telling investors that self-driving ride services are coming soon. Tesla plans to launch its ride-hailing app in Austin by June. Customers will be able to take driverless rides in Model Ys. That puts them up against Waymo and Zoox.

Cryptopolitan Academy: Coming Soon - A New Way to Earn Passive Income with DeFi in 2025. Learn More