Tesla shareholders want a full-time CEO. That's not how Musk works

CNN

7 days ago

This is a crucial year for Tesla. Just ask Elon Musk.
In January, he described 2025 as 'maybe the most important' in the company's history, with the admittedly ambitious goals of releasing its long-promised robotaxi service and humanoid robots.
But Musk's attention was monopolized by a high-profile role in the Trump administration as problems at Tesla began to mount. Even after stepping very far away from that role, Musk remains focused on a wide range of activities outside of Tesla, including starting a third political party and trying to fix problems at X, his social media platform.
The leaves Tesla — the most valuable automaker on the planet, employing 125,000 worldwide — missing one thing every other major company has: a full-time boss focused on its future.
Instead, the company has a chief executive who is so polarizing its costing the company sales and likely the ability to attract talent. While Tesla's board and shareholders aren't likely to show him the door, they probably should.
'To have one of the biggest companies in the world, not have a full-time CEO is unheard of,' said Ross Gerber, CEO of Gerber Kawasaki, an investment firm and one of the early investors in Tesla.
Gerber, a previous fan of the company and Musk, thinks he has now become a problem for Tesla.
'The fact of the matter is that Tesla is a massive company that needs a lot of attention, and it just isn't getting it,' Gerber told CNN.
Tesla faces a slew of problems, like plunging profits and the biggest drop in sales in the company's history, partly due to severe brand damage caused by Musk's political activities. Then there's regulatory credits, a huge source of revenue for Tesla, disappearing under the tax and spending bill just passed by Congress. The bill also took away a $7,500 tax credit for electric vehicle buyers, which will further cut into demand.
Meanwhile, Tesla's once-high-flying stock has lost more than a third of its value since hitting a record high last December.
A company facing such serious problems needs a CEO who is laser-focused. The mounting problems even have some Tesla bulls believing there needs to be more constraints on Musk.
'We believe this is a tipping point in the Tesla story and ultimately the Tesla Board needs to act now and set the ground rules for Musk going forward around his political ambitions and actions,' Dan Ives, tech analyst at Wedbush Securities, wrote in a note to clients this week.
Ives said the board should impose rules for how much time Musk must spend at Tesla and introduce an oversight committee for his political activities.
'Tesla is heading into one of the most important stages of its growth cycle with the autonomous and robotics future now on the doorstep and cannot have Musk spending more and more time creating a political party which will require countless time, energy, and political capital,' Ives wrote.
Tesla did not respond to CNN's request for comment on calls for Musk to spend more time at the company. However, Musk responded to Ives' suggestion by posting on X, 'Shut up, Dan.'
But it's not just analysts calling for Musk to be required to show up at the job that made him the richest person on the planet. A number of Tesla shareholders, including some Democrats who oversee the investment of public sector pension fund money in Tesla stock, complained in May to Tesla Board Chair Robyn Denholm that Musk's other activities are hurting the company.
'Musk's outside endeavors appear to have diverted his time and attention from actively managing Tesla's operations, as any other chief executive officer of a publicly traded company would be expected to do,' said the letter. 'The current crisis at Tesla puts into sharp focus the long-term problems at the company stemming from the CEO's absence.'
Even if Musk is forced to focus solely on Tesla, Gerber says Musk doesn't seem excited anymore about its core EV business, which continues to lose market share even as sales of electric vehicles increase around the globe.
'He doesn't want to be in the car business anymore,' said Gerber. 'He knows that everybody hates him. So, he thinks, 'Let's just focus on this robotaxi business and making robots, because if I put a big shiny object in front of people, they'll be distracted from the reality that Tesla has real problems and I don't have a solution for them.''
Tesla fans will argue that what matters now is the rollout of its robotaxi service, as well as developments in self-driving, robots and artificial intelligence.
But there are serious questions as to whether Musk is the right person to oversee the challenging transition.
For example, the robotaxi business finally debuted last month in Austin, Texas, but on a very limited basis and only for invited guests, not the general public. That is far behind the robotaxi efforts of Alphabet's Waymo, which is already providing more than 250,000 paid rides a week in Austin, Los Angeles, Phoenix and San Francisco.
Gerber said he still drives a Tesla himself and has made more than $100 million on investments in the company. But he says he's sold virtually all his Tesla shares and advised clients to do the same.
Gerber said he's frustrated because, with the right leadership, the company could achieve all its goals. But Musk, he says, is not the right leader.
'I don't think he has any grasp or grip on reality and any way at this point, and it doesn't seem to be anybody there to shake him and be like, 'Dude, you know, you're not seeing the world like that everybody else right now,'' he said.
But Gerber also doesn't see the Tesla board putting any limits on Musk, let alone replacing him.
'He's not going anywhere,' he said.