Tesla Inc. Chair Robyn Denholm pushed back against a report the board was looking to replace Chief Executive Officer Elon Musk, saying directors are “highly confident” in his ability.
“Earlier today, there was a media report erroneously claiming that the Tesla board had contacted recruitment firms to initiate a CEO search at the company,” Denholm posted to Tesla’s X account. “This is absolutely false.”
Denholm, who rarely if ever comments publicly on Tesla, went on to say that the board is confident in Musk’s ability to “continue executing on the exciting growth plan ahead.”
The rebuke came after the Wall Street Journal reported that Tesla board members had contacted executive search firms to hunt for a successor to Musk at the height of the carmaker’s crisis earlier this year, citing people familiar with the discussions. According to the newspaper, the directors’ approaches took place about a month ago, as investors fretted about the amount of time Musk was devoting to his cost-cutting role with the US government.
At around the same time, board members told Musk he needed to spend more time at Tesla, and Musk made no objections, the newspaper said. While the board narrowed its focus to just one recruitment firm, the current status of the succession planning isn’t clear, the Journal said.
Musk last month said he’ll pull back “significantly” from his work with the newly created Department of Government Efficiency or DOGE and pay more attention to Tesla. That soothed investor concerns following the company’s worst quarter in years.
The crisis has threatened to envelop Tesla on multiple fronts. A consumer backlash against Musk’s government work and political activities have damaged sales of its electric cars, alienated core customers and weakened the brand. By March, protesters were targeting showrooms, vehicles and charging stations in the US and across Europe. At the same time, Tesla has been weighed down by the rising costs of US President Donald Trump’s trade war.
The reported approaches to recruitment firms by the board will serve as a “warning shot” for Musk, and his days at the White House are ending, Wedbush Securities Inc. analyst Dan Ives said, before Denholm’s statement. Musk will remain Tesla’s CEO for at least another five years, Ives added.
“We would be surprised if the board was still heading down this search path as of today,” Ives said in a note.
Other investors interpreted the story differently.
Ross Gerber, co-founder and CEO of Gerber Kawasaki Wealth and Investment Management, said in an interview with Bloomberg TV that the board’s reported actions could give Musk an out, allowing him to leave his job to focus more on artificial intelligence. Ultimately, Musk could become Tesla’s chairman instead, he said.
“I look at this as a way for him to gracefully exit Tesla,” Gerber said. “With Robyn Denholm selling all of her stock as chairman of the board, I think she’s on her way out. He becomes chairman and they find a new CEO.”
Denholm earlier this week sold another large chunk of her shares and has raised around $150 million via such share sales since December.
Gerber said Tesla co-founder and board director JB Straubel would make a neat replacement.
“Considering JB Straubel is the one talking to a lot of these investors, he’s probably the one best suited to take this role, even though he wouldn’t be an outside player,” Gerber said. “I think an inside player makes a lot more sense.”
But even should Musk leave his position, there’s no quick cure for Tesla’s ailments, Gerber said, adding he’s continuing to sell shares in the EV maker.
“The damage is done,” he said. “For Tesla to really fix its brand, it’s going to be an incredibly challenging thing. A lot of the damage is not related to DOGE, it’s more related to the daily tweets and insults that come from his Twitter [account] that continually anger and enrage different groups of people that used to buy his cars.”
“Tesla is in a very vulnerable position of their own making and it’s not so simple as Elon going away,” Gerber said. “I’m still dumbfounded as to how deep a problem they’ve created. I’ve never seen any business run like this, ever.”
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