Tesla Board Firmly Denies Seeking Musk Replacement Amid Struggles

Tesla's $TSLA ( ▲ 0.35% ) leadership has categorically rejected reports claiming the company is searching for a successor to CEO Elon Musk, as the electric vehicle maker navigates through a challenging period marked by falling sales and investor concerns about Musk's divided attention.

Tesla board chair Robyn Denholm issued a definitive denial today following a Wall Street Journal report that suggested board members had approached executive search firms to identify potential CEO candidates^2,^10.

The Journal article, published on April 30, claimed that these discussions began approximately a month ago as Tesla's stock value declined and stakeholders expressed growing unease about Musk's extensive involvement with the Trump administration^3.

"The CEO of Tesla is Elon Musk and the Board is highly confident in his ability to continue executing on the exciting growth plan ahead," Denholm stated on the social media platform X^7.

She categorically described the report as "absolutely false" and noted that this denial had been communicated to media outlets before the article's publication^10.

The Original Report and Tesla's Pushback

The Wall Street Journal piece suggested a significant shift in the traditionally supportive relationship between Tesla's board and its controversial CEO.

According to their sources, board members had begun formal processes with recruitment agencies to identify a potential successor, supposedly narrowing their focus to one primary search firm^3.

Musk himself responded forcefully to these claims, describing the WSJ report as "an extremely bad breach of ethics" for publishing what he called a "deliberately false article"^3.

He further criticized the publication for failing to include what he characterized as an "unequivocal denial" from Tesla's board before running the story.

Timeline of Recent Events:
- April 30, 2025: WSJ publishes report claiming Tesla board is searching for Musk's replacement
- April 30, 2025: Tesla stock drops approximately 3% following the report
- May 1, 2025: Tesla board chair Robyn Denholm issues formal denial 
- May 1, 2025: Tesla stock rebounds slightly in pre-market trading

The situation unfolds against a backdrop of significant challenges for the electric vehicle pioneer, which has seen its market position weaken considerably in recent months^9.

Tesla's Current Business Challenges

Tesla's Q1 2025 financial results, released last week, painted a concerning picture for investors.

The company reported a staggering 71% drop in quarterly profits alongside a 9.2% decline in revenue to $19.335 billion, with both figures falling below market expectations^10.

This downturn stems largely from declining vehicle deliveries, which have reached their lowest point since 2022^12:

Tesla's first quarter production reached 362,615 vehicles, with the company delivering 336,681 units worldwide^6.

The company attributed some production challenges to Model Y line changeovers across its factories but noted that the "ramp of the New Model Y continues to go well"^6.

In the U.S. market specifically, Tesla's position has weakened considerably since its peak in spring 2023.

According to Cox Automotive analysis, Tesla's U.S. sales reached approximately 128,000 vehicles in Q1 2025, representing a 26% decline from its peak and reducing its market share from 5% to roughly 3%^9.

Musk's Divided Attention and Government Role

A significant factor in investor concerns has been Musk's role leading the Department of Government Efficiency (DOGE) in the Trump administration^7.

After spending nearly $300 million to support Trump's 2024 campaign, Musk was appointed as a special government employee tasked with reducing the size and expenses of the federal government^10.

This political alignment has reportedly caused substantial brand damage to Tesla, with protests outside showrooms and acts of vandalism targeting company facilities in both the U.S. and Europe^8.

The situation prompted some of Musk's strongest supporters on Wall Street to raise alarms about potential long-term harm to the Tesla brand^13.

Musk's Current Leadership Responsibilities:
- CEO of Tesla
- CEO of SpaceX
- De facto leader of X/xAI
- Involvement in Neuralink and The Boring Company
- Head of Department of Government Efficiency (DOGE)

Recognizing these concerns, Musk addressed investors during Tesla's first quarter earnings call, announcing plans to scale back his DOGE responsibilities beginning in May 2025^8.

He indicated that while he would continue dedicating "a day or two per week" to government matters, he would allocate "much more" time to Tesla moving forward^10,^13.

Investor Implications and Market Response

The speculation about potential leadership changes at Tesla comes at a particularly sensitive time for investors, who have witnessed the company's stock drop approximately 26% since the beginning of 2025.

This decline reflects both operational challenges and concerns about brand damage stemming from Musk's political activities.

Wall Street analysts maintain a consensus 12-month price target of $289.44 per share for Tesla, suggesting limited upside potential of just 2.6% from current levels^4.

This tepid forecast highlights the significant obstacles Tesla faces in regaining investor confidence.

Some financial analysts have expressed particularly pessimistic views about Tesla's immediate prospects.

Steve Westly, founder of The Westly Group, suggested that Tesla "may not have hit rock bottom yet" and emphasized that the company urgently needs to discover new growth sources to justify its tech company valuation^5.

Brand Impact and Future Outlook

The controversy surrounding Musk's political activities appears to have created lasting damage to Tesla's brand image.

Dan Ives of Wedbush Securities, historically one of Tesla's strongest supporters on Wall Street, has suggested that sales demand could permanently decrease by approximately 10% as a direct result of Musk's political image^8.

"The brand damage inflicted by Musk during his tenure in the White House/DOGE over the last few months will not vanish solely because of this decision, and some of the harm will remain indelible in Europe and the US," Ives noted in communication with clients^8.

Factors Contributing to Tesla's Current Challenges:
- Aging product lineup with limited recent refreshes
- Increasing EV competition globally
- Brand damage from Musk's political activities
- Potential trade war impacts on supply chain
- Uncertainty about future government EV incentives

The remainder of 2025 is likely to be characterized by continued volatility for Tesla and the broader electric vehicle market.

Industry analysts at Cox Automotive have highlighted multiple factors that could create additional headwinds, including new auto tariffs (particularly on steel and aluminum), the ongoing trade tensions with China (the world's leading supplier of EV battery materials), and speculation about potential reversals of EV sales incentives under the current administration^9.

Tesla Board's Historical Support for Musk

Today's emphatic denial from Tesla's board represents a continuation of their historically strong support for Musk's leadership.

The board has traditionally backed his decisions and initiatives, including granting him a $55 billion CEO compensation package and remaining silent during various controversies^14.

This unified front comes despite reports that some board members had privately expressed concerns about Musk's preparedness for Tesla meetings during his government work.

According to the WSJ report, at least one board member allegedly told people that Musk "wasn't as well prepared" and "needed to be briefed more about what is happening with Tesla"^14.

Looking Ahead: Leadership Stability and Strategic Priorities

Despite today's firm denial of any CEO search, the episode highlights the precarious balance Tesla must strike between maintaining leadership continuity and addressing investor concerns about Musk's divided attention.

As an iconic founder-CEO, Musk's identity is deeply intertwined with Tesla's brand and investor narrative, making any leadership transition exceptionally complex.

For now, the company appears focused on executing its "exciting growth plan" while hoping that Musk's promised reduction in government activities will allow him to refocus on Tesla's core challenges: reversing sales declines, refreshing its aging product lineup, and restoring investor confidence.

The situation remains fluid, with investors closely monitoring both Tesla's operational performance and Musk's actual time allocation in the coming months.

Though the board has forcefully rejected reports of succession planning, the episode serves as a reminder of the heightened scrutiny Tesla faces as it navigates through one of the most challenging periods in its history.