Tesla Leadership Crisis Eases as Musk Recommits, Wedbush Says

The ongoing leadership saga at Tesla appears to have taken a turn, with the company’s board of directors and CEO Elon Musk jointly reinforcing their commitment to the electric vehicle (EV) pioneer’s future. Recent developments, including a robust denial of succession rumors and Musk’s renewed focus on operational challenges, have calmed investor nerves—though significant hurdles remain.

Leadership Stability and Governance Challenges

In early May 2025, Tesla’s board emphatically dismissed reports that it was seeking a successor to Musk, with Chairman Robyn Denholm stating, “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.” This denial followed a Wall Street Journal report that had sparked a 5% sell-off in Tesla’s shares. Musk amplified the board’s stance on his social media platform, X, calling the report “deliberately false” and accusing the WSJ of unethical omissions.

Yet, the board’s defiance comes amid stark financial and governance challenges. Tesla’s Q1 2025 net profit plummeted 71% year-over-year to $0.43 per share, while its stock price has halved since late 2023. Revenue growth slowed to 12% in Q1 2025, down from 51% in 2023, and net profit margins shrank from 11.4% in 2023 to 3.2%—a worrying trend for a company once lauded for its financial discipline.

The leadership’s credibility is further strained by Musk’s dual role as head of the U.S. Department of Government Efficiency (DOGE) under President Trump, a position that has drawn criticism for politicizing Tesla’s governance. Protests targeting Tesla’s brand—fueled by Musk’s far-right political alignments and clashes with regulators—have eroded consumer trust. Institutional investors, including BlackRock and Vanguard, have pushed for reforms to limit Musk’s distractions, while Denholm’s $8.7 million pay package as a non-operational chairman has sparked accusations of mismanagement.

Wedbush’s Nuanced Outlook: Bulls and Bears Collide

Analysts at Wedbush Securities, led by Daniel Ives, have acknowledged the leadership stability gains but remain cautious on near-term risks. While reaffirming a “Buy” rating, Ives slashed his price target from $550 to $315, citing brand damage from Musk’s political entanglements and execution delays in autonomous driving.

Key concerns include:
- Brand Erosion: Musk’s alignment with the Trump administration and his role at DOGE have fueled consumer backlash, with protests and vandalism impacting sales in key markets. Ives warns of 15-20% permanent demand destruction, a loss that could shrink Tesla’s customer base by 10%.
- Autonomous Driving Lag: Tesla’s Full Self-Driving (FSD) system faces regulatory hurdles and safety issues, lagging behind competitors like Waymo. A delayed robotaxi rollout—central to Tesla’s $1 trillion valuation thesis—could trigger a sell-off.
- Competitive Pressures: Chinese EV giant BYD is on track to overtake Tesla as the world’s largest EV seller, while European and U.S. sales are slipping.

The Path Forward: Musk’s Critical Role

Musk’s recommitment to Tesla—evident in his April 2025 “all-hands” meeting with employees—offers a lifeline. Analysts emphasize that his vision for autonomous vehicles and energy storage remains unmatched, but execution requires prioritizing operational excellence over political distractions.

The board’s reported efforts to add an independent director and Musk’s plan to reduce his DOGE involvement starting in May 2025 are positive steps. However, tangible improvements in Q2 deliveries, FSD testing, and margin stabilization will be critical to rebuilding investor confidence.

Conclusion: A Delicate Balancing Act

Tesla’s near-term survival hinges on Musk’s ability to refocus on his core mission while addressing governance flaws and brand damage. The stock’s valuation—down to $300 billion from $800 billion in 18 months—reflects skepticism about its current auto business, which now trades at a forward P/E of over 100, compared to peers’ sub-8 multiples.

Wedbush’s lowered price target underscores the risks, yet its “Buy” rating acknowledges Tesla’s long-term potential in autonomous mobility. Success depends on delivering a paid robotaxi fleet by mid-2025, reversing sales declines, and insulating governance from Musk’s polarizing persona.

As one analyst succinctly put it, “Tesla’s future isn’t just about batteries and software—it’s about whether the board can keep Musk focused on the road ahead, or if the detours will prove fatal.” For now, the jury is still out.

Investors are advised to monitor Q2 earnings (due June 2025) and FSD regulatory approvals closely. Until Tesla demonstrates progress on these fronts, its valuation—and leadership stability—will remain on shaky ground.