Tesla's Leadership Crossroads: Can the Board Steer the Ship Without Musk?

Tesla’s stock price has long been a barometer of investor sentiment toward its visionary CEO, Elon Musk. But with reports now surfacing that Tesla’s board has initiated a search for a successor to Musk—a move driven by governance concerns, financial struggles, and Musk’s escalating political involvement—the company faces its most significant leadership challenge in years. .

The Wall Street Journal revealed in May 2025 that Tesla’s board had reached out to executive search firms to identify candidates to replace Musk, citing his divided attention between Tesla and his role in the Trump administration’s Department of Government Efficiency (DOGE). The board’s actions followed a 71% plunge in Tesla’s first-quarter 2024 profits to $409 million, as well as a 45% year-to-date stock decline by early 2024. illustrate this volatility, with the shares falling from over $300 in late 2021 to under $150 by late 2023, partly due to Musk’s controversial public persona and governance concerns.

The Case for a Succession Plan

The board’s decision stems from multiple pressures:

1. Musk’s Governance Challenges: Musk’s roles at SpaceX, X/xAI, Neuralink, and The Boring Company have raised concerns about his capacity to lead Tesla effectively. Internal reports suggest he requires frequent briefings on Tesla’s operations, and his public alignment with Trump’s administration has sparked consumer boycotts and brand damage.

2. Financial Strain: Tesla’s profit margin has eroded as competitors like BYD and Rivian gain traction. BYD’s sales of EVs surged 89% in 2023, while Tesla’s global market share dipped to 16% from 22% in 2021. Meanwhile, Tesla’s $25,000 Model 3, delayed by supply chain issues, faces rising competition from models like the Chevrolet Bolt EV.

3. Investor Frustration: Shareholders have grown impatient with Musk’s promises about self-driving technology and humanoid robots. The board’s 2022 approval of a $55 billion compensation package for Musk—later struck down by Delaware courts—further strained trust. Institutional investors, including Third Point’s Dan Loeb, have publicly criticized Tesla’s governance.

The Succession Landscape

Potential candidates include:

• JB Straubel: Tesla’s co-founder and former CTO, now leading Redwood Materials, has been mentioned as a candidate but is focused on his current venture.
• Tom Zhu: Tesla’s senior VP and architect of the Shanghai Gigafactory has operational credibility but lacks Musk’s visionary profile.
• External Contenders: Names like Stella Li (BYD’s executive VP) or John Krafcik (ex-CEO of Waymo) have been floated, though Tesla’s reliance on Musk’s “visionary” brand complicates the search.

Risks and Opportunities

The board’s search is fraught with challenges. Musk’s 12.8% Tesla stake and $55 billion equity stake (if realized) give him outsized influence. Moreover, Tesla’s culture is deeply tied to Musk’s leadership. As one analyst noted, “Musk is Tesla’s product, its marketing, and its innovation—all rolled into one.”

Yet, the board’s actions could unlock value. A CEO focused solely on Tesla could stabilize operations, accelerate software development, and rebuild investor confidence. Competitors like BYD have already closed the gap in battery tech and pricing, making Tesla’s turnaround urgent.

Conclusion: A Risky Gamble, but a Necessary One

Tesla’s board is walking a tightrope. Replacing Musk risks destabilizing a company built on his vision, but inaction could lead to further financial and operational decay. The stakes are clear: shows BYD’s revenue growing at 2x Tesla’s rate since 2020. Without a clear successor, Tesla’s $36 billion market cap (as of May 2025) could continue its decline.

Investors should weigh two scenarios: - Scenario 1 (Status Quo): Musk remains CEO. Tesla’s stock could remain volatile, tied to Musk’s Twitter rants and DOGE involvement, with execution risks in autonomous driving and robotics.- Scenario 2 (Succession): A new CEO could stabilize operations and prioritize profitability. However, the board must find someone who can maintain Tesla’s innovation edge without Musk’s cult-like influence.

The board’s search is a sign that Tesla’s governance model is unsustainable. Investors should prepare for a bumpy road ahead, but long-term value creation may depend on a leadership transition—regardless of how painful it proves to be.