Tesla has dismissed reports that its board is actively seeking a replacement for CEO Elon Musk, calling the claims “absolutely false” even as the electric vehicle giant faces its sharpest decline in performance and investor confidence in years.
The company’s denial followed a Wall Street Journal report on Wednesday that claimed board members had approached executive search firms to begin scouting potential candidates to succeed Musk. The report, citing people familiar with the discussions, sent shares tumbling by as much as 3% in after-hours trading on platforms like Robinhood before regaining some ground.
Robyn Denholm, chair of Tesla’s board, pushed back strongly against the report, writing on social media platform X: “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. This is absolutely false (and this was communicated to the media before the report was published). 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.”
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Despite the denial, industry analysts say the report may have touched a nerve, reflecting mounting frustration from shareholders after a woeful start to 2025 that spilled over from last year. Tesla has seen its market value slashed by more than 30% since January, following dismal earnings, production slowdowns, and persistent concerns that Musk’s growing political involvement is undermining the company’s brand and alienating customers globally.
In the first quarter of 2025, Tesla posted a 9% drop in total revenue to $19.34 billion, far below the $21.11 billion expected by analysts, according to LSEG data. Automotive revenue fell 20% year-on-year to $14 billion, due to a combination of lower average selling prices, incentives, and temporary factory upgrades that interrupted Model Y production.
Net income collapsed 71% from the year before, plunging from $1.39 billion to just $409 million. Profit per share fell to 12 cents, down from 41 cents a year ago.
This steep decline has rattled investors, many of whom once believed Tesla could weather temporary dips in performance. Now, some point to Musk’s political entanglements, particularly his public alignment with Donald Trump, as a key factor dragging on the company’s value.
Musk’s political leanings have drawn increasing scrutiny. He was a cheerleader of the Trump campaign and was subsequently appointed to lead the Department of Government Efficiency (DOGE), which aims to streamline federal agencies’ spending and cut waste.
Although Musk said he would only spend “a day or two per week” on the project and later confirmed that he had stepped back from it, the damage may already have been done. His involvement in overt political activism, especially in a sharply divided global market, has risked alienating Tesla’s progressive consumer base, particularly in regions like California, Western Europe, and parts of Asia, where environmental and social concerns strongly influence EV adoption.
Analysts: Denial Is Not the End of the Story
Despite the board’s public defense of Musk, some analysts interpret the episode as a veiled message — a “warning shot” to the billionaire CEO that his position, while secure for now, is no longer untouchable.
Dan Ives of Wedbush Securities, a long-time Tesla bull, said the Wall Street Journal story, and the board’s quick rebuttal, reflect real tensions that have been brewing behind closed doors.
“On the WSJ/Musk article: While this was a very tense situation, we believe Musk clearly did the right thing [resigning from DOGE], and we believe Musk will remain CEO for at least five years at Tesla,” Ives said. “We would be surprised if the Board was still heading down this path. The Board did a warning shot.”
Others believe that while Musk’s recent actions have undoubtedly tested investor patience, there is still no clear successor with the vision, control, or charisma to replace him.
As Tesla struggles to regain its footing in a rapidly evolving EV industry, the leadership conversation is likely far from over. Competition is heating up from both legacy automakers and new entrants, and geopolitical tensions continue to complicate Tesla’s international growth strategy.
Analysts note that Musk’s ability to refocus on core operations while avoiding further political controversy will be critical in determining whether the company can rebound or continue to stumble.