Why Tesla Can’t Find a CEO to Replace Elon Musk

Business is down and the CEO is busy with politics, but Tesla cannot replace the CEO because the values, beliefs and technological capabilities are closely tied to Musk.

As investors are increasingly concerned about falling sales and profits while CEO Elon Musk is constantly absent due to being busy with politics, Tesla’s board of directors spoke out to defend the company on May 1.

Chairwoman Robyn Denholm said they have “great confidence” in Musk to execute the “promising growth plan ahead”. The response came after the Wall Street Journal reported that Tesla’s board had considered finding a CEO to replace Musk, something Denholm denied.

The latest development shows the unique dilemma Tesla’s board of directors is facing, managing a CEO who runs five companies and has recently focused mainly on advising the Republican US President – something that has upset many of Tesla’s left-leaning customers.

In the first quarter, the US electric carmaker’s sales plummeted to a nearly three-year low, with 336,681 vehicles sold globally compared to 386,810 in the same period in 2024. Tesla’s market value has evaporated about 45% since mid-December last year. Previously, the company’s shares had peaked after Mr. Trump’s election victory, when investors expected Musk’s close relationship with the White House to benefit the electric carmaker.

Tesla’s global sales over the past three years. Source: Reuters

However, in the first quarter of this year, Tesla’s revenue fell nearly 20%, and net profit plunged 71%. “There’s no question that the brand crisis is having a negative impact on Tesla,” said Dan Ives, an analyst at Wedbush Securities. He also called the first-quarter sales “disastrous.”

According to new figures released on May 1, the company’s sales continued to decline sharply in many markets last month. Sales in France fell 59.4% year-on-year to 863 vehicles, according to the French Automobile Industry Association (PFA). This was a significant drop compared to the 36% decline in March. Since the beginning of the year, Tesla’s sales in France have fallen 43.9%. In Denmark, according to data from Mobility Denmark, Tesla’s April sales plunged 67.2% to 180 vehicles, after falling 65.6% in the previous month.

Given this situation, Tesla needs to grow again as soon as possible, and a new wind from a CEO to replace Elon Musk has been thought of or speculated by some people. However, according to many analysts, finding a CEO to replace Musk is almost impossible.

Reuters assessed that few companies have a fate that depends as much on the image of the CEO as Tesla. According to investors, analysts and three inside sources familiar with the matter, replacing Musk is considered a huge risk. An estimated three-quarters of Tesla’s outstanding market value – which far exceeds current earnings – is due to the autonomous driving and humanoid robot technologies that Musk has promised for years but has yet to launch.

Tesla supporters still see Musk as the only genius who can realize that future, despite increasingly fierce competition, especially from China, where manufacturers like BYD have surpassed Tesla in sales.

Elon Musk at a White House cabinet meeting on February 26. Photo: Reuters

Replacing Musk is a daunting task, said portfolio manager Brian Mulberry of Zacks Investment Management, a Tesla investor. The “incredibly complex” challenge requires someone with the capacity to fill the financial void left by Musk, which is to maintain profitability in the struggling electric vehicle business while also delivering on the long-standing promise of a “network of autonomous taxis.”

Any successor would have to contend with Musk, who remains Tesla’s largest shareholder, with a 13% stake. Over the past year, the electric carmaker’s leadership team has been significantly thinned as Musk has shifted his focus away from becoming an “electric car giant” to autonomous taxis, robotics and artificial intelligence.

According to Reuters’ internal sources, senior executives have resisted a drastic shift away from driverless cars. Some raised concerns with the board, but the board also sided with Musk. According to Gary Black at Future Fund, the company currently has no internal leader capable of replacing Musk. “We don’t see anyone internally who has the skills, the technical skills, the strategy, the execution,” he said. Future Fund is also an investor in Tesla.

James McRitchie, a personal Tesla investor, acknowledged the risk of replacing Musk. “The stock price is largely tied to the love of Elon and the belief that robots are going to do everything for us,” he said. He compared Musk to legendary former General Electric CEO Jack Welch, who investors once viewed as a “god.” “When he left, it was like a tower of doom. I think Tesla is the same,” he said.

On a scale of 10 for difficulty, replacing Musk is an “8 or 9,” ​​according to Brian Mulberry of Zacks Investment Management. In addition, this expert believes that the new CEO must also be someone “who has his own character and is not overshadowed by Musk’s shadow”. More bluntly, expert Gene Munster at the investment fund Deepwater Asset Management said that replacing Musk is basically impossible.

Reuters cited sources saying that some internal Tesla personnel have suggested to Musk for many years that he hire an executive to manage the day-to-day work, while he himself remains in an image role. This is similar to how his other companies are operating, for example, Gwynne Shotwell holds the role of President and COO of SpaceX.

However, Musk has firmly refused to do the same at Tesla. In an online meeting on April 22 to explain the disastrous business results, CEO Elon Musk announced that he would return to direct management of the business. “Tesla has been through a lot of crises over the years, even near death. But this is not the case. We are not on the brink of collapse, not even close,” he asserted.

Brian Mulberry believes that the American electric car company can still succeed with or without Musk. “Tesla has a great electric vehicle product line, including autonomous taxis and autonomous driving technology. Now it’s just a matter of management to complete it. Do you really need another wave of innovation, or do you just need to execute properly?”, he commented.