Tesla should dump Elon Musk as CEO before he flames out and sinks the stock price. Here's why.

Tesla’s board of directors has promised CEO Elon Musk $29 billion if he sticks around for another two years. Instead, they should pay him to quit.

The world’s wealthiest Texan has driven customers away, behaved recklessly with self-driving technology and spends too much time working elsewhere. The highest-paid CEO in history is heading for a fall, just like so many before him, and he’ll take Tesla’s share price with him.

Once upon a time, Musk was considered a heroic genius delivering the techno-utopia many Americans desire. He helped develop online payment systems, made electric vehicles cool and reinvented rocketry. Fans around the globe hoped he’d simplify daily life, fight climate change and make space travel affordable.

Today, most people consider Musk a cruel, unhinged right-wing oligarch who uses his wealth to hurt low and middle-income people around the world. While he may still be able to re-engineer products, he’ll never reverse the popular perception of his character.

Disgust for Musk has spilled over to his companies, especially Tesla.

Musk recently acknowledged that Tesla sales have dropped double-digits since he endorsed President Donald Trump and spent nearly $300 million to reelect him. A new survey from S&P Global Mobility shows Tesla customers are turning their backs on the company, the Reuters news agency first reported.

In June 2024, 73% of Tesla-owning households said they would buy another new Tesla in the future. In March, that number dropped to less than 50%, below the industry average for brand loyalty. It has since risen, but still trails Ford and Chevrolet.

This month, Musk experienced another setback when a federal jury determined Tesla was partially responsible for the misuse of the company’s Autopilot system in a fatal crash. 

The family’s attorneys successfully argued that Musk misled the public when he claimed in 2016 that Autopilot was safer than a human driver. Tesla says it will appeal. If upheld on appeal, Tesla would have to pay the victim’s family $243 million.

The Insurance Institute for Highway Safety reports that self-driving software is still unsafe and rated Tesla’s latest version of Autopilot as “poor.” Yet Musk continues to tout his software and is deploying self-driving taxis that many experts warn have inadequate sensor systems.

Some Tesla shareholders are worried about the company’s liability and have joined a class-action lawsuit against Tesla. They claim Musk attempted to conceal tests showing Autopilot and the Robotaxi speeding, braking suddenly, driving over a curb, entering the wrong lane and dropping off passengers in the middle of multilane roads.

Tesla’s self-driving technology, which is a kind of artificial intelligence, is the only thing keeping the stock price at astronomical levels. The price-to-forward earnings ratio, which reflects a company’s future value, was 165 on Thursday, while the average ratio for S&P 500 companies is 22.67.

Yet Tesla has fallen behind the competition under Musk’s leadership. Google’s Waymo is far ahead of Tesla’s Robotaxi on self-driving deployment and customer confidence. Musk’s artificial intelligence chatbot, Grok, keeps spewing hateful garbage. No wonder the CEO of X, Linda Yaccarino, quit after Musk combined Grok’s parent, xAI, with the former Twitter.

In the face of fierce competition, I’m sure no one was more surprised than his board directors when Musk spent the past year helping Trump get elected and then appointing himself the president’s “first buddy.”

Shareholders at first thought Musk would leverage the relationship into greater profits. But Trump’s policies have severely damaged Tesla’s profitability, the source of most of Musk’s wealth.

“We probably could have a few rough quarters,” Musk told investors last month. “But once you get to autonomy at scale in the second half of next year, certainly by the end of next year, I would be surprised if Tesla’s economics are not very compelling.”

Musk could be a genius, but there are only so many hours in a day. He is ultimately responsible for the mediocre performance of the six companies he runs.

Tesla’s board members argue that shareholders must give Musk $29 billion to retain his attention. At best, though, they will get a part-time CEO who has already tanked the stock price 20% in less than a year.

Unfortunately for shareholders, Musk doesn’t have to worry about answering to them. Now that Tesla is incorporated in Texas, our state law says you need to own 3% of the stock to question a CEO’s compensation.

History shows that charismatic, messianic CEOs suffer a comeuppance eventually, and that they sink their company’s stock price. Musk will retain his wealth when his moment comes, but Tesla’s investors will not. The board should get rid of him while they still have time.

 Award-winning opinion writer Chris Tomlinson writes commentary about money, politics and life in Texas. Sign up for his “Tomlinson’s Take” newsletter at houstonchronicle.com/tomlinsonnewsletter or expressnews.com/tomlinsonnewsletter.