There’s finally some Tesla (TSLA) shareholder momentum to fire Elon Musk

There finally appears to be some Tesla shareholder momentum to fire Elon Musk from the company after years of concerns being ignored by the board and most shareholders.

However, probably nothing will happen as long as the stock (TSLA) is up.

For years, we have expressed concerns about Elon Musk steering Tesla away from its mission to accelerate the world’s transition to sustainable transport and energy.

It has intensified over the last year when Musk threatened Tesla shareholders to breach his fiduciary duties, fired Tesla’s entire charging team in a kneejerk reaction, dove headfirst into a worrying social media addiction, shared countless misinformation on social media, and financed politicians who have directly attacked Tesla and whose policies go directly against Tesla’s mission.

Most of these would be firable offenses at most companies, but we also reported for years that Tesla has massive governance issues with the board basically being completely under Musk’s control despite him owning just 13% of the company.

This leaves things in the hands of shareholders, who are limited to voting once a year. During Tesla’s shareholders meeting in June 2024, they made it clear that they are still for Musk, with most of them voting in line with what the board (aka him) recommended.

Since the inauguration and Musk’s salutes, the blowback, and his response to the blowback, there seems to be more traction amongst Tesla shareholders to remove.

Currently, the most popular post on the Tesla Investor Club on Reddit, one of the biggest Tesla shareholder communities, is about removing Musk as CEO of Tesla, and there have been a few of these types of posts getting traction over the last few weeks.

The post focused on Tesla’s lack of new models other than the Cybertruck in the last 5 years and the lack of growth in delivery volumes despite the rest of the EV market growing.

It also makes the argument that Musk is not following his own guiding principles when it comes to work dedication:

Assuming a few things…

1. Musk is good at keeping organizations focused on long term hard to reach goals
2. Musk is good at managing engineering teams
3. Taking Musk’s own words as truth: management and engineers co-locating with production and “in person” at the office interactions are net positives.
4. Taking Musk’s own words as truth: employees not willing to do #3 should move on.

Musk is not doing #3 and thus is no longer performing #1 and #2 at Tesla for the mission. Additionally, with his own logic, he is now in the group of employees that were let go (#4).

This is not a bad argument considering that, in addition to virtually leading six companies and working out of the White House for his new DOGE government department, he was caught literally tweeting about non-Tesla stuff in the middle of Tesla’s earnings call last week.

All that while, he rages against employees who work from home because he believes it is less productive.

While many Tesla shareholders agreed with the post, the main objection was that “the stock is up, why mess with something that works?”

This is indeed a problem for Tesla fans who want to see Musk go. With the board not doing anything, it would come down to shareholders voting the board out and forcing a confidence vote on Musk.

Shareholders are afraid that pushing Musk out would result in him selling his stock and triggering a big correction in Tesla’s stock.

Considering Tesla is currently trading at an insane price-to-earnings ratio of 200 and closer to 400 if you remove ZEV credits and the Bitcoin gain, would that be such a bad thing if it meant realigning with the mission?

Electrek’s Take

Obviously, I don’t think we would see that happen if there were a confidence vote tomorrow. I think the stock would need to come down to reality to motivate shareholders to take action.

Personally, I think being scared of a selloff because of Musk leaving is shortsighted. Tesla’s fundamentals are looking worse by the day, and this quarter should be the worst in years.

If Tesla stock doesn’t crash this quarter, Tesla will likely be trading at a 500+ P/E after reporting Q1 2025 earnings. The last time Tesla traded at these levels, Musk warned Tesla employees that the stock would get crushed “like a soufflé being smashed by a sledgehammer” if it didn’t show profit growth.

A few years later, Tesla is in an even worse situation, considering profits from its main business, automotive, are actually crashing, while profits from self-driving cars and robots are realistically still years away.

It’s true that removing Musk would likely result in a short-term stock crash, but I think it would be good for Tesla long-term.

First, Musk is undoubtedly negatively affecting Tesla’s sales. Removing him would likely give Tesla some breathing room when it comes to demand.

Secondly, Musk has created a huge liability for Tesla by consistently promising self-driving capability on all cars produced since 2016. This needs to be addressed and fixed, and Musk is clearly not the person to do this.

Tesla needs leadership to realign the company with its mission and derisk the self-driving effort. I think there’s room to still aim for Musk’s grand vision for Tesla, but without consistently lying and overpromising.

Call me crazy, but I think the company would fair better with a competent full-time CEO instead of an egomaniac wannabe oligarch who consistently lies to shareholders, engages in resource tunneling with his private competing company, and is deeply lost in one of the worst cases of social media addiction that I’ve ever seen.