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Tesla Board Reportedly Explored Replacing Elon Musk as CEO Amid Profit Slump and Public Controversies

In a significant behind-the-scenes development, Tesla’s board of directors began confidentially exploring CEO succession options as early as March 2025, according to a Wall Street Journal investigation. Citing several unnamed sources familiar with the matter, the Journal reported that Tesla had reached out to multiple executive search firms to evaluate potential successors for Elon Musk—a move signaling growing internal concern about Musk’s focus and the company’s struggling performance.

Internal Pressures Mount as Tesla Stock Falls Over 40% in Early 2025

Tesla’s stock price (NASDAQ: TSLA) had plunged by more than 45% earlier this year—reaching its lowest point since 2022—before experiencing a partial rebound due to broader market recovery. Despite this, the company’s first-quarter earnings dropped a staggering 71% year-over-year, reflecting a mix of waning demand, production bottlenecks, and mounting brand controversies.

Tesla reported sales of just 386,810 vehicles globally in Q1, down from 422,875 in Q4 of 2024—the worst quarterly drop in company history. These figures alarmed investors and likely intensified the board’s exploration of a CEO transition.

Musk’s Government Stint Diverts Attention as Board Urges His Return

A major factor in the board’s dissatisfaction appears to be Musk’s extensive involvement with the U.S. government’s Department of Government Efficiency (DOGE), a White House initiative. Though largely symbolic, Musk’s government role had turned into a near full-time commitment, raising red flags within Tesla’s leadership as the company weathered one of its worst financial quarters ever.

At a recent investor call, Musk admitted, “There’s been some blowback for the time I’ve been spending in government… Starting next month, I’ll be allocating far more of my time to Tesla.”

He claimed his role at DOGE was largely complete, and pledged to refocus on Tesla. However, sources remain unclear if this shift changed the board’s intentions about finding a replacement.

Public Image Crisis and Internal Chaos Shake Tesla’s Foundation

In addition to financial struggles, Tesla has been embroiled in widespread public backlash, particularly in Europe and North America. Activists have protested outside showrooms over Musk’s political affiliations and controversial statements. Tesla’s brand image—once a green-tech darling—has suffered significant erosion, especially among progressive consumers.

Tesla CFO Vaibhav Taneja acknowledged during the earnings call, “The negative impact of vandalism and hostility toward our brand has had a measurable effect in key markets.”

In parallel, internal strife has grown. Cabinet members in the Trump administration, with whom Musk worked closely, have reportedly clashed with him—including a shouting match with Treasury Secretary Scott Bessent earlier this month. President Trump himself, during a Cabinet meeting, praised Musk but acknowledged his split priorities: “You’ve really been a tremendous help, but I guess he wants to get back to his cars.”

Musk’s Other Ventures and Legal Setbacks Add to Instability

Adding to investor concerns is Musk’s involvement in multiple other ventures. He remains deeply tied to SpaceX, a key government contractor, and X (formerly Twitter), which he acquired in 2022. His leadership of X has been turbulent, with public criticism over platform moderation decisions, political bias, and associations with extremist content.

Meanwhile, Musk’s record-breaking compensation package—initially valued at over $50 billion—was struck down twice by a Delaware judge due to corporate governance concerns. Tesla, once incorporated in Delaware, has since moved its registration to Texas.

Musk currently owns 410 million shares of Tesla (~12.8% of total stock) and has stock options for another 304 million shares—though these remain under legal scrutiny. If reinstated, Musk’s total stake could rise to over 22% of Tesla.

Behind Closed Doors: Musk Reportedly Open to Departure

Despite outward confidence, Musk has privately expressed willingness to step down, sources told the Journal. While he fears a successor might not uphold his vision of a fully autonomous future for Tesla, he has also voiced exhaustion and frustration—especially following his recent legal and political battles.

Insiders note that the board, while still valuing Musk’s visionary leadership, has grown increasingly concerned that his attention is stretched too thin across too many empires—Tesla, SpaceX, X, and his governmental ventures.

What's Next for Tesla?

It remains unclear if Tesla's CEO search is still ongoing, or if Musk’s renewed commitment to Tesla has stalled the board’s efforts. Neither Musk nor Tesla provided comment to media inquiries.

What’s clear is that Tesla faces a pivotal juncture: continued volatility in stock performance, shifting consumer sentiment, global trade uncertainties, and the challenge of scaling production in a cooling EV market—all while relying on a CEO increasingly pulled in multiple directions.

As the board weighs its next move, the question lingers: Can Tesla thrive under Musk’s reign, or is it time for a new driver at the wheel?

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