Tesla's board reportedly began searching for a potential successor to Elon Musk earlier this year, highlighting growing concerns about the CEO's divided attention between the electric vehicle maker and his political activities. This revelation comes as Musk has faced significant financial consequences from his involvement with the Trump administration's Department of Government Efficiency (DOGE).
The Search for a New CEO
According to a Wall Street Journal report, Tesla's board actively sought a replacement for Elon Musk earlier this year, reaching out to several executive placement firms. The board apparently issued an ultimatum to Musk, demanding that he prioritize his role at Tesla over his political activities with DOGE. This unprecedented move signals a dramatic shift in the board's perception of Musk, who was once considered the company's greatest asset but now appears to be viewed as a potential liability.
The Financial Impact of Musk's Political Role
Elon Musk's net worth has plummeted by approximately $113 billion, or 25%, since President Donald Trump's inauguration in January. This staggering loss averages more than $1 billion per day during Trump's first 100 days in office. Tesla's stock, which accounts for about 60% of Musk's wealth, has dropped 33% since just before Trump's inauguration and 41% from its peak in December 2024. These financial consequences directly correlate with Musk's increasing political profile and the resulting consumer backlash against Tesla.
Financial Impact on Elon Musk
- Net worth decline: 25% (approximately $113 billion)
- Average daily loss: Over $1 billion
- Tesla stock decline: 33% since Trump's inauguration, 41% from December 2024 peak
Tesla Business Metrics
- Q1 2025 sales: 13% decline
- Percentage of Musk's wealth derived from Tesla: Approximately 60%
- Public disapproval of Musk's DOGE role: 57% (up from 49% in February)
Brand Damage and Consumer Reaction
Musk's role as a special government employee heading DOGE has politicized Tesla's brand, triggering boycotts and protests. According to an April Washington Post-ABC News Ipsos poll, 57% of Americans disapprove of how Musk has handled his DOGE responsibilities, an increase from 49% in February. Dan Ives, a managing director at Wedbush Securities and longtime Tesla bull, described the situation as the clock struck midnight and warned that the more Tesla becomes a political symbol, the worse it is to the brand and the stock.
Tesla's Business Challenges
Beyond the political fallout, Tesla faces significant business challenges. The company reported a 13% drop in sales in the first quarter of 2025, while simultaneously confronting increased competition from Chinese manufacturers. Tesla's CFO Vaibhav Taneja had previously warned that Trump's tariff plans would impact [its] business and profitability. Adding to these challenges, Vineet Mehta, Tesla's head of battery architecture, recently departed the company, further destabilizing its leadership team during this turbulent period.
Musk's Response and Future Plans
During Tesla's recent Q1 earnings call, Musk attempted to address these concerns by declaring that his DOGE work was mostly done and promising to spend more time at Tesla starting in May. However, he also conceded that he would likely continue working with President Trump in some capacity, dedicating one or two days per week to DOGE business. It remains unclear whether this commitment has satisfied the board's demands for his full attention to Tesla's operations.
Recovery Prospects
Despite the significant downturn, there are signs of potential recovery. Musk's net worth has rebounded somewhat to about $335 billion as Tesla's stock rallies, though it remains well below its December 2024 peak. Analysts like Ives suggest that Musk's return to focusing on Tesla could help the company recover, though he warns that some permanent brand damage may have already occurred. The coming months will be critical in determining whether Tesla can overcome the political polarization affecting its brand and whether Musk can successfully balance his various roles and responsibilities.