Tesla finds itself at the center of a growing storm as major institutional investors demand accountability from its board of directors while a public feud between CEO Elon Musk and President Donald Trump has wiped billions from the company's market value. The electric vehicle manufacturer is facing unprecedented pressure from pension funds managing trillions in assets, who argue that Tesla's board has failed in its fundamental duty to provide proper corporate governance.
Pension Funds Launch Coordinated Campaign Against Tesla's Board
The American Federation of Teachers, representing 1.8 million members with pension funds controlling USD 4 trillion in assets including USD 8.8 billion in Tesla shares, has emerged as a leading voice in the campaign against Tesla's board. AFT President Randi Weingarten has been actively pressuring major investment firms including BlackRock, Fidelity, Vanguard, T. Rowe Price, and TIAA to review their Tesla holdings and demand board accountability. People don't like Elon Musk, Weingarten stated, emphasizing that the board must either ensure Musk focuses on his CEO duties or replace him entirely.
Nine state treasurers and comptrollers sent a formal letter to Tesla Chair Robyn Denholm in April, expressing concerns about risks to their economies if Tesla falters due to poor governance. Illinois Treasurer Michael Frerichs noted that no other publicly traded company CEO would be allowed to neglect day-to-day duties as Musk has done. The coordinated effort represents one of the most significant institutional investor challenges Tesla has faced in its history.
Key Financial Figures:
- American Federation of Teachers pension funds: USD 4 trillion assets under management
- AFT Tesla holdings: USD 8.8 billion
- Tesla market cap loss from Musk-Trump feud: USD 152 billion
- CalPERS Tesla stake value: USD 3.2 billion (9.4 million shares)
- Maryland State Retirement Agency Tesla investment: USD 175 million
- Tesla current market capitalization: USD 916 billion
Market Turmoil as Musk-Trump Relationship Deteriorates
The situation reached a critical point when Musk's public feud with President Trump triggered a catastrophic USD 152 billion loss in Tesla's market capitalization within hours. The conflict erupted over Trump's One Big Beautiful Bill, which Musk criticized on his X platform, leading to a series of escalating exchanges between the two figures. Tesla's stock plummeted approximately 14 percent in a single day, marking one of the biggest single-day hits to its market value in years.
Trump responded by threatening to terminate Musk's governmental subsidies and contracts, which generate billions for Tesla and SpaceX. In retaliation, Musk threatened to immediately decommission SpaceX's Dragon spacecraft, which NASA relies on for International Space Station missions. The public nature of this dispute has raised serious questions about the stability of Tesla's leadership and its potential impact on government contracts worth billions of dollars.
Tesla Stock Performance:
- Single-day drop: 14% during Musk-Trump feud
- Year-to-date performance: Down 18%
- Recent rally: Up 50% since April 21, 2025
- Current stock price: USD 332.05 (as of article date)
Consumer Sentiment Reflects Growing Brand Damage
Recent polling data reveals the extent of damage to Tesla's brand reputation. A survey conducted by GBAO found that 55 percent of 2,000 Americans view Musk unfavorably, while Tesla ranked as the least favored brand among participants considering electric vehicles. Most significantly, 51 percent of respondents indicated they would view Tesla more favorably if Musk were replaced as CEO.
The polling results align with visible protests at Tesla facilities worldwide, where thousands of demonstrators have gathered since February to oppose Musk's political activities. The grassroots movement, now organized under the name Tesla Takedown, issued a stark three-word statement following the market crash: Sell, Sell, Sell.
Consumer Sentiment Survey Results (GBAO):
- 55% of Americans view Musk unfavorably
- 51% would view Tesla more favorably with a different CEO
- Tesla ranked as least favored EV brand among survey participants
- Survey sample: 2,000 Americans
Financial Impact on Major Institutional Investors
CalPERS, the largest U.S. pension fund representing California public workers, sold 4.5 million Tesla shares in the third quarter of 2024, though it maintains that its investment decisions are driven by systematic strategies rather than single events. The fund still holds approximately 9.4 million Tesla shares worth USD 3.2 billion as of recent filings. Maryland's State Retirement Agency has USD 175 million invested in Tesla through pooled accounts, with Comptroller Brooke Lierman expressing concerns about the company's governance affecting retirement portfolios.
The financial stakes are enormous for pension funds whose members depend on these investments for retirement security. Weingarten emphasized that the AFT doesn't want Tesla to fail because such a collapse would devastate retirees' portfolios, but the organization is prepared to pursue legal action against Tesla's board if governance issues aren't addressed.
Critical Timing for Tesla's Future
The governance crisis comes at a particularly delicate moment for Tesla, which is preparing to launch its long-awaited robotaxi service in Austin, Texas, this month. Musk has positioned Tesla as a robotics and autonomous vehicle technology company rather than just an automaker, making the success of these initiatives crucial to justifying the company's USD 916 billion market capitalization.
Tesla's latest quarterly results showed significant declines in production, deliveries, and sales, particularly in European markets. The company has scaled back plans for more affordable electric vehicles and abandoned advanced manufacturing techniques it had previously promoted. With institutional investors demanding change and consumer sentiment deteriorating, Tesla faces mounting pressure to demonstrate that its board can provide effective oversight of both the company's operations and its controversial CEO.