Refute the rumor! Tesla (TSLA.US) chairman denies “search for Musk's successor” reports

The Zhitong Finance App learned that Tesla (TSLA.US) chairman Robyn Denholm denied reports that the board of directors is looking for a replacement for CEO Elon Musk, saying that the directors are “very confident” in his abilities. Denholm wrote through Tesla's official account on X: “Earlier today, media reports falsely claimed that Tesla's board of directors had contacted the recruitment company to begin searching for the company's CEO. This is absolutely wrong.”

Denholm rarely publicly commented on Tesla, and she went on to say that the board is confident in Musk's ability to “continue to execute exciting plans for future growth.”

Earlier, the media quoted people familiar with the matter as reporting that Tesla board members contacted headhunters at the height of the crisis earlier this year to find Musk's successor. According to reports, the directors' contact took place about a month ago, when investors were concerned about Musk's excessive time invested in the US federal government. The report said that at around the same time, board members told Musk that he needed to spend more time at Tesla, and Musk had no objection; although the board of directors narrowed the focus to a recruitment company, the current status of the succession plan is unclear.

Musk said last month that he would “drastically” reduce the time spent working in the Government Efficiency Department (DOGE) and focus more on Tesla. This allayed investors' concerns after the company experienced its worst quarter in years. Last week's disappointing earnings report showed that Tesla's quarterly revenue fell 9%, with car revenue falling 20% after sales declined in key markets such as California, China, and Germany.

The crisis is likely to engulf Tesla on multiple fronts. Consumer backlash against Musk's government work and political activities hurt sales of its electric vehicles, alienated core customers, and weakened the brand. By March of this year, protesters had targeted showrooms, cars, and charging stations across the US and Europe. At the same time, Tesla is also being dragged down by the rising costs of US President Trump's trade war.

Wedbush Securities analyst Dan Ives said before Denholm's statement that the board's report on the recruitment company would be a “warning” to Musk that his days in the White House were coming to an end. Ives added that Musk will continue to be Tesla's CEO for at least five years. “We would be surprised if the board continues on this path to this day,” the analyst said in a report.

Other investors have a different interpretation of this. Ross Gerber, co-founder and CEO of Gerber Kawasaki Wealth and Investment Management, said in an interview that the actions reported by the board of directors may give Musk an opportunity to leave his job and focus more on artificial intelligence. Musk may eventually become Tesla's chairman, he said.

Gerber: “I think it was a way for him to leave Tesla gracefully. With Denholm selling all of her shares during her time as chairman of the board, I think she's leaving soon. He is expected to become chairman and they are looking for a new CEO.”

Denholm sold another significant amount of shares earlier this week and has raised around $150 million through such share sales since December last year. By Wednesday's close, Tesla was down 3.38%, and its market capitalization was 908.82 billion US dollars. Since this year, Tesla's stock price has fallen by 32.4%, and the market capitalization has evaporated by 391.931 billion US dollars.

Gerber said, “Tesla's co-founder and board director JB Straubel will be a simple replacement. Given that Straubel is currently in negotiations with many investors, he's probably the best person for this role, and I think an in-house candidate makes more sense.”

But Gerber said that even after Musk leaves his position, there is no quick solution to Tesla's problems, adding that he will continue to sell shares in the electric car maker.

“The damage has already been done,” he said. For Tesla, it will be extremely challenging to actually repair its brand. Much of the damage was unrelated to DOGE, and more to the daily tweets and insults on his Twitter account, which constantly infuriated diverse groups that had bought his car. Tesla is in a very vulnerable situation of its own making, and it's not as simple as Musk leaving. They have created such a serious problem that I am still amazed. I've never seen a business run like this before, never.”