Tesla launched its search for a new CEO, marking a critical moment for the electric vehicle giant as it fell into huge profits with Elon Musk’s politically controversial involvement, sales declined, sales fell and backlash against opposition.
The move comes after weeks of turbulence among investors, with profits falling 71% in the first quarter and revenues fell to $409 million, down from $1.4 billion a year ago. Tesla shares have fallen nearly 40% since January, despite some recovery after earnings announced.
According to the Wall Street Journal, the company's board began exploring CEO succession earlier this year as Musk's dual role as Tesla's director and his political appointment raised concerns to lead President Trump's administration efficiency (DOGE). The search reportedly began with no prior knowledge of Musk.
At the urging of the board, Musk announced plans to take a step back from May's political role and “dedicate more time to Tesla.” Speaking on Tesla's revenue call, Musk admitted that he had caused losses to businesses in Washington.
“My time allocation to Doge will drop dramatically from next month,” he said, admitting he still plans to contribute one or two days a week.
It’s fantastic as pressure from Tesla’s once loyal customer base, especially environmentally conscious and tech-savvy consumers, has intensified his alignment with far-right politics and outspoken support for Trump and other populist leaders.
Protests at Tesla dealerships are becoming increasingly obvious. A Tesla grassroots campaign claimed a symbolic victory after the company's poor financial performance.
“Today's earnings report conveys a very clear message: Tesla's pressure to cut down the grassroots level begins to hit Tesla's pain, which is the company's bottom line,” the group said.
While Tesla remains the best-selling electric car brand in the United States, analysts warn that its lead is shrinking as competitors launch more competitive models. Byd, Rivian, Hyundai and GM all launched EVS, which is priced better than price, range or charging speed.
In its earnings statement, Tesla accused Trump of aggressive trade policies and a turbulent global supply chain of undermining its cost structure. The president's comprehensive reciprocity tariffs, including a 145% tax on Chinese imports, shocked the automotive industry.
Despite the turmoil, Tesla is still urging new, more affordable electric vehicles planned for early 2025. It also highlights the continued development of robotics and autonomous driving technology as part of its long-term vision. However, it warns that its 25,000 EV cost savings are first promised in 2020 and will be “less than previously expected.”
When Tesla began looking for a potential successor to Musk, the company also sought to appoint an independent director to help stabilize governance and amid increasing scrutiny.
Trump praised Musk for his work on Doge this week, quipping that the CEO may want to “go home.” Musk, in turn, praised the president's support, but acknowledged that the political spotlight had caused a headwind for Tesla.
Thanks to the CEO's attention, now expected to return – and the brand's reputation as a gold medal in Flux – Tesla faces a defined crossroads. Investors and customers will be watching closely to see if the company can regain focus and reestablish its strengths in the increasingly crowded electric vehicle market.
