'Focus on Tesla or Step Aside': Shareholders Clash with Musk Over Waning EV Fortunes

A growing number of Tesla investors are calling on CEO Elon Musk to get back to basics—by focusing on the company he leads.

Their appeal comes at a critical juncture for Tesla, as concerns mount over falling sales, sliding share prices, and Musk's expanding list of outside interests and political distractions.

Investors Demand More Focus

In a letter sent Wednesday to board chair Robyn Denholm, shareholders urged Tesla's leadership to require Musk to commit at least 40 hours per week to the company. They also demanded new governance measures to limit board members' outside obligations.

The letter called for a formal CEO succession plan and at least one new independent board director with no ties to Musk or his circle.

'Tesla's stock price volatility, declining sales, as well as disconcerting reports regarding the company's human rights practices, and a plummeting global reputation are cause for serious concern,' the letter states. 'Moreover, many issues are linked to Mr Musk's actions outside of his role as Technoking and Chief Executive Officer at Tesla.'

Musk Steps Back From Washington Role

Musk's work with the Department of Government Efficiency (DOGE), created during Donald Trump's second term, ended this week after his 130-day term as a special government employee expired.

'The @DOGE mission will only strengthen over time as it becomes a way of life throughout the government,' Musk posted on X. He also thanked President Trump 'for the opportunity to reduce wasteful spending'.

For many investors, this high-profile role symbolised a larger issue—Musk's attention increasingly straying from Tesla just as it faces intensifying competition and reputational damage.

Slumping Sales, Shares, and Standing

Tesla's European sales in April dropped by nearly 50% year-on-year, while global EV sales for the first quarter were also down. The company's share price has declined by 12% in 2024, lagging well behind the Nasdaq's 1% dip over the same period.

Reputationally, Tesla has also slipped. Once ranked among the ten most admired US brands, the company now sits at 95th place in the latest Axios Harris Poll, trailing several rival automakers.

Some shareholders blame Musk's polarising political activity, including a $300 million (£222.75 million) contribution to pro-Trump causes and his controversial endorsement of Germany's far-right AfD party.

Shareholders Push for Boardroom Reform

The signatories to the letter manage a combined 7.9 million Tesla shares. They include the SOC Investment Group, the American Federation of Teachers, Oregon State Treasurer Elizabeth Steiner, and New York City Comptroller Brad Lander.

They criticised Tesla's board for being 'unwilling to act in the best interest of all Tesla shareholders' and said that Musk's 'full-time attention' is essential to restoring the firm's stability. 'Tesla is facing a crisis,' they wrote.

This intervention coincides with a long-standing dispute over executive compensation. In January, a Delaware judge voided Musk's 2018 pay package, previously valued at $56 billion (£41.58 billion), stating the board had misled shareholders and that Musk exercised undue influence.

Is Musk Ready to Refocus?

Now, Musk is seeking a new compensation deal granting him 25% voting control. Tesla recently appointed Jack Hartung, former CFO of Chipotle, to its board—but investors flagged Hartung's past work with Musk's brother, Kimbal, raising questions about board independence.

This week, Musk signalled a renewed commitment to his businesses, stating that he plans to 'focus more' on his ventures, including SpaceX and his AI company, xAI.