Tesla’s board denies Musk succession talks, but raises bigger questions

Key topics:Tesla board denies search for Elon Musk’s replacementMusk’s leadership seen as both Tesla’s asset and riskGovernance concerns linger amid EV sales slump.Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here.Support South Africa’s bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.If you prefer WhatsApp for updates, sign up to the BizNews channel here..By Liam DenningPerhaps the biggest bombshell in the Wall Street Journal’s story about succession planning at Tesla Inc. is that the board appeared to have been doing its job.Robyn Denholm, who chairs that board, issued a statement on X saying that the report that search firms had been contacted to find a replacement for Chief Executive Officer Elon Musk was “absolutely false.” Musk, owner of X, went further, calling it a “DELIBERATELY FALSE ARTICLE” which failed to include an “unequivocal denial” provided by the board before publication. As of now, the WSJ’s story remains online and has been updated to note that Tesla issued a denial hours after publication, saying none was provided beforehand.So, a case of she-and-he said, they said. Leaving that aside, it offers a timely reminder of the curious form of governance at the top of the world’s most highly valued auto company.Denholm’s swift denial is especially noteworthy. The essential context of the story is the debacle in Tesla’s electric vehicle sales, financial performance and branding so far this year, much of it linked to blowback against Musk’s political activities in President Donald Trump’s administration. (Dismal April figures out of France suggest the damage lingers). You may be forgiven if you missed Denholm’s repeated updates and guidance during this troubling time since there don’t appear to have been any. Even speaking at a financial conference in late March, she ignored questions about Musk’s focus and didn’t respond when asked if she had a message for Tesla’s shareholders.Read more:.Tesla’s meltdown: From $1.6 trillion giant to industry underdog.Any reasonable set of directors faced with a CEO running multiple companies — including a competitor to Tesla, xAI — and engaged in political activities liable to trash the brand would be taking steps to find a successor, even if only to put out feelers before a formal process was disclosed. That Denholm broke her relative silence to counter this captures the hollowness of the board and the peculiar relationship Musk has with Tesla.With the company’s core EV business in decline for much of the past two years, its inflated multiple of 124 times forward earnings rests mostly on anticipation of breakthroughs in self-driving cars and robots. The latter are essentially options on Musk himself; that despite repeatedly missed deadlines and his evident distraction, the CEO will deliver the future and the profits to go with that. The other side of that coin, however, is that should Musk step down or otherwise disappear from the scene, belief, and the multiple which rests on that, would collapse. Musk, who has been CEO of Tesla for almost 17 years, is at once the company’s greatest asset and gravest risk.If this sort of hostage situation provides a reason for the board to keep its head down, the corollary is that this is a damning state of affairs for an S&P 500 board to have allowed to happen. Who can really be surprised, though? The longest-serving member of that board, outside of Musk himself, is his own brother. Denholm was only appointed to the chair after Musk was forced to step down by the Securities and Exchange Commission as part of a settlement over his “funding secured” debacle in 2018. And as I wrote here, she had already served as an independent director at Tesla for years, during which time Musk’s Twitter habit had begun to spiral, his gargantuan pay package — eventually struck down by a judge — was implemented and Tesla went ahead with the deeply conflicted acquisition of another Musk-linked venture, SolarCity. Denholm ended her post on X by saying that Tesla’s board is “highly confident” in Musk’s ability to deliver. The same cannot be said of that board’s willingness to act if and when he doesn’t..© 2025 Bloomberg L.P.

Tesla’s board denies Musk succession talks, but raises bigger questions

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