CNN —
Tesla’s chair Robyn Denholm has rejected a Wall Street Journal report that the company’s board has begun a search process for a new CEO to replace Elon Musk.
The Journal reported Wednesday that Tesla’s board contacted executive placement firms in March to look for Musk’s replacement, citing multiple unnamed sources.
Denholm said in a post on Tesla’s official X account that the claim was “absolutely false,” and the board is “highly confident in his ability to continue executing on the exciting growth plan ahead.”
The stunning report highlighted the volatility the electric car maker has faced in recent months, as Musk spent a significant amount of his time working for the White House’s Department of Government Efficiency (DOGE) initiatives.
Tesla’s (TSLA) stock price had tumbled as much as 45 percent this year before recovering somewhat amid a broader stock market rebound. In April, the company reported a sharp decline in both sales and profit in the first quarter, with earnings plummeting 71 percent – a shocking report that was perhaps overshadowed by Musk’s announcement the same day that he would be stepping back from his government role and returning to Tesla.
The Journal said it was unclear whether Musk’s announced return altered the status of the succession planning. Around the same time the board began looking for a potential new CEO, directors told Musk that he needed to spend more time at the company, according to the report. Musk didn’t push back, the Journal said.
Analysts led by Dan Ives, global head of technology research at financial services firm Wedbush Securities, said Musk “did the right thing” by recommitting as Tesla CEO, and expressed confidence he would remain in the role for “at least five years.”
“This situation with Musk at DOGE was reaching a breaking point, but we believe that cooler heads have now prevailed and that the Board is now NOT actively looking to replace Musk as CEO and this code red situation is now in the rearview,” they said in a Wednesday research note published before Denholm released a statement.
At a Cabinet meeting Wednesday, President Donald Trump thanked Musk for his service in his government role – one that is officially ending soon, although Musk is expected to continue some of his work with the White House after he steps back.
“You have been treated unfairly, but the vast majority of people in this country really respect and appreciate you, and this whole room can say that very strongly. You’ve really been a tremendous help,” Trump told Musk Wednesday. “You’re invited to stay as long as you want. At some point, I guess, he wants to get back home to his cars.”
Musk, who was wearing a hat on top of another hat, quipped: “Well, Mr. President, you know they say I wear a lot of hats.”
Trump officials and Cabinet members have feuded, and Treasury Secretary Scott Bessent got into a shouting match with Musk earlier this month.
But Musk arguably faced much more turmoil at Tesla: Protests outside the company’s showrooms have become routine. What was once a symbol of pride among environmentalists has now become a brand that faces significant and perhaps irreparable damage among its former fanbase.
Even before he took on a role in Trump’s White House, investors had criticized Musk for spending too little time at his only publicly traded company. Musk in 2022 bought Twitter, now X, and spent a significant amount of his energy over the past few years radically reshaping that company. Although he is no longer CEO, he plays an active role in its operations and has been criticized for engaging in conspiracy theories, making bigoted statements and elevating far-right and Nazi propagandists.
Musk also runs SpaceX, a major government contractor that stands to benefit from his relationship with the Trump administration.
But Tesla has been cast into the middle of Trump’s damaging trade war with China. Although Musk has publicly advocated for lower tariffs and has publicly feuded with Trump’s top trade adviser, Peter Navarro, Musk appears to have made little headway with Trump, and Tesla’s China sales are under threat.
Trump’s recent softening of his auto tariffs plan, however, stands to benefit Tesla in the United States, because it manufactures most of its cars in America but imports many parts. Those parts were set to get charged a 25 percent tariff starting this weekend, but Trump’s recent executive actions will temporarily reduce that burden for American manufacturers like Tesla.
On his call last week with Tesla investors and analysts, Musk admitted, “There’s been some blowback for the time that I’ve been spending in government with the Department of Government Efficiency.”
He announced that starting in May he would be stepping back from his nearly full-time job running DOGE and spending only a day or two a week on its efforts.
“My time allocation to DOGE will drop significantly,” he said. “Starting next month, I’ll be allocating far more of my time to Tesla.”
He suggested that he could step away because “the major work of establishing the Department of Government Efficiency is done.” But evidence suggests potential Tesla buyers have turned away from the company because of Musk’s high-profile support of the Trump administration as well as far-right political parties in Europe.
Tesla just reported it worst drop in sales in its history, which led to its massive profit decline in the quarter.
While Musk tried to dismiss the impact of the protests on Tesla sales and results, Tesla CFO Vaibhav Taneja has acknowledged the hit to sales from the controversy in the call with investors.
“There has been a lot of speculation as to the reasons for decline of our vehicle deliveries in first quarter,” he said. “The negative impact of vandalism and unwarranted hostility towards our brand and our people had an impact in certain markets.”
In recent months, Musk has expressed to a confidant that he no longer wants to be CEO of Tesla, that person told the Journal. Musk reportedly said that he was concerned a replacement would fail to realize his vision to make Tesla a company that sells autonomous vehicles as its primary business – but he was motivated to leave anyway, perhaps, after he lost another court battle to receive his astronomically high pay package, the largest for any public company on record.
Musk owns 410 million shares of Tesla stock outright, equal to 12.8 percent of the company’s outstanding shares. He has also been granted options to buy an additional 304 million shares as his compensation for running the company since 2018.
However, that compensation package has been thrown out twice by a state judge in Delaware, where Tesla used to be incorporated. Assuming those options are restored, he would control 22.2 percent of the company’s shares.
Members of the Tesla board testified in the Delaware court case in 2022 that they felt it was necessary to grant Musk that massive package of stock options because of the importance of keeping him involved and focused on running Tesla.
