So, is Elon leaving Tesla?

What we can learn from the WSJ - Tesla spat

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The WSJ reported last night that Tesla’s board has contacted headhunting firms about finding a new CEO to succeed Elon Musk.

Tesla’s board chair and Elon swiftly denied and blasted the report. Elon even invoked Trumpian all-caps: “EXTREMELY BAD BREACH OF ETHICS” and “DELIBERATELY FALSE.”

So, what gives?

And what happens to Tesla and Tesla’s stock if Tesla actually does find another CEO and/or Elon leaves?

TLDR: A careful reading suggests that this news is 1) board-member ass-covering, and/or 2) a trial balloon, and/or 3) a nice scoop by the WSJ. Meanwhile, imho, if Elon leaves Tesla, I think Tesla will become “just a car company,” and its stock will drop by 50%-75%. The best way forward might be for Tesla and Elon to find someone to run the company while Elon remains the visionary. Elon and the Board are likely exploring this option.

What can we learn from Tesla v WSJ?

First, here are two unpopular truths:

1. Major news organizations do not often lie. They get stuff wrong, of course — just as we all do — but “deliberate falsehoods” are rare.

2. Board members of public companies also do not often lie. They shade and spin, but they’re still subject to securities laws, so they don’t often say things they know aren’t true.

So I don’t think either the WSJ or Tesla’s board is “lying.”

Then, what gives?

Usually, you can figure out what’s really going in these spats by parsing language.

So, let’s do that.

First, let’s look at exactly what the WSJ reported:

Tesla “board members reached out to several executive search firms to work on a formal process for finding Tesla’s next chief executive.”

Note the subject of the sentence: “Board members.” Not “The Board.”

And note that they reached out “to work on” a process, not to formally start one.

Second, let’s look at Tesla’s Chair Robyn Denholm’s denial:

“…There was a media report erroneously claiming the Tesla Board had contacted recruitment firms…”

Again, note the subject. “The Tesla Board.” Not “board members.”

That minor difference in language tells us what’s likely going on. And it makes sense:

• Tesla’s board members want to assure the company’s staff, the markets, and their friends that they’re not oblivious to the disastrous turn Tesla’s business has taken recently — especially in the past few months.

• Tesla’s board members want to show they know that Elon’s recent writings on X and behavior as a member of the Trump Administration have enraged many of Tesla’s core customers and, therefore, hurt Tesla’s brand and car sales.

• Tesla’s board members want to show that they know that Elon is not spending enough time on Tesla — that the company needs more from its CEO.

• Tesla’s board members want to make clear that they are not just “potted plants” — and that, if things get bad enough, they won’t be afraid to exercise their fiduciary duty and act in shareholders’ best interests.

• Tesla’s board members want to explore how — if they or Elon were to formally decide to find a successor — they might best go about doing that. Based on the WSJ’s story, it sounds like they’ve picked the search firm they would work with.

• Tesla’s board members — and Elon — are probably curious what the market would think of the idea of Elon moving on. (At the very least, Elon is absurdly overcommitted, and he sounds burned-out on Tesla. And who can blame him? He runs half-a-dozen companies in addition to his government job. And he has been there for 20 years.)

• Tesla’s board members — and Elon — probably want to manage the market’s expectations, so that if the Board and/or Elon do decide to hire a new CEO in the future (very possible), it won’t come as a complete shock.

• Tesla’s board members do not want to have to lie publicly about what they’re doing, so they need to be deft about how they communicate.

How do you accomplish all this if you’re the board members and/or Elon?

You have board-members chat with some search firms about how they would approach a search process and figure out which firm you would want to work with. You talk to Elon and say, “Dude, we love you, but the company’s in trouble, and we need more of your time.” And then you have board members and/or reps or surrogates share this on background with a reputable news organization that will be careful to get the facts right.

Importantly, you do not do any of this formally, as “The Tesla Board.”

You do it informally — just some board members having conversations.

So that, to me, is the likeliest explanation for what’s going on here.

Here are some other possibilities:

• A board member or two, or one of the search firms, spotted an opportunity to aggrandize themselves or protect themselves from criticism and went rogue — talking to the WSJ without permission and not acting on behalf of The Tesla Board. (Possible! Maybe one of the rejected search firms).

• The excellent reporters at the WSJ — Emily Glazer, Becky Peterson, and Dana Mattioli — sniffed out the story and wormed details out of Tesla board members/reps and/or search firms and/or an Elon confidante who is worried about him and Tesla. (Possible!)

• The WSJ was either lied to or made a mistake (Possible, but unlikely, imho. They’re careful and precise.)

• The WSJ and/or Tesla Board is lying. (Very unlikely, imho).

So, what have we learned?

• The board and Elon are likely exploring options (as they should)

• Elon might leave Tesla or switch to a board role (better than letting the ship sink)

• Elon might stay CEO and play a modestly more active role (better than the status quo)

• The market is now aware of these discussions (better than clueless)

• Tesla’s board members have bought some cover (helpful)

• The WSJ likely published an excellent scoop

So, well done all around!

What happens to Tesla if Elon leaves?

My short answer:

• If Elon leaves completely, Tesla will become “a struggling car company in need of a turnaround”

• The future-beyond-cars vision Elon has so hypnotically described — robotaxis, humanoids, camera+AI-only full self driving, AI, et al — won’t happen

• Tesla’s stock will crash 50%-75% or more

The best possibility, I think — one that is in everyone’s interest — might be for Tesla and Elon to hire someone who is an excellent operator/manager who can run the company while Elon remains the visionary. He can keep the CEO title for now, to reassure everyone. And pass it down later.

This person would be hard to find, because people capable enough to turn around Tesla generally don’t like executing someone else’s vision. The relationship between this person and Elon would also likely be fraught, because Elon is a very hands-on operator. But it’s not impossible.

Reminder and disclosure: This is not investment advice. I own Tesla stock through index funds. I personally would not buy more at this price, because too much of its value depends on Elon and on products Tesla hasn’t even launched yet. Thank you for reading “Regenerator!”