To Elon Or Not To Elon? The Question Heats Up! Leave a comment

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This question may be more heated, more debated, and more relevant than I’ve ever seen it: Should Elon Musk remain the CEO of Tesla? This question has been raised for years by some, mostly people who have never liked him and have generally predicted he’d fail. In my opinion, looking back at what Tesla has achieved, I think there’s no way to say he failed. Tesla hit its semi-insane growth goals and became probably larger than Elon Musk and JB Straubel initially dreamed. The Tesla Model 3 was a massive success, and the Tesla Model Y was an even bigger success.

That was the past, though. These days, there are many people who bet on Elon in the past, who loved him in the past, and who sunk a lot of their money into Tesla who are now saying it’s time for him to move on.

I think it’s noteworthy here to bring up something that many people probably forgot, or didn’t even know: several years ago, Musk basically said that once they ramped up the Model 3 (their mass-market car that was the end goal of the Secret Tesla Master Plan), he would move on and focus on getting to Mars and perhaps other things. He felt a need to be CEO to get Tesla to financial sustainability, true financial and corporate success, and then for reasons that were both historical and personal, he thought it would be time to move on. Well, as we all know, that time came and went. There was a period of time where he was wrestling with this matter — you could see it. On the one hand, he said that there was simply no one who could replace him and do a better job than him, so he needed to stay in the role. Clearly, he also got very wrapped up in “Full Self Driving,” AI, and robotaxis, and that seems to be the one place he is consistently focused at Tesla. This side of the company is hugely baked into the identity and reputation of Tesla now, but it should be noted that it’s a separate matter from the core of the company’s business and Tesla really could be focused on different things if that wasn’t so prominent. It’s a choice to make robotaxis another practically “bet the company” focus of Tesla.

Naturally, a major topic for Tesla this week, or in recent months, is Elon’s compensation package. I don’t really want to go down that rabbit hole, but my simple opinion is: shareholders voted on his compensation package years ago, it was passed, and it should have just stayed in place. I’m not a lawyer, and I understand the arguments for repealing it, but I don’t think it should be repealed. Going forward, though, I think the company is in a very different place and there’s a strong, strong case that it should be managed in a different way with a CEO who has a different approach.

Without a doubt, Tesla is floundering right now. Tesla stock (TSLA) has taken a dive, on the back of Tesla not just missing it’s long-term 50% growth target, but actually shrinking in sales year over year (something I predicted at the end of 2023 could definitely happen in 2024). That’s not success, it’s not succeeding, and I think lack of foresight should be highlighted much more than high interest rates. Interest rates were never going to stay low forever! In fact, they were low for too long and that contributed to some of the problems society ran into! But, yes, you can pull out a dozen explanations for why Tesla isn’t hitting its targets, but at the end of the day, if the CEO gets massive rewards (making him the richest man in the world) when the company succeeds, the CEO should also face some penalties and questions about his role in the company when it fails.

Many people, especially shareholders, see Elon Musk as absolutely critical to Tesla’s future success. Many believe in his approach to AI, robots, and Tesla Full Self Driving. Many just believe in him across the board. Without a doubt, if Elon Musk was removed (is that possible?) or stepped down from his role as CEO, a ton of shareholders would sell their stock and move on. If you’re looking at it from a stock angle, there would be a huge hit, in my humble opinion. You could argue that’s the price to pay for more long-term success, that’s fine, and perhaps some people would buy more stock or buy the stock again or buy the stock for the first time, but many people don’t believe that Tesla will continue to be special without Elon.

For the ones who would like to see Musk move on from leading the company, there have been suggestions for who could be a good replacement: Carlos Ghosn, Herbert Diess, Carlos Tavares, etc. I considered discussing those options, but it’s not really my thing, so I’ll skip that debate for now. I think it’s clear you’d need someone who could oversee development of many more Tesla models and production ramp-ups and challenges across continents, but you’d also need someone who could lead tech teams for all the Silicon Valley type stuff Tesla does — that’s not to say they need to be able to code, but they need to be able to manage those teams.

I have no idea what will happen. Well, that’s not true — I think it’s much less likely that Elon Musk steps down from his role of CEO and someone else steps in. However, given the number of unpredictable things that have happened with Elon Musk in recent years, I have an open mind. However, I do have some opinions on how Elon Musk should be performing his role of CEO if he is staying in it. Someone on our team, who is involved in the background more these days, put this comment into our group chat this week:

“From the information I know, his day is split into 5-15 minute blocks/slots. Throughout the week his companies battle for those slots, each department presenting the toughest challenge that they then get input on from Elon, depending on how big the issue is and where is based at the time are the deciding factors. When things go smoothly, he isn’t needed. Funny enough this also lines up with the comment of an angry middle manager who was recently fired in the 10% job cuts, he called Elon a ‘pigeon CEO’, dropping in to shit on them when there was trouble and then departing.”

This was my response: “I honestly don’t think that approach is close to adequate at this point. He needs to be more focused on the company for more hours of the day, better in touch with what is happening across the company, more proactive, thinking more consistently about how the company can improve. This approach he currently has deserves the role of ‘Part-time special-case problem solver.’ They need a real CEO. This is a ginormous company now, and the CEO should be full time.” That’s my take. If I was in charge of everything, I’d do whatever it takes to get JB Straubel in the CEO role. I think he’s the best person for the job right now. I won’t expound on that right now, especially since I see it as a fantasy more than a possibility, but that would help the company immensely, imho. I know he’s on the board, but we all can see how much influence the board has, and I think being on the board is similarly a “part-time special-case problem solver” role of its own. JB would be much more effective as CEO than sitting on the board.

That’s the hot debate at the moment. Of course, there’s a big vote coming up, but when have shareholders ever voted against Elon Musk’s preferences? In any case, we’ll see what happens and take it from there.