Tesla has had a difficult start to the year, leaving some questioning whether Elon Musk is the right person to lead the EV giant.
In early May, The Wall Street Journal reported that members of Tesla’s board had reached out to recruitment firms to begin the search for a new CEO.
The news came as the automaker faces a stock price slump and collapsing sales around the globe. Last month, Musk said he would step back from his role at DOGE, which has sparked a global wave of protests against the brand, to spend more time at Tesla.
Tesla’s board Chair, Robyn Denholm, and Musk himself denied that The Journal’s story was true, with Denholm saying that the board had total confidence in Musk’s leadership.
It’s not the first time the question of who might succeed Musk, who is involved in multiple other companies, has come up.
During testimony in 2022 over the billionaire’s disputed $55 billion pay package, Tesla board member James Murdoch said that Musk had identified a potential successor as CEO, although he did not say who it was.
Although Musk is unlikely to leave anytime soon, Tesla analysts and investors told Business Insider that he would be nigh-on impossible to replace, and the list of potential replacements is not long.
“He’s a fabric that holds Tesla together and moves it forward. He’s one of those people who can’t be replaced,” said Gene Munster, Managing Partner at Deepwater Asset Management and a Tesla investor.
Munster said he was skeptical that Musk would ever entirely divorce himself from Tesla, which he has run since 2008, but estimated the stock could decline 25% or more if Musk departed.
Bradley Tusk, a venture capitalist and political strategist, told BI that Musk was the main reason Tesla’s valuation was so much higher than other carmakers, making him “exceptionally important” to the company.
“Tesla’s market cap, even after the decline, is still more than the next nine biggest automakers combined. And yet their sales are not even in the top 15,” said Tusk.
“The only reason why Tesla has that is because of this faith in Elon, both from institutional and retail investors. Without him, they’re just another car company,” he said.
Who could step up?
Replacing the irreplaceable is a tall order — but Munster said any successor to Musk would likely come from within Tesla’s own ranks, and take the top job with the billionaire’s blessing.
“Culturally, it’s hard for them to bring somebody over. Their whole DNA is about disrupting the standard,” said Munster.
Seth Goldstein, an analyst at Morningstar, said prime candidates from within Tesla might include Senior Vice President of Automotive Tom Zhu, who played a key role in building the company’s Chinese business, and current CFO Vaibhav Taneja.
Another possible pick for the top job is Omead Afshar, Musk’s former chief of staff.
The former biomedical engineering student and ski instructor is one of Musk’s most loyal lieutenants and was picked to oversee construction of Tesla’s Austin gigafactory, with former employees previously telling BI that Afshar acts as a “final boss” for anyone wanting to reach Musk.
Goldstein said that the lean and flat nature of Tesla’s management structure allowed the company’s division heads a lot of autonomy, meaning several of them could likely step up to run the automaker.
“What you see is that the division executives and the leaders have a lot of decision-making power to run things. It’s almost like a good leadership training ground,” he told BI.
Hard act to follow
The list of potential internal replacements at Tesla has become shorter in recent years, with the company seeing an exodus of top executives.
Veterans such as one-time CFO Zach Kirkhorn and energy chief Drew Baglino have all left the company, and battery director Vineet Mehta announced in early May that he would exit Tesla after 18 years.
Munster said that if Tesla were to look externally, the most likely candidate would be JB Straubel, the CEO of Redwood Materials and a current Tesla board member.
Straubel co-founded Tesla in 2004 and was the automaker’s CTO until 2019, when he left to run battery recycling startup Redwood full-time.
“I could see that being a big win on the level that he knows Tesla. He’s also probably the person who has the best working relationship with Elon,” said Munster, whose firm Deepwater is an investor in Redwood.
“Elon and JB have something that’s pretty special. And I think it’s unique in Elon’s orbit, the mutual respect that they have for each other,” he added.
Tesla investor Ross Gerber, who has previously called for Musk to step down as CEO, also agrees that Straubel is the most likely option to fill the billionaire’s shoes.
“He’s the most suited to me. He’s a cofounder, an investor, he runs a successful company, and if Tesla bought Redwood it would make sense for Tesla, and then he could come in and be CEO. That’s the scenario that I think would be best for everybody,” Gerber said in an interview with Bloomberg.
With a 13% stake in the company and a board packed with allies — including his brother Kimbal — the level of control Musk exerts over Tesla means any change in leadership would have to happen with his approval.
Munster said it was possible that Musk might eventually settle on a management structure that mirrors that of his other companies. X and SpaceX both have full-time CEOs who run day-to-day operations.
“I think from a future of Tesla perspective, a combination where JB is the CEO and Elon is the ‘chief technoking’ would be a big win,” he said.
Goldstein said that a shake-up of Tesla’s C-suite would be unlikely to change the day-to-day running of the company, but added that Tesla might take fewer big swings if Musk became less involved in running the automaker.
“I would question if Tesla would continue to take on initiatives as bold as they have. We may not see that level of bold decision-making if Musk stepped back,” he said.
Tesla did not respond to a request for comment from Business Insider.
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