About a month ago, when Tesla shares were falling and some investors were frustrated that Elon Musk was focused on working in the White House, the Tesla board of directors seriously began searching for Musk's successor, writes The Wall Street Journal.
The board of directors approached several executive search firms to develop an official process for finding the next CEO of Tesla.
Tesla has been experiencing a streak of bad luck for several months after Musk began spending a lot of time working on reducing federal spending. Last week, after the company reported that its first-quarter profit fell by 71%, Musk told investors that he would soon return to his work at Tesla.
Tesla has been losing brand appeal in markets such as California and Germany, and drivers have started putting bumper stickers on their cars to distance themselves from Musk's policies. Tesla is also losing ground in China, falling behind competitors like BYD. Last week's earnings report showed that quarterly revenue fell by 9%, including a 20% drop in revenue from declining sales in key markets such as California, China, and Germany.
Musk's close ties with Trump have tarnished the Tesla brand for some consumers. Even worse, the president's tariffs have complicated Tesla's business in China, one of the largest car markets, as well as the American supply chain, which heavily relies on suppliers in Mexico and Canada. After Trump's victory last year, Tesla shares initially surged, reflecting optimism that Musk's close ties with the president would benefit his business. In December, Tesla's market value reached a record high of $1.5 trillion. Since then, it has fallen to about $900 billion.
According to sources, the Tesla board of directors, consisting of eight people, is looking to add an independent director. Some directors, including Tesla co-founder JB Straubel, have met with major investors to assure them that the company is in good hands.
During a cabinet meeting on Wednesday, Trump thanked Musk for his work in the government. "You know you're invited to stay here as long as you want," Trump said. "I think he wants to go back home to his cars."
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