The treasurers of California and seven other U.S. states have written an open letter to Tesla’s board of directors, expressing they are “increasingly concerned” about the electric carmaker’s recent performance and CEO Elon Musk’s commitment while serving in a “high-profile advisory role within the federal government.”
The letter was released just hours before Musk is expected to field questions from Wall Street analysts, as well as institutional and retail investors, during Tesla’s quarterly earnings call.
The top financial officials from California, Washington, Illinois, Massachusetts, and four other states raised questions about Musk’s ability to prioritize Tesla while maintaining a role in the Trump Administration. They also challenged the board’s oversight of his compensation plan and the company’s broader strategic direction.
“We are increasingly concerned that Tesla’s recent performance signals deeper governance and leadership challenges that, if left unaddressed, could have serious consequences for the company and its stakeholders,” the treasurers wrote.
They pointed out that Tesla’s stock fell 36% in the first quarter, noting the company “missed delivery targets, recalled a substantial number of vehicles, and experienced a surge in trade-ins for competing brands.”
The letter outlined three key questions for the board:
- How is the Board ensuring that Mr. Musk and Tesla’s leadership team are devoting adequate time and focus to resolving recent performance issues and guiding the company’s future direction?
- In light of the company’s underperformance, how is the Board evaluating whether executive compensation remains aligned with shareholder value and corporate accountability?
- How does the Board plan to communicate its strategy for navigating this period of uncertainty and restoring investor and public confidence in Tesla’s leadership?
On Sunday, Wedbush analyst Dan Ives urged Musk to return to Tesla as a “full time CEO,” warning the company faces a “major crossroads” as its brand suffers from Musk’s political associations and ongoing involvement with the Efficiency Department, known as “DOGE.”
“We view this as a fork in the road time: if Musk leaves the White House there will be permanent brand damage…but Tesla will have its most important asset and strategic thinker back as full time CEO to drive the vision and the long term story will not be altered,” Ives wrote.
The letter was signed by state treasurers Mike Pellicciotti (Washington), Deborah B. Goldberg (Massachusetts), Michael W. Frerichs (Illinois), Erick Russell (Connecticut), Laura M. Montoya (New Mexico), David L. Young (Colorado), Mike Pieciak (Vermont), and Malia M. Cohen (California).
Tesla shares are currently trading at $239, up 5% from Monday’s close. Year to date, the stock is down about 40%, despite surging nearly 62% over the past twelve months.
Reuters reported over the weekend that production of Tesla’s affordable model “has been delayed” and won’t be launched in the first half of the year as initially announced by the Elon Musk-led company.
The report, which cited three unnamed sources, said Tesla was targeting to produce 250,000 units of its affordable model next year in the United States.
