A group of Tesla investors managing 7.9 million shares urged the company’s board to secure CEO Elon Musk’s commitment of at least 40 hours per week.

In a letter sent May 28, they expressed concerns over Musk’s limited involvement as Tesla faces declining sales and reputational challenges.

They highlighted issues such as reduced electric vehicle sales, stock price fluctuations, and a damaged brand image.

Tesla’s sales in Europe fell by nearly 50% in April compared to last year, continuing a downward trend from the first quarter.

The company’s stock has dropped 12% year-to-date, underperforming the Nasdaq index, which is down 1%.

The letter also criticized Musk’s outside activities, including his role with the US Department of Government Efficiency (DOGE) and political endorsements, suggesting these have hurt Tesla’s reputation.

The investors requested a clear management succession plan and restrictions on directors’ external commitments. They also called for the appointment of an independent director without ties to current board members.

Tesla recently added Jack Hartung, former CFO of Chipotle, to the board, but he has previous connections to Kimbal Musk, Elon Musk’s brother

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🔗 Source: CNBC

🧠 Food for thought

1️⃣ Tesla’s market dominance erodes as competition accelerates

Tesla’s recent sales decline illustrates how quickly market leadership can shift in maturing industries.

The company’s U.S. sales dropped nearly 9% in the first quarter of 2025, even as the overall EV market grew by 11%, showing a clear loss of market position 1.

Tesla’s market share has contracted significantly, falling from 51% to 44% over the past year as traditional manufacturers successfully introduced competitive models 2.

General Motors has emerged as a particularly strong challenger, increasing its EV market share from 6% to 11% with models like the Chevrolet Equinox EV, which offers 300+ miles of range at around $35,000 1.

This pattern mirrors historical transitions in other industries where early innovators eventually face profitability challenges as established companies with manufacturing expertise, distribution networks, and customer loyalty enter the market with competitive alternatives.

2️⃣ Product innovation cycles increasingly critical in competitive EV landscape

Tesla’s aging product lineup appears to be a key factor in its declining sales performance amid intensifying competition.

Analysts attribute Tesla’s 13% global delivery decline partly to the company’s failure to refresh existing models or introduce compelling new offerings, creating vulnerability as competitors launch more current designs 1.

The Cybertruck, which was expected to drive new growth, sold just 6,400 units in Q1 2025—far below projections and insufficient to offset declines in Tesla’s core models 2.

Meanwhile, competitive pressure is mounting across all segments, with companies like BMW reporting 64% increases in EV sales and Ford’s Mustang Mach-E becoming the best-selling non-Tesla electric vehicle in the U.S. market 3.

This trend highlights the auto industry’s fundamental requirement for consistent product innovation cycles, typically refreshing models every 4-5 years—a practice Tesla has largely avoided with its core Model 3 and Model Y vehicles.

3️⃣ Performance-based compensation and time commitment create governance tension

The investor demand for Musk’s 40-hour work commitment represents an unusual departure from Tesla’s historically outcomes-focused governance approach.

Tesla’s previous compensation structure for Musk, approved in 2018, was described as “the most radical in corporate history” with payment tied solely to achieving specific market capitalization and operational milestones, not time invested 4.

That plan would have awarded Musk 1.68 million shares (approximately 1% of Tesla) worth up to $55 billion only upon meeting ambitious performance targets, reflecting a high-risk, high-reward structure 4.

Shareholders overwhelmingly approved this performance-based approach, with Musk emphasizing that if Tesla’s value grew only 80-90% over a decade, he would “earn nothing” from the plan 5.

The current investor demand for specific time commitment represents a fundamental shift in accountability metrics—from purely outcome-based measures to input-based controls—suggesting diminishing confidence in Tesla’s ability to succeed through Musk’s strategic direction alone.

Recent Tesla developments

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