Tesla’s board of directors is under pressure to address CEO Elon Musk’s political activities after the company’s stock fell nearly 7% on Monday. The drop followed Musk’s announcement on July 4 that he plans to launch a new political movement, the “America Party,” after splitting with President Donald Trump.
Wedbush Securities analyst Daniel Ives released a note Tuesday advising the board to take immediate steps to ensure Musk remains focused on Tesla, warning that his deepening involvement in politics could jeopardize the company’s prospects.
Proposed Plan for Board Oversight
In his memo, Ives outlined a three-part proposal for the Tesla board:
- Develop an incentive-driven pay package tied to Musk maintaining at least ~25% voting power.
- Set clear expectations for the amount of time Musk must devote to Tesla operations to earn that compensation.
- Establish a dedicated committee to monitor Musk’s political engagements and assess their impact on his leadership role.
“We urge the board to act now and move the Tesla story forward with Musk as CEO,” Ives wrote, maintaining that Tesla remains well-positioned in autonomous and artificial intelligence markets despite the recent turbulence.
Market Reaction to Musk’s Announcement
Tesla shares closed Monday at $293.54, down nearly 7%, wiping out about $68 billion in market value. Shares remained flat in early Tuesday trading.
Musk responded bluntly to Ives on social media, writing: “Shut up, Dan.” When asked later by CNBC, Ives replied that while Musk was entitled to his opinion, Wedbush stands by its recommendation.
Board Concerns and Previous Reports
Musk’s recent comments come amid broader concerns about his outside ventures and political roles. In May, The Wall Street Journal reported that Tesla’s board had begun exploring succession options, citing worries about Musk’s time spent on external activities, including his brief role in the Trump administration’s Department of Government Efficiency (DOGE).
Although Musk and Tesla board chair Robyn Denholm denied those reports, tensions appeared to escalate when Musk publicly criticized Trump’s “One Big Beautiful Bill,” claiming it would add trillions to the deficit. Trump later dismissed Musk’s America Party as “disruptive and chaotic.”
Analyst Sees Long-Term Potential Despite Challenges
Despite the current controversies, Ives reaffirmed his long-term optimism about Tesla’s potential in AI-driven technologies and autonomous vehicles, which he values as a trillion-dollar opportunity.
“We view Tesla along with Nvidia as the two best physical AI companies in the world,” Ives wrote, emphasizing Musk’s continued importance to the company’s success if properly managed.
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