A growing number of frustrated Tesla investors are souring on the idea of another record payday for Elon Musk if he continues to operate as a “part-time” CEO.
Shareholders are expected to vote on a new compensation deal at this year’s annual meeting after a Delaware court voided a 2018 approval worth $56 billion, the biggest ever on record and more than the company has earned in its history since Tesla first reported a net profit in 2020.
The eye-popping number, in part, resulted from concerns that without giving Musk a big payday Tesla would have to actively compete with SpaceX and a bevy of his other companies for his limited time.
Lately, however, their CEO appears more interested in advocating against illegal immigration and diversity hiring than in fixing Tesla’s core business.
In the first three months of the year, quarterly car sales fell for the first time since the pandemic, with the big surprise coming from weak demand in the U.S. market.
A study out this week claims his online persona is partly to blame, while Barron’s found he tweeted more about Disney than Tesla since the numbers came out.
“It’s very important to get that comp plan up and running because that is what keeps him focused,” complained Henning Schulze, now “significantly” underwater on his investment after three years.
“Still believing in Elon, don’t get me wrong,” the IT professional told other Tesla investors in an X Spaces forum held immediately after this week’s disastrous Q1 volumes, but “he needs to focus and not be complaining or ranting about borders.”
Fortune contacted several Tesla veterans regarding whether they were also worried about the company’s trajectory.
Broken feedback loop
Many Tesla veterans distrust mainstream media, believing coverage has been consistently unfair, and suspect much is the result of rival automakers buying negative headlines with their advertising dollars.
Those who do respond tend to already be disillusioned.
And while some have been critical of his brand of divisive politics, their complaints focused on Musk’s lackluster enthusiasm as Tesla CEO, which they feel too few are willing to call out.
Twitter/X once served as a useful mechanism to provide quick feedback to Musk from the community, but now some believe the Tesla CEO has let his popularity on the platform go to his head.
Some Tesla “fans” are now doing some things that are petty and potentially even illegal that affect my life directly – simply because they disagree with what I write.
— Fred Lambert (@FredericLambert) March 13, 2024
This is a new low and it won’t work.
They are messing with the wrong person. I’ve been sued before, I had…
“The feedback loop is completely broken, and now Elon is basking in the praise of his superfans while branding all legitimate criticism as attacks,” says Fred Lambert, who has previously spoken about mistakenly putting Musk on a pedestal.
Speaking to Fortune, the editor-in-chief for EV motoring website Electrek says his involvement in the community goes back to the days when he volunteered as a Tesla subreddit moderator.
For nearly a decade he has run coverage for one of the very first online publications devoted to the technology, founded by 9to5Mac creator Seth Weintraub.
Recently, Lambert distanced himself from Musk after emails surfaced showing the tycoon had always favored OpenAI becoming a for-profit company—just one under his control and not Microsoft’s.
“He was always in it for himself,” Lambert wrote at the time, adding: “This is not the man I used to consider my hero.”
Speaking to Fortune, Lambert believes the CEO made a strategic mistake by focusing on the expensive stainless steel Cybertruck at the expense of a $25,000 entry model teased at its September 2020 Battery Day, which he believes would have driven further growth. (Musk appears to now be prioritizing a robo-taxi, following a Reuters report on Friday that he’s put development of the entry model on ice.)
Tesla Robotaxi unveil on 8/8
— Elon Musk (@elonmusk) April 5, 2024
Lambert is indicative of a growing schism in the community.
While most don’t care how Musk splits his time since they support the man first—and the company second—an increasingly vocal minority want to see Musk commit himself fully to Tesla’s original mission to decarbonize transport, fearing that this plan has been forgotten as the CEO pivots to robotics and AI—when he isn’t posting his thoughts on X.
Musk moves on to robots and AI, forgetting his broken promises
YouTuber Lee of New Zealand has published over 900 videos devoted to the company under the Tesla Economist account.
He tells Fortune he became increasingly critical after Musk broke one promise after the other, whether it is the never-ending wait for the Semi, the Roadster, or the entry model.
Perhaps the biggest disappointment, however, has been the painfully slow progress made with Tesla’s vaunted next-generation 4680 cells and its related failure to reach scale with its innovative dry battery electrode coating, a game changer in terms of capital expenditure and manufacturing cost.
“The company itself has been going downhill ever since,” he says.
Musk still hasn’t delivered on the second part of his master plan, and yet he is already predicting Tesla’s future lies in robotics.
Meanwhile, the core car business has faltered and needed a series of price cuts just to hit its volume target of 1.8 million vehicles last year.
“I believe he saw this coming and dumped his stock early as a result,” Lee says.
Lee also criticizes Musk for popularizing meme cryptocurrency like Dogecoin among his followers, knowing he can manipulate the price with a single tweet.
Much like his promotion of the Shiba Inu–themed digital token, he suspects a lot of Musk’s broken promises were little more than an attempt to pump the stock to meet the milestone targets of his mammoth (and now void) pay package.
My take:
— Tesla Economist (@teslaeconomist) April 3, 2024
I had been warning everyone since last year how bad Q1 was looking. As Q1 is always the worst performing Q. Although I didn't expect it quite this bad.
It is clearly demand related, whether too much competition, dated Tesla designs, EV market growth slowing, or maybe…
Now hope mainly rests on a sudden surge in software revenue from its advanced driver-assist system called supervised Full Self-Driving.
“It would appear the fate of the company is down to FSD,” said the Tesla content creator, “and it’s up to you how likely you think that will occur and how much it would be worth.”
This month’s move to drop the “beta” qualifier in front of FSD in favor of “supervised” is seen by many as an attempt to claim testing and validation of the software is over, so that it can recognize a chunk of the $926 million in deferred revenue to rescue what will surely be an otherwise challenging Q1 for profits.
The loss of Tesla’s unflappable finance chief weighs heavy
Ross Gerber, a cofounder of asset manager Gerber Kawasaki, has long been a vociferous supporter of Tesla.
Yet like many fans of the company’s original mission, he is critical of the debt-funded Twitter acquisition that has sucked up so much of Musk’s time.
Gerber put himself forward two years ago as a candidate for Tesla’s board of directors.
After poor Q1 sales—suggesting Musk took his eye off the ball to focus on servicing the $13 billion in debt he shouldered to buy Twitter—Gerber called for a wholesale boardroom reshuffle with new independent directors.
For over a year I’ve been warning about this potential reality. Now it’s here. It’s time for shareholders to assess the blame where due. The tesla BOD should be replaced immediately with independent directors as required by law. $tsla
— Ross Gerber (@GerberKawasaki) April 2, 2024
His reward for stepping out of line is a stream of abuse from Elon superfans.
Musk himself called the money manager this week “such an idiot that he can’t even tell he’s an idiot.”
The tycoon’s moodiness and volatility, for which he is on a ketamine prescription, were less of an issue so long as Tesla’s unflappable finance chief, Zach Kirkhorn, was at his side.
Last May, the Wall Street Journal even dubbed him “the executive who keeps Tesla rolling,” suggesting Kirkhorn led the field of potential candidates to replace Musk.
“Zach was a great executive and potential leader. Elon eliminated him,” Gerber tells Fortune. “So there is no one to run Tesla other than Elon—no one good enough.”
Call for unity in the increasingly divided fan base
All three Tesla veterans Fortune spoke to have lost a good chunk of their standing in the Tesla community for warning the EV maker risks falling behind in a competitive field led by China’s BYD.
A new threat in the form of Xiaomi has now also emerged, with the popular handset maker undercutting the Model 3 by thousands of dollars with a sporty electric car that looks suspiciously like the Porsche Taycan EV.
Omar Qazi, one of the original figures behind the Third Row Tesla podcast and an unofficial brand ambassador with access to Musk himself, urged everyone in the community this week to unite behind their CEO.
Echo chamber warning.
— Gary Black (@garyblack00) April 3, 2024
“Elon Musk is the most important asset Tesla has,” he told Schulze and others in the forum. “And we’re in danger of losing him, in part because [of] … the sentiment of shareholders who say we should just kick the guy out; we should just fire him.”
Many are tired of hearing old war stories of how Musk would sleep in the factory during the Model 3 ramp-up six years ago, and would be more content if they knew he showed up every day to run the company like he used to rather than spend his limited time engaging in divisive political issues on X.
“That’s my litmus test to determine whether someone is a fan of Tesla or Elon—do they believe [Tesla] deserves a full-time CEO?” Lambert says. “But if he cannot snap out of this broken feedback loop, I just cannot see him having a more positive than negative impact going forward.”
