Tesla investors are worried Elon Musk enjoys operating “above the law”

Tesla reported a sharp drop in profits last week.

A group of Tesla investors asked CEO Elon Musk for more commitment to the electric vehicle (EV) company in an open letter published last week, specifically requesting that he spend less time posting “derogatory tweets.” The letter also urged Musk to address accusations of a toxic work environment at Tesla and concerns about future profitability.

The self-described progressive investor group demanded a plan to overhaul the composition of the board, including the removal of directors close to Musk, and a policy that would limit his commitments to his other companies, SpaceX, Neuralink, and X Corp (formerly known as Twitter).

“We each initially added Tesla to our portfolios because we saw Tesla as a true leader in producing products and services essential for our transition to a sustainable and green economy,” the letter said. “Over time, however, we have grown increasingly concerned with governance and leadership issues at the company.”

The investors cited Tesla’s “broader culture of being above the law,” accusing Musk of ignoring investigations into its autopilot system while compulsively tweeting at anyone who criticizes him.

The letter was signed by a coalition including the New York City Comptroller’s Office and Amalgamated Bank, which is union-owned. Together, the group owns $1.5 billion in Tesla shares, less than 1% of the company’s total value.

Tesla rebounds slightly from 2022 losses

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Musk has been busy lately

Musk currently takes no salary for his role as CEO of Tesla after cashing out his stock options from a 2018 package earlier this year, fueling speculation that the EV company isn’t at the top of his list of priorities.

In the past week alone, Musk launched a rocket, accused Microsoft of illegally using Twitter data, slashed the prices for two Tesla models, and announced the development of his own AI chatbot. He still seemingly had enough time to take away blue checks from celebrities on Twitter, before giving them back when his plan backfired.

This all happened during a week that Tesla reported dwindling quarterly earnings, including a 24% plunge in net income. The company also reported that—despite boosting car deliveries by more than a third—its operating margin had fallen from 19.2% last year to 11.4% now.

During the earnings call, Musk said he’s focused on his grand vision for Tesla, not on creating profit, telling investors that the company is the only one “making cars that technically could sell for zero profits now and yield tremendous profits in future through autonomy.”

This strategy falls in line with his recent grandiose plans to turn Twitter into the app for everything and bypass philosophers to create an epistemic AI chatbot that focuses on “maximum truth-seeking.” It isn’t difficult to imagine why investors are concerned.