- 2 days ago
On "Forbes Newsroom", Alan Ohnsman, a senior editor at Forbes, discussed with Brittany Lewis whether Tesla's board would oust Elon Musk.
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00:00Hi, everybody. I'm Brittany Lewis, a breaking news reporter here at Forbes. Joining me now is
00:07Alan Onsman, senior editor and author of The Current Climate Newsletter. Alan, thanks so much
00:12for joining me. Hi, Brittany. Great to be with you. Numbers from Tesla's second quarter are
00:18historic, but not in the way a company would like. Tesla saw its biggest ever year-over-year
00:23decline in vehicle deliveries. So now as we sit here at the beginning of Q3, what problems does
00:29the company face? Well, unfortunately, it's more of the same. We saw this in Q1 and the problems
00:39continued in Q2. Its core business is selling electric vehicles, selling charging services,
00:47and selling batteries. And we don't know all the details for charging services and battery sales
00:55yet. But the biggest chunk of Tesla's revenue, electric vehicles, down a lot, about 13.5%
01:01in the quarter. Just dramatic declines, especially in Europe. They were down in China. They were down
01:07in North America. And this comes after a rough Q1. There was some hope that a refreshed version of
01:15the Model Y was going to help boost sales a little bit. In Q2, that did not materialize.
01:21Cybertruck, the newest product, the sales are small enough that Tesla doesn't even bother to break them
01:29out. It's lumped together with Model S and Model Y in this kind of other product segment. And that segment
01:37was way down. So, you know, Cybertruck has not delivered anywhere close to the types of numbers
01:43Musk was promising a couple of years ago. So it was a pretty rough quarter. We'll know in a couple
01:49weeks when they do earnings what those other business areas looked like. The excitement for Tesla for a lot
01:57of investors is new businesses. But, you know, I'll be a broken record on this one. 95% of its revenue
02:07comes from cars, batteries, and charging services. And if those businesses aren't strong, Tesla's not
02:12strong. And they need to really up their game there. And we saw no indication in Q2 that many of the
02:21problems they faced in their auto business, for example, have been addressed at this point.
02:25And to that point, those businesses aren't strong in Q2, another rough Q1. What has Elon Musk said
02:33about all of this? Not a lot. I mean, most of, I think most of his conversation has been pinned on
02:39Robotaxi and new businesses. And so put all your faith and hope in those areas. Those may prove to be
02:48great new sources of revenue at some point. But as I also like to say, today, you cannot realistically
02:55calculate or forecast, say, robotaxi revenue. They're operating a limited pilot program in Austin,
03:02charging a token amount per ride. So there's no meaningful revenue from that. You know, even when it gets
03:10to $100 million, $200 million, $400 million of revenue, when does that happen? I couldn't begin to tell you.
03:16Because we don't really know when this project or program is going to be able to scale. And at the
03:24same time, Tesla's just getting hammered by BYD and a lot of the Chinese manufacturers and Hyundai and
03:32Kia and General Motors and many other automakers that have added a great many competitive products
03:38in, you know, in its core business and has not refreshed its product line. So that's a very simple
03:47issue. And unfortunately, the company has not focused on compelling new products at this point. So that
03:54certainly should be of concern. The stock has fallen a bit now. And you raised the point about, you know, what some of
04:05the concerns are there. Tesla, one of the reasons Tesla's down is not just competition. It's that Elon Musk himself
04:11has done some damage to the brand. His image is not great. His work in Doge and with the Trump administration
04:18was not helpful for the Tesla brand. That's one reason why Europe in particular, Tesla has been down so precipitously.
04:29It's way down here in California where I am. China has been Tesla's best market. The Chinese don't
04:36really care about Doge or, you know, Musk's association with the Trump administration. That is
04:41not of consequence. But Tesla's just failed to stay competitive in the Chinese market. You know,
04:48Xiaomi and BYD and NIO and just all these interesting, you know, Chinese EV companies just keep adding
04:56really exciting new products that are better priced, more features, all sorts of things. And Tesla is
05:02just not showing the kind of competitiveness that you would want to see for a company that at least
05:08at the end of 2025 was technically still the world's leader in EV sales. And you and I have talked
05:14before about the three camps of Tesla's problems, competitors, product issues, and Elon Musk and his
05:22brand issue. And I want to talk about that because Wedbush analyst Dan Ives said that Tesla's board,
05:28quote, needs to act now and set the ground rules for Musk going forward around his political ambitions
05:33and actions. And he posted three steps for Tesla's board on X. He said this, quote, new pay package,
05:39getting Musk's 25% voting control, clears a path for XAI merger, guardrails established for amount of
05:46time Musk spends at Tesla as part of pay package, and oversight on political endeavors. That's a lot
05:53of monitoring for a CEO. What do you make of those recommendations? You know, certainly Dan thinks
06:00those would be helpful. I mean, I would say, where has the board been for the last few years? Because
06:07if you are holding your breath that Tesla's board is suddenly going to get firmer with Elon Musk,
06:14you know, you may be in for a rude surprise. His public behavior has, shall we say, deteriorated
06:22to some extent over the last few years. You know, calling people pedophiles, claiming he had money
06:28to take the company private, any number of inflammatory comments on Twitter and X over the years.
06:35And then his political involvement before he decided he was forming his own political party.
06:41And Tesla's board did nothing. There's no indication that they have any ability to reign in
06:49Elon Musk at this point. That's simply like objectively the reality. So I think that's quite
06:56a wish list from Dan Ives. I wouldn't hold my breath that any of those things are going to happen.
07:02That has been an ongoing issue. And I think you can talk to any number of experts in corporate
07:09governance who just roll their eyes when they, you know, look at Tesla's board and its failure
07:14to really actively try to set some restraints and some guidelines for Elon Musk. And I really cannot
07:23think of another company where this is the case, where a CEO, his public behavior can be very damaging.
07:32And the board consistently does not get involved. So, you know, good luck with what Dan's asking for.
07:41But I'm not optimistic any of that's going to materialize.
07:44And Dan's wish list was compared to essentially babysitting Elon Musk. And Elon responded directly
07:50to that on X. He said, shut up, Dan. And Tesla's board of director is made up of nine people.
07:56Two of them have the last name of Musk, Elon Musk himself, as well as his brother, Kimball Musk.
08:02There's seven others. Have they ever tried to restrain Elon Musk in the past? I mean,
08:07what's the point of having a board of directors if they see these problems and don't really do anything?
08:14There is no public example I can point to of where the board did intervene.
08:20It looked like perhaps after Musk left the Trump administration and he left on good terms,
08:30but then immediately got into a social media fight with with Trump over the budget bill and things got
08:38ugly and then he dialed it back. When he dialed back, perhaps that was the board saying something
08:47quietly. But then, of course, it all just, you know, exploded again, leading him to announce he
08:54was creating his own political party, which, you know, is an interesting development.
09:01And that political party is the America Party. And he announced that over the weekend. By Monday,
09:07his net worth plunged by 12 billion dollars. I mean, he's still the richest person in the world by
09:12and the second person being Larry Ellison. And Elon Musk has over 100 billion dollars more than Larry
09:17Ellison, as you and I sit here right now. In this case, do you think money talks, though,
09:23when it comes to Elon Musk? And does that matter? Will he listen because he's so rich? It almost
09:28essentially won't affect him. I think I think there's an argument for the latter there that I don't
09:36know if that really how to what extent that that really impacts his judgment at this point.
09:43I think he's going to do what he wants to do regardless. And, you know, certainly all indications
09:48are that if this is something he wants to do, he's just going to do it. You know, it does underscore
09:55this issue that we had seen, though, earlier in the year where so many of his public comments and
10:01actions from Doge to different things he was he was tweeting were clearly very, very damaging to the
10:08Tesla brand. And starting a political party has nothing to do with the bottom line of any of his
10:21companies. You know, it is it is so separate and removed. And again, everything with with Elon Musk is
10:29unprecedented. I can't point to an example. You know, Ross Perot, who was a very successful
10:35business person who had one of the most impressive independent party runs in U.S. history. He didn't
10:42really start a political party. He did start a political movement of sorts. It didn't survive him.
10:48It doesn't continue. It was just about him. Musk himself, being born in South Africa, can't run for
10:56president of the United States. But he can certainly fund a presidential campaign, limitless funding.
11:04And apparently he's been in talks with Andrew Yang. And so, you know, maybe he'll cobble something
11:09together. But right now, it would seem that any political party he puts together is more of a
11:15revenge act against Trump and the Republicans. And would would really that that's who's most likely to
11:21be damaged in future elections as well. And what's interesting about Elon Musk, too, is that he the
11:29brand problem is multifaceted because he says erratic things. He has reportedly a very erratic personal
11:36life. He also is seemingly spread too thin for any CEO. He's involved in politics. He's very outspoken
11:43politically. Can Tesla's board, can Tesla investors look at Elon Musk and directly say, hey,
11:49your actions are directly impacting our bottom line, A, and B, any chance he's going to listen to that?
11:58Well, they certainly should have been saying that for quite some time because it is objectively
12:03reality. It simply is. And if they're not saying that, that's really, you know, that speaks to what
12:11a poor job they're doing as the board of a public company and paying attention to their fiduciary
12:17responsibility. So objectively, 100 percent, they should be doing that. Whether he if they are doing
12:25that and he's ignoring it, well, then that's also a problem because he at the end of the day does
12:30report to the board. Would they ever be in a position to say, OK, well, we're going to relieve
12:38you of your duties here? I don't know that that's going to happen. There was that Wall Street Journal
12:44piece, I guess, from a few months ago where they were quietly floating a job search and looking for
12:49potential candidates. And a couple of months ago, I put my own list together of five people that I
12:55thought might be able to do the job. You know, Tesla doesn't have what SpaceX has. It doesn't have a
13:02Gwen Shotwell. Gwen Shotwell at SpaceX is the president and COO, but she's really been de facto
13:10running that company for 20 years. There is no equivalent to a Gwen Shotwell at Tesla. You know,
13:18recently, a key lieutenant who ran North American and European operations just left. I think I saw
13:24overnight a report that another key tech person, you know, who's developing Tesla software just resigned
13:32I, you know, the number of high ranking Tesla executives who could roll into, say, a CEO position
13:42or even a COO position, very few, very small. It does not publicly have a deep bench of talent,
13:51a narrow C-suite. So it puts things in a problem, you know, there's no one immediately in the company
13:58that the board could turn to and say, can you, you know, can you run things on a day-to-day basis?
14:04So I, you know, it's very, it's very murky, like, you know, where things are going to go with Tesla.
14:10If Musk continues with this push to create his America party and that becomes a thing,
14:16on top of supposedly being Tesla's CEO at SpaceX and X and Boring Company and XAI and everything else,
14:25you know, that's, that's just too much for it. No one can do that. They're only 24 hours in the day.
14:33And, and I, and it's just untenable. And yeah, should the board be standing up and saying you,
14:38you really need to like do less and, and especially things that are harmful to the company? Yes,
14:45they should be. Is he going to listen? I, I, I think, you know, as of today, that's unlikely.
14:51And he's also facing another headache at X, a high ranking person at one of his other companies
14:57is now out. Linda Yaccarino, what do you make of that? And what really does that mean for Elon Musk
15:03when he's already, and his board is viewing him potentially as being stretched too thin and having
15:09other priorities at other companies? Well, when he bought Twitter, you know, he was initially the CEO
15:16and that upset people because they said, look, you're already doing too much. And now you're
15:20taking on the duties of yet another company, uh, by running that. And so to, to pacify, uh, folks,
15:27he, he hired Linda Yaccarino to be the functional manager. Um, and, uh, you know, she survived two
15:33years in that role, uh, left somewhat unexpectedly. Um, and, uh, there has been no announced replacement
15:42as we're talking at this moment. Um, perhaps that'll change, uh, within a day or so. Um,
15:49but it does raise this new issue of, of, you know, does he now go back and is he the de facto,
15:54um, CEO for yet another company, uh, which is more of a time suck, you know, uh, when he's already
16:00trying to do a lot of things. Um, you know, the other issue of course is Linda Yaccarino has been in
16:06a very difficult position because, uh, as, as X, you know, it's, uh, Twitter has taken a, a, a very
16:15dark turn. It's, it's become very controversial for the types of content on there, the lack of
16:21restraint. Um, uh, and, uh, a lot of advertisers had of course fled the platform over the last couple
16:29of years. It seemed like for a period this year, because of Musk's association with the Trump
16:34administration. Um, and, uh, the fact that, that X Twitter was being used as such a important platform
16:42for some news announcements that it was starting to trend back up again. What we saw shockingly within
16:49the last few days, of course, was that Grok, the chat bot integrated into X that's created by XAI
16:56has just gone nuts with crazy anti-Semitic racist stuff. Um, no clue why no one was stepping in,
17:08intervening much faster to stop that. Um, but it got particularly terrible on Tuesday. And then the
17:15fact that Linda Yaccarino left the next day, I mean, was that a factor in her, in her final, uh, decision?
17:22One would think possibly because her role was to get advertisers to come back to the platform.
17:28Um, it's pretty hard to get Disney and McDonald's and Coca-Cola and Budweiser to advertise on a platform
17:36that is actively, you know, that has an AI on it that's actively spewing anti-Semitic racist nonsense.
17:43I mean, who wants to advertise on that? So it kind of put her in an impossible situation. Um,
17:49so I, perhaps that was the final straw. I mean, we'll, we'll find out as time goes on,
17:55but it's a big concern, uh, what's going to happen in terms of who's going to manage it.
17:59Does that now mean he's got to spend more time with it, which means less time for Tesla and all
18:03his other companies. Alan, one of our conversations, one of our first conversations, when we started
18:09talking more frequently about Elon Musk and Tesla was the theme that things are bad at Tesla right now,
18:15and they are probably going to get worse. So when you're now looking at Q3, when we're sitting at
18:19the beginning of it, what signposts, what specifically are you looking out for next?
18:26Uh, I'm, I'm a simpleton. So in my case, um, I keep looking at the same things, which is the core
18:31business. Um, to, to, to me at this point, I'm not an investor. I'm a reporter. Um, when he talks
18:38about AI, robo taxis and humanoid robots, I think that's very interesting. Fine. Work on that,
18:46turn that into a business someday. But I want to see, uh, how is your core business that pays the
18:52bills that, you know, that, that, that, um, boosts your stock price? How is the core business doing?
18:59And the core business does not look great. And of course we didn't mention this, but, but the other
19:03factor is Tesla has been the biggest beneficiary of federal incentives, uh, for its customers,
19:08uh, for, in the form of EV tax credits. Uh, those are now going away at the end of September. Um,
19:14so that suggests that at the end of September, which is the end of Q3, uh, that does not set
19:19things up well for both Q3 and Q4. Um, so, you know, you were getting a $7,500 tax credit if you
19:25bought a Tesla, uh, today and you will continue to get that up until the month of September. But after
19:31September, they're gone. Um, that's going to affect sales for everybody, the entire industry.
19:37Um, the pullback by the federal government on many of the incentives that were created
19:42for federal support for, um, charging infrastructure. Tesla has been making money,
19:46millions of dollars, uh, in federal contracts for charging services, uh, because it opened up its
19:52network to other EV brands that could now charge it at Tesla superchargers. Um, those funds go away.
19:58The support for that goes away. It's battery business for energy storage, especially large
20:03scale energy storage, um, has benefited from, um, the IRA, Biden's IRA, uh, federal incentives for
20:10those types of projects that goes away. So a lot of the supports that Tesla has benefited from, I mean,
20:16Elon Musk was one of the biggest critics of president Joe Biden, but Tesla was this, you know,
20:21arguably in the auto space, the single biggest beneficiary of Biden's policies. All of that is going
20:27away. So what that tells me is the first half stunk, uh, in terms of sales, uh, there's nothing to
20:35indicate Q3 and Q4 will be better. And especially as the year continues, Q4 looks particularly tough,
20:43uh, right now. So that story saying things are bad at Tesla, they're going to get worse.
20:49Unfortunately, um, that remains the case. Um, the future is not great for the core business in the
20:56months ahead. Well, I think that means we have plenty of conversations that are still get to be
21:02had. Alan Oensman, thanks so much for joining me. Thanks, Brittany. Great to be with you as always.
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