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Three years ago I wrote about how Senator Elizabeth Warren was questioning Tesla about its fiduciary duties to the company, its workers, and its shareholders. She outlined the stringent requirements involved with providing disclosures about conflicts of interest, misappropriation of corporate assets, and other actions by their executives that may impact stakeholders. Sound familiar?

The fiduciary situation at Tesla seems to be spiraling out of control. Yesterday, the Wall Street Journal reported that Tesla’s top sales executive and vice president of sales, service, and delivery in North America, Troy Jones, has left the electric vehicle maker. Jones had a 15 year run with the company. Jones isn’t the only qualified Tesla employee to jump ship — it’s beginning to seem like a mass exodus.

• Omead Afshar, a top aide to CEO Elon Musk, had been promoted less than a year ago to oversee all of the sales and manufacturing operations in North America and Europe. Afshar has departed the company.
• The company’s director of human resources for North America, Jenna Ferrua, left in June.
• Milan Kovac, a vice president of engineering, who oversaw Tesla’s development of Optimus, is gone. Optimus is a humanoid robot that is crucial to Musk’s vision of transforming the company into a robotics and artificial intelligence (AI) company.

In the meantime Tesla sales have slumped, especially in Europe, where new vehicle sales fell for five consecutive months despite an overall growth in the electric car market.

What is going on behind-the-scenes at Tesla? Has the company abdicated its fiduciary duty?

Questions of board accountability have made the headlines, but so, too, have concerns about the company’s capital allocation discipline. The combination is unsettling at best. Clyde Morgan on AI Invest outlines a series of markers that point to distress behind Tesla’s closed doors.

• Full Self-Driving (FSD) software has made little progress since CEO Elon Musk’s promise to deliver “Level 5 autonomy by year-end.” Instead, beta FSD has met with significant regulatory scrutiny.
• Robotaxi production woes mark another of Musk’s failed promises. Instead of a million robotaxis by 2024, Tesla has been stymied by short term production woes instead of a keen focus on software integration. (As if S3XY weren’t puerile enough, Musk has extended the Austin robotaxi circuit so its map resembles a phallus. Really? Would Mary Barra allow anyone at GM to design in such a way?)
• xAI integration seems to have resources misallocated, so that, instead of a means to accelerate autonomy and energy systems, it is another tempting product stuck in Tesla development hell.

“Without enforceable metrics—such as autonomy milestones or capital allocation targets,” Morgan argues, “the board risks Tesla’s transformation into a Musk vanity project rather than a sustainable business.”

A Gap in Fiduciary Responsibilities from the Tesla Board

Has Tesla’s leadership been compromised? Has the Tesla board approved diverting resources to Musk’s political ventures? Speculation abounds. What is clear, however, is that serious governance risks and strategic misalignment have the potential to affect Tesla’s long term valuation and to pose an existential threat to the company.

Tesla’s board of directors knew from the onset of Musk’s foray into the political realm had likelihood for division among its stakeholders. Musk spent nearly $300 million to support Donald Trump’s re-election campaign, yet he recently left the White House in a frenzy after his efficiency initiatives (DOGE) to slash federal agencies fell short. Protests at Tesla dealerships in response to Musk’s role in the Trump administration dampened already eroding Tesla sales.

Lehigh County Controller Mark Pinsley has concluded that Tesla has become a “cultural fault line” rather than an innovation leader.

The company’s fiduciary failings abound.

• In April Tesla acknowledged that it had failed to file its definitive proxy statement within the normal time frame, with speculation that a lack of audited financial statements may have slowed required reporting.
• Then last week Tesla extended the usual 13 month time allotted by Texas between shareholder meetings until November 6, 2025. The decision to finally set a date for the Tesla annual shareholders meeting followed a letter issued by a group of investors managing $1.5 trillion in collective assets.
• Another problem was revealed this week in which Tesla has yet to apply for regulatory permits it needs to operate driverless taxis in California. Two state regulators revealed the discrepancy a day after Musk said the company would expand its robotaxis to the San Francisco Bay Area within two months.

No one truly knows what governance looks like on the Tesla board these days, yet public failures to meet fiduciary deadlines seem an admission by Tesla’s directors that its corporate governance has problems simmering beneath the surface.

Musk’s $56 billion pay package remains in a state of chaos and points to disparate motives from board members of a publicly-held company. The board has been determined by a US judge to be flawed due to Musk’s “extensive ties with the persons tasked with negotiating on Tesla’s behalf.”

In most cases a CEO would be isolated from tainting the overall health of a corporation. But that’s never been the situation with Tesla, as Musk’s name has always been synonymous with the brand. That relationship was on full view earlier this week during jury selection at the federal trial of a civil lawsuit over the 2019 crash of a Tesla Model S that killed a pedestrian and left another badly injured when the car was in Autopilot mode. “Anything that involves Elon Musk is very hard for me,” one potential juror said, as related by NBC News. Another would-be juror said she could not be fair and impartial to Tesla because of the company’s “ethics, ownership, and what I have seen in the news about its relation to the government.”

Wedbush analyst Dan Ives suggested that a special board oversight committee be formed to influence Musk’s decisions regarding Tesla’s fiduciary responsibilities. In reply, Musk offered two words to the respected financier. “Shut up.”

Final Thoughts about Tesla’s Fiduciary Problems

Our CleanTechnica colleague, Jennifer Sensiba, states it succinctly. “Hopefully, soon the Tesla board will realize that they have a fiduciary duty to step in and stop the carnage by disconnecting the company from its technoprince.”

Some in the financial sector aren’t quite as concerned. Kit Norton at Investors Business Daily describes how Cathie Wood and Ark Invest scooped up nearly 60,000 shares of Tesla in Friday’s stock market. It was part of a Musk move to seek further cooperation between his businesses with SpaceX and potentially get Tesla to invest in his artificial intelligence company, xAI.

“It’s not up to me. If it was up to me, Tesla would have invested in xAI long ago. We will have a shareholder vote on the matter,” Musk wrote on Sunday on his social media site.

Is it really up to Musk to revitalize another one of his hobby businesses? We’ll see.