Tesla’s feckless board needs to rein in Elon Musk before it’s too late

Shares of Tesla are up around 190% during the past five years, almost double that of the S&P 500, which has given its CEO, the voluble and volatile, Elon Musk a lot of room to flout convention.

The board of the publicly-traded EV company technically works for its shareholders and because of that share price, it has allowed Musk to smoke pot on a podcast, thumb his nose at securities regulators, juggle multiple outside business interests, sell Tesla stock to buy Twitter, become President Trump’s “first buddy,” spend lots of time tweeting, and now — maybe —to start a new political party.

I say “maybe” because Elon’s latest side hustle could be where he’s gone too far, corporate governance experts and investors tell On The Money.

Elon says he wants to start a new political party dedicated (at least according to a reading of his social media feed) to fiscal discipline, which he believes is missing from the two major parties that currently exist. This latest venture comes after he spent time and millions of dollars getting Donald Trump elected president, working in the White House in its cost-cutting efforts known as DOGE, then famously falling out with Trump over the president’s failure to deliver meaningful cuts in his “Big Beautiful Budget” that still produces a $2 trillion-plus annual deficit.

On The Money will leave the merits of his Trumpian tensions and the need for a third-party dedicated to reigning in our obviously perilous fiscal largesse for another column and will instead focus on whether Musk’s latest foray could land him in legal peril.

The answer according to these people is yes. Finally, Musk might have to conform to some semblance of what is generally regarded as normal behavior for a CEO running a public company.

I know what you’re saying, why is starting a political party worse than everything else Musk has done? And why would a board known for its acquiescences to an imperial CEO finally grow a pair and exert its legal responsibility as fiduciaries for shareholders?

Recall Musk’s prior antics were taking place while Tesla’s shares were exploding in value, beating every metric as the EV car company became a symbol of the future for transportation. Tesla, from an operational standpoint, looked like a well-oiled machine, hitting its production targets and growing profits.

That was before Musk joined the Trump White House and became a political target, dragging Tesla along with him. The radical left vandalized Tesla dealerships, which is a law enforcement matter. The real problem was that Musk alienated Tesla customers, much of them left-leaning environmentalists who ride EVs as a political statement, and profits nosedived.

While Musk was spending so much time in the White House, Tesla has been missing delivery targets; it’s placing a big bet on autonomous cars, but that could deprive its staple EV of much needed R&D. The Big Beautiful Bill cuts EV subsidies, which Trump believes is at the heart of their feud, but now that their relationship keeps souring, Tesla could lose other forms of government support.

Since the beginning of the year, shares are down around 20%; the S&P is up about 7%. All of which is putting pressure on Tesla’s board to intervene and set some ground rules on Musk starting a new political party, On The Money has learned.

Veteran tech analyst Dan Ives, a long-time Tesla bull, expects exactly that at the next company shareholder meeting scheduled for November after what appeared to be a long delay that prompted more investor backlash. Ives points out that Musk does have significant control of the company since he’s the largest individual shareholder.

But that doesn’t make him immune from shareholder pressure, and fiduciary responsibility that should be enforced by his board given all of the above, or they too could be on the hook for civil litigation and possible violations of securities laws by not creating some shareholder-friendly behavioral boundaries for their CEO.

It’s unclear, Ives says, whether this will preclude Musk from his third-party idea, but he says he expects the board to impose more “oversight…to make sure Musk does his homework assignment.”