Can Musk fix Tesla? The board thinks so

Can Musk fix Tesla? His recent awareness of $29 billion in company shares suggests the board has confidence in him. But what governance issues does he have to tackle?

Tesla has been on a rollercoaster of fortunes in the last year. Its close association with Elon Musk has tied the company's reputation – and financial success – to Musk's personal exploits. In essence, Tesla joined Musk (or was dragged alongside him, depending on how you choose to look at it) while he embraced Trumpism, headed DOGE, oversaw mass firings and spending cuts, then spectacularly fell out with Trump after leaving his post.    

For Tesla, this period transformed steady growth into bumpy fortunes. Its share price spiked in late 2024, but has fallen repeatedly in 2025, plagued by issues like stronger competition and collapsing sales figures in some countries due to rejection of Musk's personal brand.

Despite that, the board has just renewed its confidence in Musk and granted him increased influence over the company's fortunes through a bumper share package. 

Tesla has had a busy year. Here's the latest:

• The board has just approved an award of $29billion in shares to Musk, based on the recommendation of a special board committee.
• In a statement, the company said that "Rewarding Elon for what he has done and continues to do for Tesla is the right thing to do."
• Media commentary is centring on the award as a way to keep Musk energised and focused on Tesla. A similar previous deal worth $56 billion is still the subject of a legal dispute in the US state of Delaware.
• The current deal would bring Musk's stake in the company from around 13% to around 15%, according to The Guardian.
• Musk had previously voiced his need to have a bigger stake as a way to ward off activist investors and keep the company on track.
• Musk worked with the Trump Administration in early 2025 and then spectacularly fell out with Trump once the stint had finished.
• This period coincided with a drop in Tesla's share price, reduced sales in many countries (particularly in Europe), and concern from investors over the damage Musk's personal brand was doing to the company.
• Despite this, the board and investors have maintained that the solution is to ensure Musk is more focused on Tesla going forward. They have pointed to his role in the company's "unprecedented" growth up to 2024 as evidence that he is a tremendous asset.

So, on the back of a particulaly wild few months, Musk and Tesla are committed to going back to business as usual. These are the things need to be addressed:

One of the most pressing issues for the company is increased competition in the electric vehicle sector. Firms like Chinese manufacturer BYD have seen increased activity worldwide, while Tesla has suffered. This increased competition was likely something that was always going to happen, although Musk's personal brand issues probably gave competitors a bit of a boost when they needed it most.

In addition to this shorter-term issue, the company will also need to successfully manage its stated goal of transitioning to other forms of technology, such as AI, autonomous driving and humanoid robots. Musk is no stranger to these fields.

That said, his leadership will be under the microscope in the months ahead:

Musk has always favoured the one-person-band approach to leadership. He likes executives and directors who support his ideas rather than challenge them.

It's caused ripples before. Questions have been raised over how independent the board is from Musk's personal influence. It was regularly pointed out that while all directors met Nasdaq's technical requirements for independence, the reality was less than certain.

Whatever you think about Tesla's board, any system where the board and management are linked enough for checks and balances to disappear is questionable governance. It's not illegal, it's just questionable. 

This latest sequence of events is one of the key reasons why: boards working with strong CEOs can easily become rudderless if that CEO doesn't give the appropriate amount of focus. When he began work at DOGE, it is fair to say that Musk's presence was missed. Now that he's back, the company is still in risk and damage-control mode. Tesla needs to make smart planning decisions and ensure it retains a significant market share in spite of these challenges. Without Musk, the leadership style he champions so much, that decision-making is paralysed. 

Tesla is tied to Musk, and Musk continues to be tied to Trump, even though that relationship is – quite famously – over. Allowing a company's brand to become so closely aligned with a polarising political figure is a major reputational risk. In governance, we know that while reputations can be undone quickly, they often take years to rebuild. 

The most pressing consequence of the last few months is that Tesla is losing consumer trust in key markets. Musk has associated it with political positions that have nothing to do with cars, and little to do with the preferences of its customers. The stickers on the back of Teslas worldwide, promising that they were bought before Musk's shift to the right, will remain, because once a narrative like that exists, it's hard to deconstruct it.

Can Musk fix Tesla? It depends on how he handles the two governance issues above. 

Will he be able to dedicate enough time to the company to develop new ideas and strategies? If he does, then the $29 billion deal will be worthwhile. If he can't, then they will continue to miss that strong top-down approach they have been told to expect. The deal's announcement did increase Tesla's share price, so it means that the market has at least some level of confidence that Tesla's board made the right call. 

Will he be able to distance Tesla from the Trump administration? That's a bigger question that will take a longer time to answer. The short-term outlook is that he will probably not be able. Musk is the wealthiest person in the world, and Trump the most powerful; now that those two have been put together, it will be hard to consider them apart. Escaping that reputation will require a significant amount of work and a shift in focus.