Updates with Tesla response

Investing.com-- Tesla on Thursday denied a Wall Street Journal report that its board had launched a CEO search to replace Elon Musk earlier this year, with Chair Robyn Denholm stating that the board remained confident in him.

"The CEO of Tesla is Elon Musk and the Board is highly confident in his ability to continue executing on the exciting growth plan ahead," Denholm said in a statement posted on Tesla’s X account, calling the WSJ report erroneous.

Tesla (NASDAQ: TSLA ) shares rose marginally in early pre-market trading, following the company’s clarification. They had fallen as much as 3.6% in overnight trading following the WSJ report.

Commenting on the WSJ report, UBS analyst Joseph Spak said "no other company has as large a key man risk as Tesla."

"Even if Musk stays on as CEO, we do believe it will eventually prove important for investors to have a better sense of succession planning at the company," he added.

Spak stresses that Tesla is at a pivotal moment, with its core auto business facing mounting pressure on sales and profitability. They add that much of the bull case hinges on Tesla’s positioning as an AI company, making it difficult to envision a CEO who could match Musk’s market influence.

"Finding a CEO who can captivate the market and investors as much as Musk is a tall task," the analyst said.

The WSJ reported that Tesla’s board had reached out to several executive search firms to work on a formal process to find a new CEO, citing people familiar with the discussions.

The discussions had begun amid mounting tensions at the company- over a sustained decline in earnings, and over Musk turning too much of his focus towards Washington.

The board had also approached Musk over spending more time at Tesla, and that he needed to state that he would do so publicly. Musk had complied, and had said during the company’s first-quarter earnings call last week that he will dedicate much more of his time to Tesla from May.

But Musk had clarified that he would still engage with the government.

Musk was thanked by U.S. President Donald Trump during a cabinet meeting on Wednesday, for his activities in cutting government spending under the Department of Government Efficiency.

Tesla has been grappling with a difficult 2025, as its sales tumbled in the face of increased competition, dwindling electric vehicle demand, and more damningly for Musk, a sales boycott in the U.S. and Europe over the Tesla CEO’s political affiliations.

Musk also said the company faces “significant” headwinds from a bitter trade war between the U.S. and China, although Trump’s recent scaling back of his automotive tariffs could help lessen this blow.

Ambar Warrick contributed to this report.