Elon Musk’s prioritization of his other projects over Tesla has raised concerns among investors and drawn the attention of US Senator Elizabeth Warren. Warren has been a vocal critic of Musk and has previously written letters to Tesla’s board expressing her concerns about his conduct. In her most recent letter, Warren emphasizes Musk’s multiple leadership roles at various companies, including Tesla, SpaceX, and X Corp.
One particular issue that Warren highlights is Musk’s decision to divert Nvidia chips originally intended for Tesla to X, which she sees as a “glaring conflict of interest.” She argues that this decision could be interpreted as Musk neglecting his responsibilities to Tesla investors. Despite Musk’s personal pursuits and vast personal wealth, Warren asserts that he has legal obligations to Tesla as a publicly traded company.
Musk’s involvement in various side projects has been a source of worry for Tesla investors for some time. The concerns began in 2022 when Musk acquired Twitter, which he later renamed X, by selling Tesla stock for $44 billion. Last year, he launched xAi, an artificial intelligence startup that some investors feared would divert his attention away from Tesla’s AI goals.
The delay of Tesla’s self-driving Robotaxi unveiling until October further fueled investor concerns, leading to a small sell-off in Tesla shares. Musk dismissed the diversion of chips to Tesla as a result of limited factory space, but some investors found this explanation dubious, given that Tesla’s Texas gigafactory has over 10 million square feet of factory floor space.
Warren accuses Musk of betraying his duty to Tesla’s shareholders by prioritizing one of his private companies over Tesla or by exaggerating Tesla’s AI projects to boost investor confidence. She notes that Musk has long emphasized AI as a core component of Tesla’s business. These criticisms come at a critical time for Tesla, as its stock has declined by 20% year-to-date following a missed second-quarter earnings estimate and concerns about Robotaxi delays and AI chip supply.
In her letter, Warren includes a list of questions for Tesla’s board, seeking information on internal investigations into Musk’s decision to divert chips and whether any specific guardrails have been put in place for the CEO. If the board fails to ensure that Musk is meeting his responsibilities, Warren suggests that intervention from federal regulators may be necessary.
The concerns raised by Warren reflect a broader apprehension among Tesla investors regarding Musk’s commitment to the company. They highlight the need for Tesla’s board to address these concerns promptly to protect the interests of shareholders. Additionally, the scrutiny from a high-profile senator like Warren indicates the potential for regulatory intervention if Tesla fails to take appropriate action.
