Pulse News

**The Electric: Why Elon Musk Should Step Down at Tesla**

By Steve LeVine

Mar 6, 2025, 4:30am PST

Tesla CEO Elon Musk has promised to release a new affordable electric vehicle by the end of June, less than four months from now. Investors hope the car will provide a spark for the company, which otherwise looks likely to mark a second consecutive year of declining sales.

But Musk is following little of his usual pre-launch playbook: He's conducted none of the usual publicity stunts of prior model releases—no showy sneak previews, no boastful tweets with tantalizing photos to drum up pre-orders, not even a name to hang on the mystery vehicle.

None of this bothers Morgan Stanley analyst Adam Jonas. In a note to clients on Sunday, Jonas, a Tesla bull, conceded that the new vehicle—whatever it turns out to be—may not prevent another annual sales decline. But if that results in a lower stock price, it would only make Tesla shares more attractive to shrewd investors who understand the company's genuine value—not as a maker of EVs, but as the future producer of driverless robotaxis, humanoid robots, and other artificial intelligence products.

Musk's recent actions as Tesla boss—his oddly low-key rollout of the promised EV and his fervent pivot to driverless taxi and robot businesses—have sparked an animated debate among bulls like Jonas and critics like Ross Gerber, CEO of Gerber Kawasaki, an investment fund. Gerber, who said his fund owned 221,000 shares of Tesla as of last week, thinks Musk should focus on EVs.

The debate has intensified as Musk has become the second most powerful political figure in the U.S. next to President Donald Trump, triggering questions about how Musk—who is spending virtually all his waking time reducing the size of government—is also managing Tesla. Tesla shares are down 31% for the year and 42% from their peak in mid-December.

The doubts come against the backdrop of a second straight year of struggling vehicle sales for the company: U.S. sales figures are not available yet, but the sale of cars made in Tesla's Shanghai factory declined 49% in February year on year, according to the China Passenger Car Association, a group that tracks the industry, and 28% through the first two months of 2025. Most of that decline reflects soft sales of Shanghai-made Teslas in Europe, where the company suffered a 45% year-on-year drop in vehicle sales in January and continued to bleed sales last month. In Germany, February sales fell 76% year on year; in France, 26%; in Denmark, 53%; and in Italy, 55% (complete February figures for the continent are not yet available).

China's Byd, meanwhile, reported a 49% year-on-year jump in global sales of EVs and plug-in hybrids in February.

There is no visible shareholder or board movement to force Musk out of the company. But Gerber thinks that if Musk doesn't intend to run Tesla full time, he should step down. “If Elon said, ‘I want to come back to Tesla, work at Tesla full time,' I'd be all for that," Gerber told me. "But he's the only CEO in America that actually doesn't work at the company that he works for."

The absence of the usual hype around Tesla's new vehicle makes some observers of the company wonder whether it will meet its self-appointed deadline of June 30. If a vehicle does emerge, many industry hands don't expect it to be wholly new, but instead anticipate a small or stripped-down variation of its current bestseller, the Model Y crossover SUV. A minority of observers predict Musk will install a steering wheel and pedals in the Cybercab, a two-seat autonomous car that he unveiled in a high-profile Austin, Texas, event in October, slap a $25,000 price tag on it, and call that Tesla's new affordable vehicle. Another option is for Tesla to simply release images of a mocked-up prototype and say it will be sold commercially later.

Gerber hopes it's the Cybercab with a steering wheel. "I hope that's what's happening because I think selling great EVs is the business Tesla should be in, not robotics and cybercabs. That should be a separate business spun off from Tesla, and Elon should just run that or have xAI buy it," Gerber said, referring to Musk's AI company.

Investor discontent with Musk's absenteeism precedes his entanglement with Trump, going back to his 2022 purchase of X. As we reported a year ago, Gerber and other investors were already urging Musk to step down as CEO and perhaps serve as a technical adviser, leaving Tesla to be properly run by a new chief executive. After all, Musk's other major company—SpaceX—is run day to day by Chief Operating Officer Gwynne Shotwell. Why can't he appoint a similar figure at Tesla?

In his note, Jonas said Tesla's soft sales simply reflect "a company in the transition from an automotive 'pure play' to a highly diversified play on AI and robotics." But Gerber thinks Musk has misplayed his hand in focusing on driverless cars and overestimates demand for the future Cybercab.

Most Tesla rivals, including Waymo and Chinese driverless car companies Baidu and Pony.ai, use lidar, a sensor that relies on lasers, and radar in addition to cameras to navigate. Musk believes that cameras alone are sufficient since humans drive using just their eyes and that dispensing with lidar will make driverless Teslas cheaper than the competition. But critics including Gerber have challenged that view.

Gerber said he is trying out the latest version of Tesla's Full Self Driving software in his Cybertruck, and it "sucks. It just doesn't work that well."

"I think Elon's underestimated the other senses that humans use in driving," Gerber said. "And probably one of the most important senses that a human uses in driving is a sense called intuition. Computers have no ability to have intuition. It's not how much compute you have, it's actually how good you are with your senses."

"I've come to the conclusion that Tesla needs to move on from Elon Musk, and that Elon Musk has moved on from Tesla,” Gerber said. "I think there's enough innovation and enough product road map for Tesla to move forward following its original mission of advancing sustainable transportation and energy, and that's what they should do."

Steve Levine is editor of The Electric. Previously, he worked at Axios, Quartz and Medium, and before that The Wall Street Journal and The New York Times. He is the author of *The Powerhouse: America, China and the Great Battery War*, and is on Twitter @stevelevine.