In an unprecedented move that highlights growing internal tensions, a group of Tesla employees has formally called for CEO Elon Musk to resign. This dramatic development comes amid plunging profits, declining sales, and mounting evidence of significant demand problems for the electric vehicle giant. The employees point to Musk’s controversial political activities and divided attention as the primary culprits behind Tesla’s current struggles.
The Open Letter and Its Consequences
Several current and former Tesla employees recently published an open letter directly addressing the company’s leadership crisis. The letter doesn’t mince words about the source of Tesla’s problems: “The damage done to Elon’s brand is now irreversible and as the public face of Tesla, that damage has become our burden,” the employees wrote. They describe Tesla as standing at a critical “crossroads” – continue with Musk and watch customers abandon the brand, or move forward under new leadership.
Matthew LaBrot, a five-year Tesla veteran who served as Staff Program Manager for Sales and Delivery Training Programs, was reportedly fired after being associated with the letter. The group created a website and social media accounts to share their message, though their X (formerly Twitter) account was quickly suspended by the platform, which Musk owns.
The letter explicitly rejects Musk’s recent promise to “refocus” on Tesla while reducing his time with the Department of Government Efficiency (DOGE). The employees called this claim “tone-deaf” and “insulting,” arguing it wrongly suggests Tesla’s problems stem from Musk’s lack of attention rather than his actions themselves.
A Company in Crisis
Tesla’s financial situation has become increasingly dire. The company reported a shocking 71% plunge in profits for the first quarter of 2025 compared to the same period last year. Revenue declined by 9% overall, while revenue specifically from car sales dropped by a devastating 20%.
These financial troubles are matched by operational challenges. Despite Tesla’s claims that sales declines were primarily due to the Model Y changeover, employees have revealed thousands of new Model Ys are now sitting unsold in inventory. This directly contradicts the company’s narrative about strong demand.
“Production is running better than ever. Quality is high. Processes are strong. Demand is what’s broken,” the letter stated bluntly. “This is not a product problem. It is a leadership problem.”
The situation has become so serious that Tesla recently instructed workers at Gigafactory Texas to take a full week off from Cybertruck and Model Y production lines – a telling sign of demand challenges that the company has been reluctant to acknowledge publicly.
The DOGE Factor
Musk’s leadership role in the Department of Government Efficiency (DOGE) under President Trump’s administration has proven particularly controversial. Since joining the White House, Musk has spearheaded efforts to reduce what he describes as “waste, fraud, and abuse” in the federal government.
The sweeping layoffs and budget cuts mandated by DOGE have led to significant backlash across Washington and beyond. This political activity has alienated many potential Tesla customers, with protests against the brand erupting worldwide. Some Tesla owners have even placed bumper stickers on their vehicles to disassociate themselves from Musk.
During a recent earnings call, Musk announced he would reduce his time allocation to DOGE starting in May, claiming the work was “mostly done.” However, he maintained he would continue spending “a day or two per week on government matters” for the remainder of President Trump’s term.
Investor Pressure Mounting
Tesla’s stock has suffered tremendously amid the company’s struggles. Shares have dropped approximately 37% so far in 2025, erasing all of the gains made after Trump’s election. The stock had nearly doubled between election day and mid-December on hopes of Tesla-friendly policies from the incoming administration.
Several major investors have publicly called for Musk’s removal. Ross Gerber, CEO of Gerber Kawasaki Wealth & Investment Management, told media outlets: “It’s time for somebody to run Tesla. The business has been neglected for too long.”
Gerber added that Musk should either “come back to Tesla and be the CEO of Tesla and give up his other jobs, or he should focus on the government and keep doing what he’s doing but find a suitable CEO for Tesla.”
Protests and Brand Damage
The impact on Tesla’s brand has been profound. Used Tesla prices have fallen by 10.1% in the last 12 months, according to market data, while the price of used cars in general rose by 1%. Tesla owners are trading in their vehicles at an increasing rate, and prices for used Teslas have sunk considerably.
More concerning are reports of vandalism targeting Tesla dealerships, charging stations, and vehicles. Incidents involving Molotov cocktails, gunshots, and arson have been reported both in the United States and across Europe.
During a recent all-hands meeting with employees, Musk addressed some of these issues while urging vandals to “stop being psycho.” He attempted to reassure employees about the company’s future, telling them to “hang onto your stock.”
A Tale of Two Narratives
Tesla leadership and Musk have consistently downplayed the company’s problems. Musk has dismissed questions about brand damage, blaming any drop in sales on overall economic weakness and consumer uncertainty. This perspective stands in stark contrast to the data showing sales for competing EV models and other automakers have risen during the same period.
Marketing experts and business professors have increasingly suggested that removing Musk as CEO might be the only way to save Tesla from its current predicament. One consultant told media outlets: “Tesla’s only option now is to remove Musk as CEO. They no longer have a free run at the EV market, and it’s time to put a grown-up in charge.”
Despite the challenges, Musk remains publicly confident about Tesla’s future. During recent investor calls, he has continued to emphasize the company’s long-term vision focusing on autonomous driving, robotaxis, and humanoid robots rather than conventional vehicle sales.
“The future of Tesla is brighter than ever,” Musk insisted, adding that the company’s problems are “not on the ragged edge of death” as they have been in past crises. He promised that Tesla’s work on autonomous driving and humanoid robots would eventually produce a period of “sustainable abundance for all.”
Without evidence, Musk has attributed the protests to those who were “receiving wasteful and fraudulent dollars,” claiming the demonstrations are “paid for.” Tesla Takedown, a group organizing protests, has firmly rejected this assertion, stating that participants are volunteering because “they believe in democracy and the rule of law, not because a billionaire is paying them.”
Competition Closing In
While Tesla struggles, competition in the electric vehicle market continues to intensify. Chinese automaker BYD has pulled ahead of Tesla in EV sales for several quarters in recent years, including the first quarter of 2025. Although Tesla has maintained the lead in full-year sales, current trends suggest it may lose this title in 2025.
China remains the world’s largest market for electric vehicles and Tesla’s second-largest market after the United States. The financial impact of declining Chinese sales has added pressure to Tesla’s already strained balance sheet.
The Board’s Decision
Despite mounting evidence of Tesla’s challenges, the company’s board of directors has thus far taken no action regarding Musk’s leadership. Critics have pointed to the board’s close ties with Musk as a reason for their inaction.
As one investor noted, the Tesla board “solely functions at the benefit of Elon” and has been “highly compensated” by Musk. “They’re not going to do anything he doesn’t say,” the investor added.
Marketing experts and business professors have increasingly suggested that removing Musk as CEO might be the only way to save Tesla from its current predicament. One consultant told media outlets: “Tesla’s only option now is to remove Musk as CEO. They no longer have a free run at the EV market and it’s time to put a grown-up in charge.”
Despite the challenges, Musk remains publicly confident about Tesla’s future. During recent investor calls, he has continued to emphasize the company’s long-term vision focusing on autonomous driving, robotaxis, and humanoid robots rather than conventional vehicle sales.
“The future of Tesla is brighter than ever,” Musk insisted, adding that the company’s problems are “not on the ragged edge of death” as they have been in past crises. He promised that Tesla’s work on autonomous driving and humanoid robots would eventually produce a period of “sustainable abundance for all.”
Whether this optimistic vision can materialize amid the company’s current turmoil remains to be seen. As Tesla grapples with leadership questions, declining sales, and growing competition, the coming months may prove decisive for the electric vehicle pioneer’s future.
FAQs
Why are Tesla workers calling for Elon Musk to step down?
Tesla employees cite Musk’s controversial political activities and divided attention as major factors hurting the company’s sales and brand image.
How much have Tesla’s profits dropped?
Tesla reported a 71% decline in profits for the first quarter of 2025 compared to the same period last year.
What is DOGE?
DOGE stands for Department of Government Efficiency, a White House initiative led by Musk under President Trump’s administration.
Has Tesla’s stock price been affected?
Yes, Tesla shares have dropped approximately 37% so far in 2025.
What do Tesla investors want?
Several major investors have called for new leadership, suggesting Musk should either focus fully on Tesla or step aside for a new CEO.
Is Tesla facing competition?
Yes, Chinese automaker BYD has outpaced Tesla in quarterly EV sales several times, and competition in the EV market continues to intensify.
What does Musk say about Tesla’s future?
Musk remains optimistic, focusing on autonomous driving, robotaxis, and humanoid robots rather than conventional vehicle sales.