Former Tesla chairman Elon Musk has resigned from chairman duties after a fraud scandal. The US accused Musk of saying he’d make his company private and stocks wouldn’t be for sale. Musk’s punishment is a fine of $20 million charged to Tesla and another $20 million to him but he will be allowed to stay the CEO of Tesla.
There is a slight difference between being a chairman and CEO. CEO’s are more responsible for being the leader of a company that sets examples and makes difficult decisions. A chairman is responsible for overseeing management and keeping stock holders happy. Musk will have to let go of his duty of advising management as stock holders are now suspicious of his fraudulent ways. Shareholder Jing Zhao is just one of many shareholders that wants a different representative for chairman. He stated that this double role of CEO and Chairman was more appropriate for Tesla’s early days but now that the company has grown, an independent director should take over as Chairman.
Despite the turmoil going on at Tesla, Musk has been able to lead the company to a very successful quarter in which they had a record in car production (80 000 vehicles). Because of Musk’s ideas towards stocks being bought, they have not been profitable. But with about 55 000 cars being sold they are reaching profitability. Musk sent out an email to employees stating that they are very close to profitability.
There has been a roadblock for Musk though. The tariffs in China don’t allow him to sell cars there in the largest electric car market which scared off investors and lowered their stock even further. Musk decided to open a new gigafactory in China which meant tariffs are 15% less. Despite Musk’s fraud accusations, he was able keep Tesla on the right path to profitability and success. As for Tesla’s future now, we’ll have to wait and see.