Testimony at Elon Musk’s 2018 compensation trial revealed that the Tesla board has identified a potential successor for the role of CEO. This shouldn’t come as a surprise because it’s good corporate governance. Avoiding the discussion of succession plans would be irresponsible and—with a decision as big as this one—the board has to plan years in advance. Musk has made it clear that he does not want to be CEO. At the company’s August 2022 shareholder meeting, he mentioned that he will stay at Tesla for as long as he can remain useful. On a 2021 earnings call, he implied that no one should be CEO forever.
Our guess is that we’re 2-3 years away from a new CEO announcement. That’s consistent with Musk’s commentary throughout the last couple years that he doesn’t want to be CEO of any company (including Tesla, Twitter, SpaceX, Neuralink and the Boring Company). Instead, he will stay with the company long-term in his self-proclaimed role of “Technoking.” As for shares of TSLA – So long as Musk is leading Tesla’s product vision, investors will likely remain supportive of the company.
Potential successors: external and internal
It’s a long list of seven candidates, in order of probability:
- Herbert Diess. Former CEO of Volkswagen. Diess took over as Volkswagen CEO following the 2015 Emissionsgate in which Volkswagen cheated on emissions testing in the US. In 2022, he was let go of Volkswagen, reportedly for moving too fast to embrace EV as the future. Musk respects Diess as is evidenced by him joining a Volkswagen management event hosted by Diess in Fall 2021. Earlier this year, Musk commented that Diess is “moving VW rapidly toward electrification.”
- JB Straubel, CEO/Founder of Redwood Materials; Co-Founder of Tesla. The gold standard in CEO transitions was of course Steve Jobs to Tim Cook. Jobs was a product visionary just like Musk is. Straubel’s strength is in batteries but he also embodies a level-headed business approach and a steady-handed personality that is reminiscent of Cook, which appeals to investors. In this scenario, Tesla would acquire Redwood and JB would become CEO. Apple made a similar move in 1996 when it acquired Steve Jobs’ company, NeXT, and brought him back as CEO of Apple. Though JB left Tesla in 2019, he still plays a role in the company’s growth as he currently serves as an advisor, is a highly visible ex-Tesla executive and remains on favorable terms with Elon.
- Drew Baglino, Currently at Tesla (16 years). SVP of Powertrain and Energy Engineering, with knowledge of battery management, powertrain modeling and optimization, energy storage systems and system optimization. Baglino is also on Tesla’s Board of Directors.
- Vineet Mehta, Currently at Tesla (15 years). Director of Battery Technology & Powertrain Architecture.
- Alexander Wojcicki. Manager of Propulsion at SpaceX for the past 12 years. While there is a lightyear gap between building cars and rockets, Musk has historically shared talent between the SpaceX and Tesla teams to solve technical problems.
- Lars Moravy, Currently at Tesla (12 years). VP of Vehicle Engineering, with extensive experience in chassis dynamics, NVH and PLM engineering, as well as suspension, wheel, tire and steering systems. Previous to Tesla, Moravy was a design engineer at Honda R&D.
- Eddy Cue. The Apple executive knows everything about Apple and a lot about cars given that he’s on the board of Ferrari. This is at the bottom of the potential successor list given it’s unlikely that Eddy wants the headache of running the show.
Unlikely successors: external
- RJ Scaringe, CEO of Rivian. RJ started Rivian in 2009 and has built the company into what we believe is Tesla’s biggest running competitor. RJ joining Tesla would be akin to going to the dark side, and his design sense would likely butt heads with Musk.
- Doug Field, Chief Officer of EVs and Digital Systems at Ford. Previously at Apple, Tesla. Doug would come with some baggage and a lot of industry knowledge. In the end, Ford won’t let him go and would likely give him a pay raise.
- Jeff Bezos, The Blue Origin/SpaceX conflict is too much to overcome.
- Peter Rawlinson, CEO of Lucid Motors. We believe that Musk sees Lucid as a Model S knock-off.