Elizabeth Warren: Elon Musk 'betrayed' Tesla investors by prioritizing other companies

Richard Bord/Getty Images; Jenny Chang-Rodriguez/BI

Elon Musk is shirking his duties to Tesla investors, Senator Elizabeth Warren said.
Warren called on Tesla’s board to ensure Musk was meeting his responsibilities at the carmaker.
Investors have aired concern Musk is prioritizing his other companies, like X and xAI, ahead of Tesla.

Elon Musk has turned his back on his own car company and appears to be putting his other projects ahead of Tesla, US Senator Elizabeth Warren said in a letter published this week.

Warren — who’s been a loud critic of Musk and has sent multiple letters about his conduct to Tesla’s board — pointed to Musk’s simultaneous leadership roles at various companies including Tesla, SpaceX, and X Corp.

In particular, Musk’s recent decision to divert Nvidia chips originally meant for Tesla to X shows a “glaring conflict of interest,” and could be interpreted as him neglecting his responsibilities to Tesla investors, Warren said in a new letter sent to Tesla’s Chair on Thursday.

“I write to you with ongoing concern that Tesla’s Board of Directors appears to be failing to meet its fiduciary duties to Tesla’s shareholders by neglecting to address company CEO Elon Musk’s multiple interests,” Warren wrote. “Regardless of his personal pursuits and his vast personal wealth, Mr. Musk has legal responsibilities to Telsa—a publicly traded company—and its shareholders.”

Musk’s many side projects have worried Tesla investors for years. Shareholders began airing concerns in 2022 after Musk first acquired Twitter, which he later renamed X, in a deal that involved him selling Tesla stock to pay for the $44 billion acquisition.

Then, last year, he launched xAi, an artificial intelligence startup that some investors have feared could lead Musk further astray from Tesla’s AI goals.

Tesla has delayed the unveiling of its self-driving Robotaxi to October, sparking a small sell-off in Tesla shares last month.

Musk has shrugged off the diversion chips to Tesla as a matter of limited space in its factories. Some investors have criticized that as a “weird excuse,” given that Telsa’s Texas gigafactory has over 10 million square feet of factory floor space, according to the company’s website.

“It therefore appears that Mr. Musk has betrayed his duty to Tesla’s shareholders, either by knowingly prioritizing one of his private companies over Tesla or by exaggerating the extent of Tesla’s AI projects to boost investor confidence — or both,” Warren added.

“This betrayal is particularly egregious when considering that Mr. Musk has long framed AI as a core component of Tesla’s business, if not the core component.”

Musk’s list of companies and projects has been growing at a critical time for Tesla, whose stock has been hurting in 2024. Tesla shares are down 20% year-to-date, pulled lower after the company missed second-quarter earnings estimates and Musk failed to reassure investors about the carmaker’s Robotaxi delay and AI chip supply.

Warren included a list of questions for Tesla’s board, inquiring about internal investigations into Musk’s recent decision to divert chips and if there were any “specific guardrails” placed on the CEO.

If the board fails to ensure Musk is meeting his responsibilities, intervention from federal regulators could be warranted, she added.