Tesla executives were reportedly alarmed after Elon Musk denied a Reuters report from April 2024, which claimed the company had canceled plans for a $25,000 electric vehicle.

Sources familiar with the matter indicated that Musk’s post on X, labeled the report as “lying.”

This response temporarily stopped a decline in Tesla’s stock, although it still closed down by 3.6% that day.

Musk’s denial caused confusion among some senior managers.

Executives questioned Musk about what the company should tell perplexed suppliers and investors, people familiar with the matter said.

Tesla and Musk have not commented on the situation. An SEC spokesperson also declined to comment when approached by Reuters.

🔗 Source: Reuters

🧠 Food for thought

1️⃣ Musk’s direct communication style creates ongoing governance challenges

This latest incident fits a pattern where Musk’s personal communication style creates governance tensions at Tesla.

In 2016, Musk personally canceled a customer’s Model X order after the customer wrote a critical blog post about a Tesla event, highlighting his direct control over customer relations even for small matters 1.

The current situation mirrors Musk’s 2018 SEC settlement, where he paid $40 million after tweeting about taking Tesla private, demonstrating the significant financial consequences of communications that regulators view as misleading 2.

This executive tension reflects a recurring governance challenge for Tesla: balancing Musk’s impulsive communication style with the need for accurate investor information, especially regarding product roadmaps critical to Tesla’s valuation.

Such direct CEO interventions in corporate messaging are unusual in the auto industry, where product announcements typically follow more structured disclosure protocols to prevent market confusion.

2️⃣ Tesla faces intensifying competition in affordable EV segment

While Tesla delays its $25,000 vehicle, competitors have aggressively entered the affordable EV space that Tesla once promised to dominate.