Elon Musk: James Murdoch won’t be Tesla chairman

James Murdoch was tipped to take over the chairmanship of Tesla from its embattled founder, Elon Musk. However, Musk has shot down the report.

Background

In August, Tesla CEO Elon Musk tweeted plans to take his company private at $420 per share, claiming that he had secured funding for such a deal – an assertion that sent markets scrambling. According to reports, Musk had not obtained specific financing with partners for the deal and had rounded up the trading price of Tesla’s stock to reference “420” – which is slang for marijuana.

US financial watchdog the Securities and Exchange Commission (SEC) filed a lawsuit over the tweets saying Musk disrupted the stock market with “false and misleading statements.”

Musk and Tesla reached a settlement with the SEC in late September. Under the terms of the deal, Musk would have to step down from his role as chairman at Tesla for at least three years within 45 days. Both Tesla and Musk have been ordered to pay a civil penalty of $20 million. Tesla has until November 13 to appoint an independent chairman of the board.

Analysis

James Murdoch was tipped to be the leading candidate to replace Elon Musk as chairman of Tesla, the Financial Times reported citing sources close to the talks.

“The Tesla chairman job is perfect for James,” a person briefed on the discussions told the FT. “He’s working on this fund and will be sitting next to Elon … he’s going to get access to so much deal flow.”

Murdoch – the son of media tycoon Rupert Murdoch – is currently chief executive of 21st Century Fox. He is set to step down from the role when the entertainment company completes the sale of the majority of its assets to Disney. In 2017, Murdoch joined Tesla’s board as a non-executive director.

However, Musk disputed the Financial Times report in a response to a tweet about the article, saying: “This is incorrect”.

Assessment

Our assessment is that speculation surrounding of Elon Musk’s replacement as chairman will continue as the November deadline approaches. We believe that the rumoured appointment of Murdoch – who has no prior auto-industry experience - as chairman of Tesla’s board is unlikely.