A series of negative signals has caused the legendary Elon Musk to crumble in the eyes of shareholders, with the last straw being the accusation of drug use affecting his ability to lead Tesla.

According to Fortune, Elon Musk's control over Tesla has significantly diminished as the billionaire pledged his shares to the bank to raise money for the Twitter-X acquisition. This $43 billion deal is considered a stumble for the Tesla boss, as the current estimated value of the Twitter-X social network is only $22 billion.

To make matters worse, neglecting Tesla and engaging in a price war has eroded the company's profits, allowing Chinese competitor BYD to surpass it.

Furthermore, the slowing demand for electric cars in the market has increased shareholder concerns, leading to a story disclosed by The Wall Street Journal (WSJ) about Elon Musk's drug use and doubts about his leadership abilities.

As a result, Elon Musk recently "challenged" Tesla shareholders by threatening to switch to making electric cars at another company if he doesn't get more voting rights.

"I am uncomfortable turning Tesla into a leader in artificial intelligence (AI) and robotics without having a 25% voting stake. Currently, I only have influence, not an unassailable position. So unless the request is met, I will develop products outside Tesla," billionaire Elon Musk posted on Twitter-X.

Shaky Throne

According to Fortune, although Elon Musk remains the largest shareholder at Tesla with a 13% stake, he previously sold and pledged a significant number of shares to raise nearly $40 billion for the Twitter-X acquisition in 2022.

Now, as this social network remains a money-losing venture with no profits, and is even deteriorating due to advertising withdrawals, Elon Musk faces trouble with influence at Tesla.

It's worth noting that many Tesla shareholders have filed lawsuits, claiming that the company's board did not intervene in time to prevent Elon Musk from freely using his shares for other projects, thereby negatively impacting Tesla's reputation and stock price.

The fear of being ousted has pressured Elon Musk to consolidate power over Tesla's board.

Ironically, at a time when the world's richest man is consolidating his power, it's not going smoothly.

Fortune reports that Tesla is starting 2024 on a sour note, losing up to $94 billion in market value, and the profit margin is decreasing.

Since being listed on the stock exchange in 2010, this is the first time Tesla has experienced such a sharp decline in its total market capitalization. The company's stock has dropped by 12% since the beginning of the year, marking the worst performance since 2016 when Tesla's stock fell 14% in the first nine days of trading.

Tesla's stock fell 2.7% before the start of trading on January 16, 2024. With a market capitalization of $695.8 billion, Tesla is far behind its peak of $1.2 trillion before Elon Musk acquired Twitter-X.

Meanwhile, the price war is eroding Tesla's profits. The gross profit margin of Elon Musk's empire, excluding government tax credits, was only 16.3% in Q3/2023, significantly lower than the 27.9% in the same period the previous year. This is not to mention the ongoing labor strikes in the U.S. auto manufacturing industry demanding higher wages.

"We are going through a cyclical downturn with electric vehicles, and the price war, competition in the current market is exacerbating the pressures of this cycle," said Ivana Delevska, Chief Investment Officer at Spear Invest.

Worse yet, Fortune suggests that 2024 is starting quite bleak for Tesla as the price-cutting strategy to gain market share in 2023 did not stimulate consumer demand as expected.

Although electric vehicle sales in the U.S. are still increasing, the growth has slowed significantly and is lower than expected when compared to the efforts of both manufacturers and government support.

Most recently, the announcement by Hertz car rental company that it will sell 20,000 electric cars to switch to gasoline and reconsider the contract to purchase 100,000 Tesla electric cars further worsens the situation.

"Investors are fearing Tesla's growth momentum is slowing," warned analyst Jeffrey Osborne of Cowen.

All these factors have led to the WSJ revealing directors' concerns about Elon Musk's leadership ability when the founder used drugs. This is considered the last straw as shareholders no longer trust the "legend" Elon Musk.

Legend Crumbles

According to Fortune, billionaire Elon Musk often boasts that Tesla is leading in AI and robotics with its self-driving electric car product. However, the safety issues of this self-driving mode are being questioned by U.S. officials due to too many accidents.

Even the promised electric pickup truck Cybertruck of Tesla, although it has started delivery, is also rated as difficult to increase production due to technology issues.

Meanwhile, Tesla itself has had to admit the possibility of a decline in demand for electric vehicles in the Q3/2023 financial report. Since then, many global car manufacturers have revised their optimistic forecasts for the market, and many companies have canceled their plans to expand their electric vehicle production.

By Q4/2023, although Tesla's business results were better than previously forecasted, their sales volume was lower than BYD, the main competitor from China.

It should be noted that Tesla is sold in China, but BYD is not sold in the U.S., meaning the development potential of the electric car company from Asia is much greater than Elon Musk's empire.

Fortune suggests that investors are gradually losing faith in Elon Musk at the beginning of 2024 when realizing that Tesla is just a young, non-traditional electric vehicle startup that could fail compared to many well-established traditional car companies.

In 2023, Tesla's stock ranked 8th in the S&P 500's list of best-performing stocks. However, at the beginning of this year, Tesla's stock is ranked 8th from the bottom.