Tesla has denied reports that its board contacted recruitment firms to search for a replacement for Elon Musk as chief executive, following allegations that directors were frustrated with his focus on work for the US government.

The Wall Street Journal reported on Wednesday that Tesla's board members had reached out to several executive search firms "about a month ago" to work on a formal process for finding a successor, citing people familiar with the discussions.

According to the report, this initiative came as "tensions had been mounting" at the electric vehicle maker, with "sales and profits deteriorating rapidly" while Musk was "spending much of his time in Washington".

Tesla chair Robyn Denholm strongly refuted these claims on Thursday: "There was a media report erroneously claiming that the Tesla Board had contacted recruitment firms to initiate a CEO search at the company. This is absolutely false (and this was communicated to the media before the report was published)."

She added: "The CEO of Tesla is Elon Musk and the board is highly confident in his ability to continue executing on the exciting growth plan ahead."

Musk echoed this denial on his social media platform X, writing: "It is an EXTREMELY BAD BREACH OF ETHICS that the WSJ would publish a DELIBERATELY FALSE ARTICLE and fail to include an unequivocal denial beforehand by the Tesla board of directors."

The controversy follows Tesla's disappointing financial results last week, which showed quarterly revenue had declined 9 per cent, including a 20 per cent drop in automotive revenue. The company's first-quarter profit plunged 71 per cent to $409 million compared with $1.39 billion in the same period last year.

Musk, who poured hundreds of millions of dollars into Donald Trump’s 2024 presidential campaign, is overseeing the administration’s gutting of federal spending as part of the Department of Government Efficiency (DOGE) initiative, an non-governmental advisory body that has attracted significant criticism for perceived overreach and misleading claims. Many Tesla customers have distanced themselves from the brand due to Musk's political activities, and Tesla dealerships have come under fire – in some cases literally – as targets of protests.

During last week's earnings call, Musk addressed his divided attention, stating: "Starting next month, I'll be allocating far more of my time to Tesla."

The Wall Street Journal reported that during a recent meeting, board members told Mr Musk "he needed to spend more time on Tesla" and "needed to say so publicly", according to people familiar with the meeting.

Temporary government employees like Musk are normally limited to working 130 days a year, which would end his current role in late May if counted from Trump's inauguration date.

Tesla's market value has fallen from about $1.5 trillion in December to approximately $900 billion, with shares declining about 30 per cent since the start of the year.

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