Tesla investor presses board to finally address the elephant in the room: Elon Musk’s politics and their impact on the EV maker

Jay Butera, 67, of Pennsylvania, submitted a shareholder proposal to the board asking Tesla to adopt a policy of political neutrality that would prohibit executives and company leaders from making statements, endorsements, contributions and taking other visible actions in support or opposition to political parties or candidates. Butera, a retired entrepreneur, is deeply passionate about renewable energy and founded the bipartisan climate solutions caucus in 2016. He’s also been an investor in Tesla since the company’s IPO in 2010. In his view, Tesla’s mission of widespread electric transportation and deployment of renewable energy sources is of paramount importance. Butera doesn’t want to see “the day-to-day politics of mankind get in the way of that.”

Butera’s plight as a Tesla owner and supporter at odds with the impact of Musk’s high profile in politics has been raised repeatedly by the electric vehicle manufacturer’s legion of retail investors. His proposal is the first time the Tesla board has had to directly respond to the query and it comes as Tesla faces increasing pressure on sales and innovation amid a slowdown in consumer spending.

“Elon Musk is a technical genius and I believe his enthusiasm and passion have enabled him to do things that no one else could do, so it’s not surprising that his interest in politics was larger than life,” said Butera. “It’s that kind of passion and energy and enthusiasm that drove him to create Tesla and to make Tesla do what no other company has been able to do—create practical electric transportation.”

But that same zeal, directed at politics, is jeopardizing the world’s transition to sustainable energy, Butera said, and Tesla’s investors.

“We can’t afford to do anything at any level in the company that alienates customers, alienates government officials, or alienates regulators, whether it’s here or abroad,” he said.

Butera first reached out to the board in October 2024 with a letter outlining his concerns and never got a response, which surprised him because at the time he owned about $8 million worth of Tesla stock, he said. Butera has since sold off about half the investment after holding onto it for 15 years because he was concerned about the impact of political activity on the company and thought Tesla was overrepresented in his investment portfolio.

“It just stands to reason that if you make political statements in one direction or another, you’re going to offend somebody,” Butera told Fortune. “For that reason, I’m a big advocate of neutrality for people who are in the public eye.”

His proposal does not mention Tesla’s CEO by name, but Musk has hardly been neutral. He spent north of $250 million backing a super PAC he created to mobilize support for President Donald Trump and he was the face of the Department of Government Efficiency (DOGE). The latter was behind thousands of unpopular federal job cuts and slashed millions in federal funding.

Tesla board pushes back

Tesla board members, chaired by Robyn Denholm, are seeking to omit the proposal, which would mean it won’t appear on the company’s final proxy statement and Tesla shareholders won’t get to vote on it at the annual meeting in November.

The Tesla board wrote that the proposed neutrality policy “would not only have a chilling effect on free speech, but could also be both impossible and unlawful for the board to implement and enforce.”

“This would place the Board in an unworkable situation to constantly monitor and analyze an undefined category of statements made by the Company’s directors and high-ranking officers in their personal capacities using non-Company platforms,” board members said in an opposition statement. “The Board neither has the ability to enforce nor should it be placed in a position to be constantly interpreting these sweeping, nebulous and rapidly shifting standards.”

The board recommended investors vote against the proposal, and its request to strike the proposal entirely to the Securities & Exchange Commission remains pending.

Rising concerns from Tesla investors

While Butera submitted the shareholder proposal in his capacity as an individual investor in the company, he is hardly alone. Retail investors holding thousands of Tesla shares have upvoted questions every quarter since 2024 asking about Musk’s involvement in politics and begging the board to rein him in.

“Elon the person has freedom of speech. The brand ambassador of Tesla does not,” wrote one investor before the last earnings call in July. “What is the board doing to distance Tesla from the private actions of its CEO?”

“Boycotts, protests, vandalism, negative headlines, and a stock slide have been sparked by Elon Musk’s participation in changes to U.S. gov’t services & employment,” wrote another investor in April. “Is the Tesla board discussing whether their CEO should focus fully on Tesla and leave gov’t to elected politicians?”

Similar Musk-focused queries rolled into the platform Tesla uses to solicit questions from its army of retail investors in advance of quarterly earnings calls in January, October 2024, and July 2024.

Consumers in blue states are cooling on Tesla

In heavily Democratic-leaning California, which Musk has left in favor of Texas, the hit on Tesla sales has been deep. For the past seven straight quarters, new registrations for Teslas have declined in California, where the share of electric vehicles is overly represented relative to rest of the U.S., according to data from Experian. The state’s share of zero electric vehicle registrations is 28.6%, and the market share is 19.5%. In comparison, the U.S. market share of the vehicles is 7.8%.

California registrations of Teslas dropped 18% during the first half of 2025, compared to the first half of 2024, according to quarterly figures published in July by the California New Car Dealers Association. Meanwhile, hybrid registrations increased 54% in California the first half of the year. Tesla’s Model Y and Model 3 remain the top 2 selling cars in California, despite the declines.

As of August 2025, the share of registered voters in California was 45.3%, while the share of Republicans was 25.2%, according to the Public Policy Institute of California.

A 2024 study authored by a University of Chicago Booth School of Business assistant professor of economics that analyzed 117 major corporate political stance events found that when companies take controversial positions perceived to be political, they get a response from consumers.

“Consuming Values,” written by Jacob Conway and Levi Boxell, found that when a quarter of consumers are aware of a firm’s political position on an issue, those aligned with the position increased their consumption by 19% the following month. Consumers opposed to the stance decreased their spending by 11%, the study found.

Making political statements is “certainly very fraught in the sense that there is now good academic evidence that taking stances certainly affects customer demand for your product,” said William Cassidy, an assistant professor of finance at Washington University’s Olin Business School.

The research also found that the consumption differences persisted even a year after a firm took a political stance on an issue.

Butera said he has friends who won’t buy Teslas because of Musk’s politics and has others who have sold their Teslas. As an investor and climate-change advocate, he finds that trend alarming.

Before he submitted his proposal, he researched Tesla’s Code of Business Ethics, which asks employees to avoid conflicts of interest that “interfere, or appear to interfere, with Tesla’s interests.” His proposal asks the board to incorporate statements that deem political activities by leaders as conflicting with Tesla’s interests. He said the proposal isn’t meant to criticize, penalize, or embarrass anyone at the company.

“I’m just asking the board to acknowledge the risks of political activity, to learn from its mistakes, make necessary adjustments in governance, and to move forward toward Tesla’s stated goal of ‘Accelerating the Transition to Sustainable Energy,’” said Butera. “Tesla’s success in this mission is important to the world—more important than the personal political opinions of any one person. I would hope that Tesla’s Board would have the same mindset.”