Warren Slams Elon Musk for “Glaring Conflict of Interest,” Misappropriation of Company Resources in Redirecting Critical AI Chips from Tesla to X, Urges Accountability from[...]

August 09, 2024

Warren Slams Elon Musk for "Glaring Conflict of Interest," Misappropriation of Company Resources in Redirecting Critical AI Chips from Tesla to X, Urges Accountability from Tesla Board

Warren Slams Elon Musk for "Glaring Conflict of Interest," Misappropriation of Company Resources in Redirecting Critical AI Chips from Tesla to X, Urges Accountability from Tesla Board

"Musk betrayed his duty to Tesla's shareholders, either by knowingly prioritizing one of his private companies over Tesla, or by exaggerating the extent of Tesla's AI projects to boost investor confidence - or both."

Text of Letter (PDF)

Boston, MA - U.S. Senator Elizabeth Warren (D-Mass.) wrote to Tesla's Board of Directors regarding her concerns over CEO Elon Musk's continued conflicts of interest and misappropriation of company resources, and the Board's failure to hold him accountable. The letter follows a June 2024 report that Mr. Musk redirected scarce artificial intelligence (AI)-related resources from the publicly-traded Tesla to one of his private companies, X Corp.

Mr. Musk is the CEO of Tesla, a publicly traded company, and also leads several private companies, including SpaceX, Neuralink, The Boring Company, and X Corp. Recent reporting revealed that Mr. Musk ordered Nvidia to redirect over 12,000 critical graphics processing units (GPUs) originally meant for Tesla to X instead. GPUs are a scarce resource critical to the development of AI technologies and some companies must now wait years to acquire them. As Tesla uses Nvidia's GPUs to train its self-driving technology, Mr. Musk's decision to prioritize Nvidia GPUs for X over Tesla raises a glaring conflict of interest between his financial interest in X and his fiduciary duties as CEO of his publicly-traded company.

"Regardless of his personal pursuits and his vast personal wealth, Mr. Musk has legal responsibilities to Tesla-a publicly traded company-and its shareholders. The Tesla Board must act to ensure that Mr. Musk is meeting all of these responsibilities," wrote Senator Warren.

Shareholders have already raised numerous concerns over the Board's lack of independence, including Musk's close ties to members of the Board, challenges to his $56 billion pay package, and allegations that Tesla is "a family business masquerading as a public company."

"(T)he Board appears to be neglecting its duty to adequately govern the company and refusing to establish clear policies to address the risks to Tesla posed by Mr. Musk's multiple apparent conflicts of interest," concluded Senator Warren.

The letter contains a series of ten questions for the Board related to how it is handling Mr. Musk's conflicts of interest and ensuring that he meets his responsibilities as CEO of Tesla.

Senator Warren has been a strong advocate for corporate oversight and accountability:

• In May 2024, Senator Warren wrote to the Department of Defense, following a deeply troubling Wall Street Journal investigation revealing that Starlink, a satellite-internet service and subsidiary of DoD contractor SpaceX, is being used by Russia and other sanctioned U.S. adversaries, and concerns that the company has not taken appropriate action to stop this illicit activity.
• In March 2024, Senator Warren raised new concerns to Gary Gensler, Chair of the U.S. Securities and Exchange Commission (SEC), related to her July 2023 call for the SEC to investigate Tesla's Board of Directors (Board) and its Chief Executive Officer, Elon Musk for possible misappropriation of Tesla resources and conflicts of interest related to Mr. Musk serving in dual roles at Tesla and X, formerly known as Twitter.
• In November 2023, Senators Elizabeth Warren, Sherrod Brown, Jon Tester, Tina Smith, and John Fetterman sent a letter to Gary Gensler, Chair of the U.S. Securities and Exchange Commission (SEC), urging him to issue rules requiring public companies to disclose their lobbying expenditures.
• In October 2023, Senator Elizabeth Warren sent a letter to the Department of Justice (DOJ) asking it to immediately reverse its newly unveiled "safe harbor" policy that would provide a get-out-of-jail-free card for mergers involving corporate white-collar criminals - a betrayal of DOJ's mission and a massive step backwards for the Biden administration's fight against anticompetitive mergers.
• In August 2023, Senator Elizabeth Warren and Representative Pramila Jayapal sent a letter to Ambassador Katherine Tai, Secretary of State Antony Blinken, and Secretary of Commerce Gina Raimondo urging them to rebalance the trade advisory committee system to include the interests of of all pertinent stakeholders, including labor, environmental, and other public interests - not just big business.
• In July 2023, Senator Elizabeth Warren sent a letter to the Chair of the Securities and Exchange Commission (SEC), Gary Gensler, calling on the SEC to open an investigation into Tesla and the Tesla Board of Directors' (Board) failure to manage the actions of CEO Elon Musk in his dual role as CEO of Twitter and Tesla.
• In June 2023, Senator Elizabeth Warren and Representative Katie Porter alongside Representatives Greg Casar, Jesus Garcia, Pramila Jayapal, and Jan Schakowsky sent a letter to Transportation Secretary Pete Buttigieg urging DOT to resist JetBlue's misleading tactics to rig the Department of Transportation's (DOT) evaluation of the airline's application to consolidate with Spirit Airlines and urging DOT to block the merger.
• In June 2023, Senators Elizabeth Warren and Ron Wyden sent a letter to the Department of Justice (DOJ) raising serious concerns about the deal announced between the PGA Tour and the Saudi Arabian Public Investment Fund (PIF) to consolidate global golf-related business, including LIV Golf (LIV).

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