Wall Street analyst warns this is a tipping point in the Tesla story

Investing.com -- Wedbush’s Dan Ives believes Tesla’s story is at its “tipping point,” urging the company’s board to take decisive action over Elon Musk’s growing political ambitions.

Ives warned that Musk’s decision to officially launch a new political party, dubbed the “America Party,” could become a serious distraction just as Tesla (NASDAQ:TSLA) enters a critical growth phase.

“Tesla is heading into one of the most important stages of its growth cycle with the autonomous and robotics future now on the doorstep,” the analyst said, adding that the company “cannot have Musk spending more and more time creating a political party which will require countless time, energy, and political capital.”

Musk’s party plans to run candidates in the 2026 U.S. midterm elections, a move that could put him at odds with the Trump administration.

This, Ives argues, is “exactly the opposite of what Tesla shareholders want to see with a very important autonomous regulatory framework now on the horizon.”

The analyst proposed three immediate steps for the Tesla board to take.

First, he suggests a new incentive-driven pay package that would increase Musk’s voting power to about 25% and solidify his role as CEO through at least 2030.

“This would also create a framework that potentially Musk could drive Tesla to merge with xAI and create one of the most powerful AI companies in the world under one roof over the next 12 to 18 months,” Ives continued.

Second, he believes the board should introduce requirements on how much time Musk must dedicate to Tesla operations.

Third, Ives urges the board to establish a special oversight committee to monitor any political activities that could interfere with Musk’s leadership role.

“The Board cannot control Musk’s donations...but they can have oversight if his political ambitions/endeavors interfere with his role as CEO of Tesla,” Ives said.

The analyst believes that Musk remains essential to Tesla’s success, particularly in the emerging AI and robotics markets. Alongside Nvidia (NASDAQ:NVDA), he views Tesla as one of the “two best physical AI companies in the world.”

“We urge the Board to act now and move the Tesla story forward with Musk as CEO,” the note concluded.