The head of New York City’s pension funds called for a shareholder lawsuit against Tesla, accusing Elon Musk, its chief executive, of causing the company’s shares to plunge because of his actions to slash spending and the federal work force as head of the Trump administration’s cost-cutting effort.
In a letter sent late Monday to the New York City Law Department and reviewed by The New York Times, Brad Lander, the comptroller who oversees the city’s five public pension funds, said the highly contested cost-cutting measures by Mr. Musk’s initiative, the Department of Government Efficiency, are hurting Tesla’s stock.
He accused Mr. Musk, the world’s richest person, of “effectively quitting his job at Tesla” and “promoting policies” that have been harmful to Tesla’s business.
“As the market has learned the truth, bit by bit, that Musk has in fact abandoned Tesla in favor of DOGE, where he was taking actions that alienated Tesla’s consumer base and causing Tesla’s sales to severely decline, the share price has dropped in response,” Mr. Lander wrote in a letter to Muriel Goode-Trufant, the corporation counsel for New York City. The letter was seen as a likely precursor to a lawsuit because Ms. Goode-Trufant is the lawyer for the pension funds.
As a result, the letter said, the value of the pension system’s Tesla holdings has dropped by 34 percent from Dec. 31 to March 28, to $831 million from $1.26 billion.
Mr. Lander, in an interview, said that Tesla had emphasized the importance of Mr. Musk’s involvement to the electric car maker’s success, but had falsely represented that he spends “significant time on the company and is highly active” in its management. He said that he hoped the lawsuit will help recover some of the losses and compel Tesla to make policy and governance changes.
“No other corporate board allows the C.E.O. to barely show up for work,” said Mr. Lander, who is running for mayor in the June 24 Democratic primary and has pledged to protect the city from Trump administration policies that could harm it.
Tesla did not immediately respond to a request for comment. Mr. Musk has acknowledged that his work for DOGE has hurt the company. Tesla has faced vandalism of its dealerships, an almost 50 percent decline in its share price and car owners (including celebrities) who are selling their Teslas because they do not want to be associated with Mr. Musk.
“What they’re trying to do is put massive pressure on me, and Tesla I guess, to you know, I don’t know, stop doing this,” Mr. Musk said at a town hall in Wisconsin over the weekend. “My Tesla stock and the stock of everyone who holds Tesla has gone, went roughly in half. I mean it’s a big deal.”
The pension funds have raised issues with Mr. Musk’s management of Tesla in the past. In 2024, they joined with other investors to call for Tesla shareholders to reject Mr. Musk’s compensation package, raising concerns that he was “dramatically overcommitted” given his positions as the head of X, formerly known as Twitter, along with SpaceX and other companies.
The pension funds are also suing the Fox Corporation for abandoning its responsibility to shareholders by broadcasting false information about the 2020 presidential election.
