Tesla CEO Elon Musk seems to be always embroiled in at least one major controversy at all times. In the most recent case, the Wall Street Journal reported that the billionaire had sex with an employee and an intern at SpaceX and asked other women to have his babies.

The report comes ahead of Tesla’s annual meeting, set for Thursday, where shareholders would decide on reinstating Musk’s controversial 2018 compensation package. Here’s what the allegations of sexual misconduct could mean for Musk and Tesla.

According to the Wall Street Journal, several female employees of SpaceX have confided in friends and family, and at times SpaceX “that Musk showed them an unusual amount of attention or pursued them.”

Wall Street Journal Report Accuses Musk of Sexual Misconduct

This is not the first such allegation against Musk though. A female flight attendant on Musk’s private jet alleged that the billionaire exposed himself and offered to buy her a horse in exchange for sexual favors in 2016. Musk termed her allegations as “utterly untrue” and joked that the scandal could be called “Elongate.” Meanwhile, SpaceX paid the flight attendant $250,000 to settle the allegations.

SpaceX’s president and chief operating officer, Gwynne Shotwell, ridiculed the allegations by the flight attendant and said, “Personally, I believe the allegations to be false; not because I work for Elon, but because I have worked closely with him for 20 years and never seen nor heard anything resembling these allegations.”

To be sure, SpaceX has faced allegations of sexual harassment in the past also. For instance, in 2022 five former SpaceX employees alleged that there was a “culture of sexual assault” at the Musk-led company.

More recently, Michelle Dopak, a production coordinator at SpaceX headquarters in California, filed a lawsuit against the company earlier this year, alleging the company paid female employees less than their male counterparts.

SpaceX Has Also Faced Allegations of Sexual Misconduct

Dopak also alleged that her supervisor, a married man, pressured her into sex which resulted in a pregnancy. The supervisor allegedly offered Dopak $100,000 to have an abortion, which she declined. SpaceX subsequently allowed the supervisor to transfer $3.7 million worth of his SpaceX stock options to avoid paying child support to Dopak.

In her complaint, Dopak alleged that Shotwell, 2nd in command behind Musk at SpaceX, ignored complaints of harassment at the company. Meanwhile, and quite expectedly, Shotwell has said that the company is quite serious about complaints related to harassment and takes appropriate actions when they are reported.

She also ridiculed the Wall Street Journal report and said, “The untruths, mischaracterizations, and revisionist history in your email paint a completely misleading narrative.”

Shotwell added, “I continue to be amazed by what this extraordinary group of people are achieving every day even amidst all the forces acting against us. And Elon is one of the best humans I know.”

To be sure, Musk has quite an uncharacteristic personal life and has at least 10 children from different women, some of whom he named quite strangely. For instance, he named one of his sons with singer Grimes “X Æ A-12” but eventually dropped 12 from the name as under California laws the name can have only up to 26 letters of the English alphabet.

Musk’s Views on World Population

In 2022, Musk tweeted “Population collapse due to low birth rates is a much bigger risk to civilization than global warming.” In a separate tweet, he added, “Doing my best to help the underpopulation crisis.”

Musk indeed is true to his words and among his many kids, he shares twins with Shivon Zilis, an executive at his brain-implant company Neuralink. Musk, who believes that people with high IQs should procreate, encouraged Zilis to have children and then donated his sperm to help her become pregnant.

What Do These Controversies Mean for Tesla?

To be sure, this is not the first time that Musk has faced controversies, and among others, the Tesla CEO is still battling allegations of insider trading and illegal drug use. While he has always been a polarizing figure, his popularity has waned since he acquired Twitter (later renamed X).

A self-proclaimed “free speech absolutist,” Musk restored several banned accounts including that of former President Donald Trump. Several reports say that hate speech on X has increased under Musk, who himself has tweeted and retweeted antisemitic content.

While most of Musk’s controversies did not seem to have much impact on Tesla, shareholders are getting more and more concerned that Musk’s antics are hurting Tesla and are turning off some potential car buyers, specifically those on the left of the political divide.

According to car buyers surveyed by researcher Strategic Vision in October and November, the proportion of Democrats buying Tesla vehicles fell by more than 60%. While the survey showed that Tesla had made amends with Republican buyers, the company might still not have been able to offset the losses from losing liberal buyers – or at least that’s what its latest numbers seem to show.

tesla margins

Would Allegations of Musk’s Sexual Misconduct Impact Tesla?

A negative PR would be the last thing that Tesla and Musk would need at this point as the company’s sales are slowing and its margins have fallen to multi-quarter lows amid the price war. The stock has also sagged and TSLA is the worst-performing constituent of the “Magnificent 7” this year.

A more pressing issue for Musk however is Tesla’s annual meeting when the shareholders would decide on Musk’s 2018 compensation package that was struck down by a Delaware judge earlier this year.

Tesla’s chair, Robyn Denholm, has hinted that the compensation package which was once valued at $56 billion is necessary to retain Musk.

There is little denying that despite his many controversies, Musk has been a net positive for Tesla. Tesla might get into uncharted waters if shareholders reject his package as it would put a question mark on Musk’s future at the electric vehicle giant.

Incidentally, Musk said earlier this year that unless he has 25% voting rights at Tesla, he won’t be comfortable building artificial intelligence (AI) products at the company. These products are critical to Tesla’s future growth and its mammoth valuations. Musk doesn’t seem to be prioritizing Tesla over his other companies, however. He reportedly diverted extremely valuable AI hardware from Nvidia that was supposed to go to Tesla to X and his AI startup X.ai. Naturally, this move raised concerns over a potential conflict of interest.

As for the sexual misconduct allegations against Musk, they will only harm Musk and Tesla as the brand is so interwound with the cofounder.

While the allegations might not have an immediate impact on Tesla’s share price, it would only take the sheen off the brand which has so far relied on Musk’s persona to spur sales.