Tesla dealership in Washington, D.C. Photo: Diego M. Radzinschi/ALM
In April, the American Federation of Teachers President sent an urgent letter to 75 state and city chief fiduciary officers to safeguard their retirement assets and “urgently review their current holdings” in struggling electric-car maker Tesla. Now, a Pennsylvania public pension fund is the first known U.S. pension fund to divest from Tesla.
The Lehigh County Pension Board in Pennsylvania, which oversees the $500 million Lehigh County Employees’ Retirement Fund, passed a resolution last week to end the purchase of shares of Tesla and will seek to completely divest its holdings. The Lehigh County board did not sell off existing Tesla holdings, but have asked for a full report on the financial, reputational, and governance risks tied to the company. Until then, they’ve halted any new investment in Tesla.
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Given the steep plunge in Tesla shares this year due to extreme pushback from Tesla CEO Elon Musk’s role as “special government employee” in the Trump administration’s DOGE unit, the Lehigh County pension fund made the move. The pension fund has less than 1% of its assets invested in Tesla through S&P 500 index funds, the vote highlighted Tesla's first-quarter net profit drop of 71% to $409 million, a 9% decrease in total revenue to $19.3 billion, and a 20% decline in automotive revenue to $13.9 billion.
"Elon Musk's choice to become a political figure rather than a customer-focused leader has compromised the Tesla brand," said Mark Pinsley, the Lehigh County controller who first introduced a motion to cease Tesla investments, in a statement. He expressed concerns over lack of confidence in Musk’s leadership and Musk's behavior on the social platform X, suggesting it reflects his approach to brand value and reputation.
AFT President Weingarten’s letter was sent to state treasurers and city comptrollers across the country, including the California State Teachers’ Retirement System, the Teachers’ Retirement System of the City of New York and the Chicago Teachers’ Pension Fund.
Previously, she sent a letter to BlackRock, Vanguard, State Street, T. Rowe Price, Fidelity and TIAA, warning that her members’ exposure to tens of billions of dollars in Tesla stock in their portfolios presented an unacceptable retirement risk. AFT members participate in pension funds totaling an estimated $4 trillion.
Related: American Federation of Teachers urges fiduciaries to examine Tesla investment ‘at risk’ in pensions
In March, a group of 51 New York State legislators called on the state to divest its $1 billion in Tesla holdings. In April, eight state treasurers penned a joint letter to Tesla's board to express concern over Musk's lack of focus on Tesla.
"Tesla's earnings are down 71% from a year ago, their auto revenues have dropped 20%, and profitability has taken a sharp dive," said Pinsley. "We owe it to our retirees and taxpayers to take a hard look at whether these are wise investments at this time."
In an op-ed column for Common Dreams, Pinsley urges “public pension funds nationwide, especially those shaped by organized labor, including the United Auto Workers, to look hard at their Tesla holdings.”
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Lynn Cavanaugh
Lynn Varacalli Cavanaugh is Senior Editor, Retirement at BenefitsPRO. Prior, she was editor-in-chief of the What's New in Benefits & Compensation newsletter. She has worked for major firms in the employee benefits space, Vanguard and Willis Towers Watson, as well as top media companies, including Condé Nast and American Media.
