The electric auto maker has announced that Robyn Denholm, who has been an independent director at the business since 2014, will step up to become chairman with immediate effect. Denholm has been active at Tesla since 2014 but is now working with Australia-based Telstra as its CFO and Head of Strategy and has put in her six-month notice with the company.
Denholm is now one of two women on the electric-car maker's board.
The SEC accused him of manipulating the market and sued him in late September for making "false and misleading" statements to investors.
The move vaults Denholm, 55, from relative obscurity into a high-profile position of trying to rein in Musk and manage a company that is struggling to produce vehicles and make money as it attempts to shift the world from fueling transportation with oil to battery-powered electric vehicles.
'I believe in this company. Tesla says that in order to ensure a smooth transition during that time, "Elon Musk will be a resource to Robyn and provide any support that she requests in her role as chair". In media interviews he said he often slept on a sofa in the Tesla office and more recently in an online video he briefly smoked marijuana.
Robyn Denholm takes over the role from founder Elon Musk, who will remain as Tesla's chief executive.
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"She was there while all of this was going on", said Charles Elson, director of the corporate governance centre at the University of Delaware.
The new chairman isn't likely to influence Musk's behavior, said Frank Schwope, an analyst with NordLB in Germany. "No other CEO of any other public company would have survived this".
Enlarge / Robyn Denholm is the new chair of the board at Tesla.
In premarket trade on the Nasdaq exchange Thursday, Tesla's share price was up 0.24 percent at $349.00.
Musk did not comment about the move on Twitter, but he did laud his colleague in a company statement. Mr Musk was also obliged to relinquish his role as chairman for three years.
Prior to working at Telstra, Denholm spent seven years at Toyota in Australia, where she was a senior financial manager. The Australian telecommunications executive will assume the role immediately, the company announced this morning.