Elon Musk, already the wealthiest man alive, might edge closer to becoming the first trillionaire. Tesla’s board introduced a new compensation package aimed at locking his focus on the carmaker as it navigates challenges in the electric vehicle market.
The deal promises Musk vast stock rewards if Tesla’s value skyrockets beyond all corporate precedents. His earlier agreement was seen as overly ambitious, yet Tesla hit the targets with surprising ease.
Musk’s trillion-dollar climb
The new package offers Musk 423.7 million Tesla shares, worth $143.5 billion today. But he only gets them if Tesla achieves huge growth.
To claim the full reward, Tesla must reach a market capitalization of $8.5 trillion. That is far above the current $1.1 trillion. At that level, Musk’s extra shares alone could approach $1 trillion in value.
Such a rise would make Tesla the most valuable company ever, surpassing Nvidia by a wide margin. Despite Toyota’s greater sales and profits, Tesla already dominates automaker valuations.
Proposal links Tesla and xAI
The proxy filing also revealed a proposal for Tesla to buy into xAI, Musk’s artificial intelligence company. That could further expand Tesla’s ties to his empire.
XAI recently took over X, the platform Musk purchased in 2022 for $44 billion. Tesla gave no position or figures on how much it might invest.
Any deal would potentially enrich Musk further, since he is xAI’s main owner.
The scale of Musk’s fortune
Musk holds 410 million Tesla shares worth $139 billion. Including SpaceX, xAI, and other ventures, Bloomberg estimates his net worth at $378 billion.
He also has rights to 304 million more shares from a contested 2018 deal. A Delaware court struck it down, though Tesla is trying to reinstate it this year. If successful, Musk’s stake would grow to 18%.
Tesla stock nearly doubled after the 2024 election, lifted by investor enthusiasm over Musk’s political ties. But backlash and falling profits erased those gains. Shares are still 26% below their December peak despite a partial rebound.
Betting on robotaxis and robots
Musk continues to forecast massive growth. He says Tesla’s robotaxi network will transform transport and profits. Owners could rent out cars for autonomous rides when unused.
He also pledges humanoid robots, which he claims could one day outsell Tesla’s vehicles.
Analysts back the move
“It’s a huge package but Tesla must retain Musk,” said Wedbush analyst Dan Ives. He argued Musk is vital for Tesla’s future in AI.
The board agreed, stressing Musk’s unique leadership. The proxy noted Musk even hinted at pursuing other ventures without assurances.
Still, Tesla is preparing for succession. Musk must help design a CEO transition plan to unlock the final 70 million shares.
Planning for life after Musk
Tesla said it regularly reviews succession for emergencies and long-term scenarios. It highlighted a strong internal pipeline while also considering outside candidates.
Musk takes no salary. His pay relies solely on stock and options, leaving him without compensation since 2017. By contrast, Jeff Bezos and Mark Zuckerberg relied on their founder stakes without new grants.
Musk demands greater control
Musk insists he needs 25% control of Tesla to guide its AI and robotics future. Without that, he said he might focus outside Tesla.
Ross Gerber of Gerber Kawasaki said the package reflects Musk’s fear of being sidelined. He called it excessive but admitted it could be justified if Musk meets the targets.
High hurdles and sharp criticism
If Tesla hits $8.5 trillion, Musk’s holdings could surge by nearly $1 trillion. But he will not gain anything until Tesla doubles to $2 trillion and meets operational milestones. Targets include deploying one million robots or reaching $50 billion in adjusted operating income, far beyond Tesla’s past records.
Skeptics point to Musk’s long history of promises. He has claimed since 2014 that fully autonomous cars were imminent, but they never arrived. Analyst Gordon Johnson accused him of inflating Tesla’s stock with bold but empty predictions.
Critics also warn the package could push Tesla to chase hype rather than address real problems. Chinese rival BYD is close to overtaking Tesla in EV sales.
Meanwhile, changes in US law removed Tesla’s lucrative regulatory credit revenues, adding more strain on the business.
Johnson dismissed the ambitious plan. “Tesla will never reach $8 trillion,” he said.
Tesla’s stock rose about 5% in early trading after the announcement.
