Tesla has proposed a large new $1 trillion compensation bundle for its CEO Elon Musk, and most of the benchmarks he must hit are merely watered-down variations of guarantees he’s spent years making concerning the firm.
That’s not the image Tesla’s board of administrators paints within the firm’s annual proxy assertion, the place they revealed the proposed pay bundle. As an alternative, the board focuses on the way it plans to create “essentially the most beneficial firm in historical past.”
To make sure, if Tesla accomplishes all that it goals for with this deal, it’s going to appear to be a a lot completely different firm on the finish of the 10-year interval it covers. That doesn’t change the truth that the milestones the corporate is asking Musk to purpose for are much less formidable than his personal previously-stated objectives.
Whereas the unprecedented pay bundle nonetheless must be accredited by shareholders at a gathering in November, it’s simple to see the corporate’s fervent fan base voting “sure.” Earlier votes on Musk’s compensation have been overwhelmingly accredited by Tesla’s shareholders.
With that in thoughts, let’s check out what Musk wants to perform with the intention to obtain the total payout.
defaultImage Credit:Justin Sullivan / Getty Photographs
20 million vehicles … complete
Musk spent years claiming Tesla would be capable of make 20 million electrical automobiles per 12 months by 2030. This was again when he and his firm had been nonetheless promising to develop at a price of fifty% every year.
However Tesla walked away from these guarantees as gross sales progress stalled, after which reversed in 2024. The corporate then pulled the 20-million-per-year aim from its affect report final 12 months, and stopped constructing a deliberate manufacturing unit in Mexico that might have elevated manufacturing.
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Now, the primary “product aim” that Tesla’s board of administrators laid out for Musk to realize on his path to changing into a trillionaire is to ship 20 million automobiles complete. Tesla has already bought eight million vehicles thus far, and even with gross sales slumping, is transferring simply shy of two million per 12 months.
With the brand new pay bundle being laid out over a 10-year interval, which means the goal has gone from 20 million EVs per 12 months by 2030 to only 20 million complete by 2035.
A Tesla Cybercab prototype at a Tesla retailer in San Jose, California, US, on Tuesday, Nov. 12, 2024. Tesla CEO Elon Musk stated the robotaxi, which has no steering wheel or pedals, might price lower than $30,000 and “most likely” will go into manufacturing in 2026. Photographer: David Paul Morris/BloombergImage Credit:David Paul Morris/Bloomberg / Getty Photographs
A million robotaxis*
Considered one of Musk’s most notorious and outrageous guarantees about Tesla got here in 2019, when he claimed that the corporate would have a million robotaxis on the highway in 2020. It’s now 2025, and Tesla has solely simply begun to trial a robotaxi service in Austin, Texas that has, at most, round 20 or 30 vehicles with security drivers on board.
To entry his full proposed pay bundle, Tesla is asking Musk to assist the corporate notice an altered model of that promise, as one other product aim listed is to have “1 million Robotaxis in Business Operation.”
It’s a aim with caveats. The superb print reveals that Tesla is simply requiring there to be a “day by day common mixture” of 1 million robotaxis “commercially operated by or on behalf of [Tesla] over a consecutive three-month interval, as a part of a transportation service.”
Tesla goes on to outline “Robotaxi” as any Tesla automobile, together with however not restricted to the purpose-built “Cybercab” it’s growing, that’s utilizing the corporate’s Full Self-Driving software program to supply rides to folks.
This consists of customer-owned automobiles, which is one other factor Musk has lengthy promised however by no means delivered. He’s spent years claiming that Tesla might flip a digital change and switch present automobiles into fully-autonomous ones, and that house owners might add and subtract these automobiles to a bigger robotaxi fleet at will.
However Musk has since stated most of the Teslas at the moment on the highway don’t have the required {hardware} for the previous to occur, and the corporate has but to show the latter. Regardless, Musk now has an excellent looser timeline to try to make each issues occur.
Picture: TeslaImage Credit:Tesla
A million “bots”?
Musk sees Tesla’s future being all concerning the humanoid robotic that it’s growing, referred to as Optimus. Simply this week he claimed it might make up as a lot as 80% of the corporate’s future income.
As he turned more and more centered on Optimus, Musk made some fairly wild guarantees about what that future would appear to be. Considered one of his core claims was that Tesla might be making a million Optimus bots per 12 months by as early as 2029.
And but, Tesla’s board is simply asking Musk to ship a million “bots” complete as a part of this proposed compensation plan. Tesla additionally defines “bots” as “any robotic or different bodily product with mobility utilizing synthetic intelligence manufactured by or on behalf of the Firm” — although the corporate’s automobiles don’t rely.
The administrators appear to agree that Optimus has “the potential to be Tesla’s bestselling product,” and so they say it reperesents “the clearest instance of how Tesla has the flexibility to make autonomy profit all of humanity.”
However the board additionally notes that “commercialization plans” for Optimus are “nonetheless in improvement,” and Musk now has till 2035 to succeed in the a million mark.
Picture Credit:Tesla India / X
Every part else
The fourth and closing product aim Musk has to realize is to notch 10 million lively subscriptions to Tesla’s Full Self-Driving (FSD) software program. It’s arguably essentially the most formidable product aim. The corporate doesn’t say what number of present house owners have paid for FSD, although executives have not too long ago stated the adoption price is within the “teenagers.” At finest, which means anyplace from just a few hundred thousand to the low hundreds of thousands of Tesla automobiles have the software program put in.
Every part else Tesla’s board is asking of Musk is tied to cash. Finally, Musk wants to assist Tesla attain an $8.5 trillion valuation with the intention to unlock the total worth of the compensation bundle and grow to be a trillionaire himself.
Musk already had grand designs to perform one thing comparable. He has usually claimed that Tesla might in the future grow to be extra beneficial than Apple and Saudi Aramco mixed. At their present valuations, these two corporations are collectively price round $5.5 trillion. However earlier this 12 months, the CEO claimed Tesla might be price greater than the subsequent 5 most-valuable corporations mixed — which on the time meant he was aiming nearer to the $15 trillion mark.
Together with the aim of blowing up Tesla’s valuation, Musk is being requested to extend the corporate’s earnings to, primarily, $400 billion per 12 months — an unlimited determine in comparison with final 12 months’s earnings of round $17 billion.
Lastly, Tesla’s board has requested for 2 notable assurances from Musk with the intention to unlock the total worth of the compensation bundle. One is that he should work with the corporate to develop a plan for a way he might be succeeded as CEO of Tesla (and the plan primarily locks him to the corporate for not less than 7.5 years).
The opposite, buried in a footnote, is that Tesla acquired “assurances that Musk’s involvement with the political sphere would wind down in a well timed method.”
Taken as a complete, it’s a posh settlement with a lot of actually pie-in-the-sky concepts about the place Tesla might go underneath Musk’s management over the subsequent decade. The identical was stated concerning the earlier compensation deal that Tesla struck with Musk again in 2018, and but the corporate hit all of these seemingly-outrageous objectives. (Musk’s award was finally dusted by Delaware’s Chancery Courtroom.)
Nonetheless, it’s exhausting to not discover simply how a lot these new objectives seem to return from the corporate making an attempt to tug its CEO’s guarantees again right down to Earth.
