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 in regards to 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 a substitute, the board focuses on the way it plans to create “probably the most precious firm in historical past.”
To make sure, if Tesla accomplishes all that it goals for with this deal, it’s going to seem like a a lot totally 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 goal for are much less bold than his personal previously-stated targets.
Whereas the unprecedented pay bundle nonetheless must be authorized 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 authorized 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.
defaultPicture Credit:Justin Sullivan / Getty Photographs
20 million automobiles … whole
Musk spent years claiming Tesla would have the ability to make 20 million electrical autos per 12 months by 2030. This was again when he and his firm have been nonetheless promising to develop at a price of fifty% annually.
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 influence report final 12 months, and stopped constructing a deliberate manufacturing facility 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 attain on his path to changing into a trillionaire is to ship 20 million autos whole. Tesla has already bought eight million automobiles 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 simply 20 million whole 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/BloombergPicture Credit:David Paul Morris/Bloomberg / Getty Photographs
A million robotaxis*
One in every 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 automobiles 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 high-quality print exhibits that Tesla is just 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 car, together with however not restricted to the purpose-built “Cybercab” it’s creating, that’s utilizing the corporate’s Full Self-Driving software program to supply rides to individuals.
This consists of customer-owned autos, 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 swap and switch present autos into fully-autonomous ones, and that homeowners might add and subtract these autos 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 reveal the latter. Regardless, Musk now has an excellent looser timeline to attempt to make each issues occur.
Picture: TeslaPicture Credit:Tesla
A million “bots”?
Musk sees Tesla’s future being all in regards to the humanoid robotic that it’s creating, known 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 seem like. One in every 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 just asking Musk to ship a million “bots” whole 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 autos don’t rely.
The administrators appear to agree that Optimus has “the potential to be Tesla’s bestselling product,” they usually 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
All the things else
The fourth and closing product aim Musk has to attain is to notch 10 million lively subscriptions to Tesla’s Full Self-Driving (FSD) software program. It’s arguably probably the most bold product aim. The corporate doesn’t say what number of present homeowners have paid for FSD, although executives have lately stated the adoption price is within the “teenagers.” At greatest, which means wherever from a couple of hundred thousand to the low tens of millions of Tesla autos have the software program put in.
All the things else Tesla’s board is asking of Musk is tied to cash. In the end, Musk wants to assist Tesla attain an $8.5 trillion valuation with the intention to unlock the total worth of the compensation bundle and change into a trillionaire himself.
Musk already had grand designs to perform one thing comparable. He has typically claimed that Tesla might sooner or later change into extra precious 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 may very well 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 infinite 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 the way he might be succeeded as CEO of Tesla (and the plan primarily locks him to the corporate for no 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 an entire, it’s a posh settlement with plenty of actually pie-in-the-sky concepts about the place Tesla might go beneath Musk’s management over the subsequent decade. The identical was stated in regards to the earlier compensation deal that Tesla struck with Musk again in 2018, and but the corporate hit all of these seemingly-outrageous targets. (Musk’s award was in the end dusted by Delaware’s Chancery Court docket.)
Nonetheless, it’s laborious to not discover simply how a lot these new targets seem to return from the corporate making an attempt to tug its CEO’s guarantees again right down to Earth.
