Elon Musk, already the wealthiest man alive, could become the first trillionaire. Tesla’s board has revealed a groundbreaking new compensation package aimed at keeping his focus on the carmaker as it navigates rising competition and slowing sales.
The plan offers Musk massive stock rewards if Tesla achieves market valuations never seen before. His earlier compensation plan was once doubted, yet Tesla managed to hit those goals quickly.
Musk’s trillion-dollar challenge
Under the deal, Musk could receive 423.7 million Tesla shares, worth $143.5 billion today. But the reward only comes if Tesla grows far beyond its current value.
To secure the full payout, Tesla must reach a market capitalization of $8.5 trillion, compared to today’s $1.1 trillion. At that valuation, Musk’s new shares alone would approach $1 trillion in worth.
Such growth would make Tesla the most valuable company ever, surpassing Nvidia’s market leadership. Even though Toyota sells more cars and earns more profit, Tesla already holds the top spot in valuation among automakers.
Plan to connect Tesla with xAI
Tesla’s proxy statement also included a proposal for the company to take a stake in xAI, Musk’s artificial intelligence firm. That move could tighten links between Tesla and Musk’s expanding empire.
XAI recently bought X, the platform Musk acquired in 2022 for $44 billion. Tesla did not state whether it supports the proposal and gave no details about size or cost.
Any stake would likely increase Musk’s fortune further, as he remains xAI’s primary owner.
Musk’s wealth across companies
Musk currently holds 410 million Tesla shares valued at $139 billion. With his stakes in SpaceX, xAI, and other ventures, Bloomberg estimates his total wealth at $378 billion.
He also has options for 304 million more Tesla shares from a contested 2018 deal. Courts struck it down, but Tesla is pushing to reinstate it. If successful, his stake could rise to 18%.
Tesla stock nearly doubled after the 2024 election on optimism over Musk’s political ties. But protests, sliding sales, and weaker profits erased those gains. Shares remain 26% below their December peak.
Betting on robotaxis and humanoid robots
Musk continues to promise big future breakthroughs. He says Tesla’s robotaxi fleet will create massive profits and allow owners to rent out cars for autonomous rides.
He also pledged humanoid robots, which he claims could one day surpass Tesla’s cars in sales.
Analysts back the board’s move
“It’s a huge package but Tesla must retain Musk,” said Wedbush analyst Dan Ives. He argued Musk is central to Tesla’s growth in artificial intelligence.
The board echoed that view, calling his leadership unmatched. The filing revealed Musk had suggested he might pursue other ventures without new assurances.
Still, Tesla emphasized its focus on succession. Musk must design a CEO transition plan to unlock the final 70 million shares.
Preparing for leadership beyond Musk
Tesla confirmed it reviews succession planning for emergencies and long-term scenarios. It praised its internal leadership pipeline while also considering external candidates.
Musk does not take a salary. His compensation comes only from shares and options, leaving him unpaid since 2017 due to legal battles. Unlike Musk, Jeff Bezos and Mark Zuckerberg relied solely on their founding stakes without additional stock awards.
Musk insists on control
Musk says he needs 25% control of Tesla’s voting shares to guide its future in AI and robotics. Without that level of influence, he suggested he may develop projects outside Tesla.
Ross Gerber of Gerber Kawasaki said Musk fears losing power. He described the package as excessive but admitted it could be justified if Musk meets the ambitious goals.
Critics question lofty targets
If Tesla hits $8.5 trillion, Musk’s wealth could grow by nearly $1 trillion. But he gains nothing until Tesla reaches $2 trillion and meets tough operational milestones. These include putting one million robots into service or generating $50 billion in adjusted operating income, far above Tesla’s past performance.
Skeptics say Musk’s promises often fall short. Since 2014, he has predicted fully autonomous cars, but the technology has not materialized. Analyst Gordon Johnson accused him of boosting Tesla’s stock through grand but empty claims.
Critics also warn the package could push Tesla toward hype rather than solving pressing problems. Chinese rival BYD is close to overtaking Tesla in global EV sales.
At the same time, new US laws have removed Tesla’s lucrative regulatory credit revenues, adding pressure to its business model.
Johnson dismissed the plan outright. “Tesla will never hit $8 trillion,” he said.
Tesla shares gained about 5% in early trading following the announcement.
