Elon Musk, already the richest person in the world, could soon reach trillionaire status. Tesla’s board unveiled a colossal new pay deal for its chief executive. The plan aims to keep him focused on the carmaker as it faces fierce competition and financial headwinds.
The package offers Musk enormous stock rewards if Tesla’s market value rises far beyond its current level. His last agreement drew skepticism but Tesla eventually met the ambitious targets it set.
Musk’s road to a trillion
The new deal could grant Musk 423.7 million Tesla shares. At current prices, that equals $143.5 billion. But he will only receive them if Tesla’s valuation soars in the coming years.
Tesla must hit $8.5 trillion in market capitalization for Musk to claim the full award. That is far above today’s $1.1 trillion. At that level, the shares would be worth nearly $1 trillion.
Such growth would make Tesla the most valuable company in history, roughly double Nvidia’s current worth. Tesla already leads automakers in valuation, though Toyota sells more vehicles and earns more profit.
A link between Tesla and xAI
The proxy statement also revealed a proposal for Tesla to invest in Musk’s AI venture, xAI. That move could tie the automaker more closely to his growing tech empire.
XAI recently acquired X, the platform Musk bought in 2022 for $44 billion. Tesla’s filing took no stance on the idea and gave no details about a possible stake or cost.
Because Musk controls xAI, any Tesla investment would likely expand his wealth further.
Musk’s vast wealth
Musk holds 410 million Tesla shares worth $139 billion. Including stakes in xAI, SpaceX, and other ventures, Bloomberg places his net worth at $378 billion.
He also has options for 304 million more Tesla shares. But a Delaware court invalidated the 2018 package that granted them. Tesla has sought to reintroduce the deal this year, which would lift his ownership to 18%.
Tesla shares nearly doubled between election day and December 2024, fueled by optimism over Musk’s political ties. But protests, falling sales, and shrinking profits wiped out those gains. Shares remain 26% below the peak despite partial recovery.
Betting on robotaxis and humanoids
Musk maintains Tesla will grow much larger. He predicts robotaxis and autonomous vehicles will create massive profits. Owners could even rent out their cars for driverless rides.
He also promised humanoid robots that he claims could one day outsell Tesla’s vehicles.
Analysts support the package
“It’s a huge package but Tesla must keep Musk as CEO,” said Wedbush analyst Dan Ives. He argued Musk is key to Tesla’s growth in the AI era.
Tesla’s board agreed, saying Musk’s leadership remains vital. The proxy revealed Musk warned he might pursue other projects if denied assurances.
The board stressed his unique leadership qualities. Still, it emphasized succession planning. Musk must prepare a CEO succession framework to unlock the final 70 million shares.
Preparing for succession
Tesla said it is planning for both sudden and long-term leadership changes. It praised its internal talent pipeline and confirmed it is also reviewing outside candidates.
Musk does not take a salary. His earnings come from Tesla shares and options. Because of the legal fight, he has received no pay since 2017. In contrast, Jeff Bezos and Mark Zuckerberg relied solely on their founding stakes without new grants.
Musk demands greater control
Musk insists he must control at least 25% of Tesla’s stock. He said he feels uneasy steering AI and robotics projects without that level of influence. Otherwise, he hinted he may build products outside Tesla.
Ross Gerber, CEO of Gerber Kawasaki, argued the package reflects Musk’s fear of losing power. “He’s worried about being sidelined,” Gerber said. He also called the package excessive and rooted in greed.
Bold targets and sharp criticism
Musk’s holdings could rise by nearly $1 trillion if Tesla’s value hits $8.5 trillion. But he will not receive new shares until Tesla first reaches $2 trillion. He must also meet ambitious goals such as deploying one million robots or lifting adjusted operating income to $50 billion.
Critics remain skeptical. Musk has promised fully autonomous cars since 2014 but has not delivered. Analyst Gordon Johnson accused him of inflating Tesla’s stock with bold claims.
Others warn the package encourages lofty promises instead of addressing Tesla’s problems. Chinese automaker BYD is close to overtaking Tesla in global EV sales.
Meanwhile, new US rules removed billions in revenue Tesla once earned from regulatory credits. Without them, Tesla must depend heavily on sales growth.
Johnson dismissed Tesla’s chances. “Things will get worse, not better,” he said. “Tesla will never reach $8 trillion.”
Tesla shares rose about 5% in early trading after the announcement.
