Elon Musk, already the richest man in the world, could become the first trillionaire. Tesla’s board has introduced a new compensation plan designed to secure his commitment to the carmaker as it faces challenges in the electric vehicle market.
The deal promises Musk vast stock rewards if Tesla’s market value reaches unprecedented levels. His earlier package was once seen as unrealistic, but Tesla met those targets with surprising ease.
Musk’s potential trillion-dollar windfall
The new plan could give Musk 423.7 million Tesla shares, worth $143.5 billion today. But he only gets them if Tesla grows far beyond its current valuation.
To claim the entire award, Tesla must hit $8.5 trillion in market capitalization, compared to $1.1 trillion today. At that level, Musk’s extra shares could be valued close to $1 trillion.
Such growth would make Tesla the most valuable company in history, surpassing Nvidia. Despite Toyota’s greater profits and sales, Tesla already dominates carmaker valuations.
Possible Tesla investment in xAI
The filing also included a proposal for Tesla to invest in Musk’s artificial intelligence venture, xAI. This could strengthen ties between Tesla and Musk’s expanding business empire.
XAI recently acquired X, the social media platform Musk purchased in 2022 for $44 billion. Tesla offered no opinion or financial details on a possible investment.
Any stake would likely boost Musk’s fortune since he remains the main owner of xAI.
Musk’s growing empire
Musk currently holds 410 million Tesla shares valued at $139 billion. Combined with SpaceX, xAI, and other companies, Bloomberg estimates his wealth at $378 billion.
He also holds options for 304 million more shares under a disputed 2018 package. Courts struck it down, but Tesla is working to reinstate it. If successful, Musk’s stake could climb to 18%.
Tesla stock nearly doubled after the 2024 election amid optimism about Musk’s political ties. But falling sales, protests, and weaker profits erased those gains. Shares are still down 26% from their December peak.
Robotaxis and humanoid robots
Musk insists Tesla will grow much larger through self-driving cars and robotaxis. He says owners will be able to rent out their cars for autonomous rides.
He also predicts humanoid robots will one day surpass Tesla’s car sales in revenue.
Analysts rally behind the deal
“It’s an enormous package but Tesla must keep Musk,” said Wedbush analyst Dan Ives. He stressed Musk’s key role in Tesla’s AI-driven growth.
The board agreed, describing Musk’s leadership as unmatched. The filing revealed Musk hinted he might pursue other ventures without new guarantees.
Still, Tesla confirmed it is preparing for succession. Musk must design a CEO transition plan to unlock the final 70 million shares.
Planning for succession
Tesla said it regularly reviews leadership succession, both for emergencies and long-term planning. It praised its internal talent pipeline and confirmed it is also considering external candidates.
Musk receives no salary. His compensation comes solely from shares and options, leaving him unpaid since 2017 due to ongoing court battles. By contrast, Jeff Bezos and Mark Zuckerberg have relied only on their founding stakes without additional stock grants.
Musk pushes for stronger control
Musk insists he must hold 25% of Tesla’s voting shares to guide its future in AI and robotics. Without that influence, he suggested he may build projects outside Tesla.
Ross Gerber of Gerber Kawasaki said the package shows Musk’s fear of losing control. He criticized it as excessive but admitted it could be justified if Musk delivers on targets.
Lofty ambitions face doubts
If Tesla hits $8.5 trillion, Musk’s holdings could soar by nearly $1 trillion. But he gains nothing until Tesla reaches $2 trillion and meets tough performance goals. Targets include deploying one million robots or achieving $50 billion in adjusted operating income, far above Tesla’s best year.
Critics doubt Tesla will reach those levels. Musk has promised fully autonomous cars since 2014 without results. Analyst Gordon Johnson accused him of lifting Tesla’s stock with bold but unfulfilled claims.
Others fear the package will push Tesla to chase hype rather than fix real challenges. Chinese rival BYD is close to surpassing Tesla in global EV sales.
Meanwhile, new US rules removed Tesla’s valuable regulatory credit revenue, creating more financial pressure.
Johnson rejected the ambitious plan outright. “Tesla will never hit $8 trillion,” he said.
Tesla shares rose about 5% in early trading following the announcement.
