Elon Musk, already the richest man on the planet, might become the world’s first trillionaire. Tesla’s board has unveiled a gigantic new compensation package meant to secure his focus on the company as it battles mounting challenges in the electric vehicle sector.
The plan offers Musk huge stock rewards if Tesla’s valuation climbs to historic levels. His previous package was once seen as unrealistic, yet Tesla managed to achieve those goals ahead of schedule.
Musk’s route to a trillion
The agreement could give Musk 423.7 million Tesla shares, worth $143.5 billion at current prices. But the payout comes only if Tesla’s market value surges far beyond today’s level.
To receive the full award, Tesla must reach a market capitalization of $8.5 trillion. That dwarfs its current $1.1 trillion. At that figure, Musk’s additional shares could approach $1 trillion in value.
If achieved, Tesla would become the most valuable company in history, surpassing Nvidia’s market dominance. Tesla already leads automakers by valuation, even though Toyota sells more cars and earns bigger profits.
Proposal to link Tesla with xAI
The proxy statement also presented a shareholder proposal for Tesla to invest in Musk’s artificial intelligence firm, xAI. Such a move would tie Tesla more closely to Musk’s expanding business empire.
XAI recently purchased X, the platform Musk acquired in 2022 for $44 billion. Tesla did not endorse or oppose the proposal and offered no financial details.
Any deal would likely increase Musk’s wealth further, since he is the principal owner of xAI.
Musk’s current fortune
Musk holds 410 million Tesla shares valued at $139 billion. With stakes in SpaceX, xAI, and other ventures, Bloomberg estimates his net worth at $378 billion.
He also has rights to 304 million more shares from a contested 2018 package. Courts struck down that deal, but Tesla is seeking to restore it this year. Including those options, Musk’s stake could rise to 18%.
Tesla’s shares nearly doubled after the 2024 election on hopes tied to Musk’s political connections. But protests, weaker sales, and declining profits wiped out those gains. The stock remains 26% below its December peak despite recovering some losses.
Betting on self-driving and robots
Musk says Tesla will become far more valuable through self-driving cars and a robotaxi network. He argues Tesla owners will be able to rent out vehicles for autonomous rides.
He has also promised humanoid robots that he claims could eventually generate more sales than Tesla’s cars.
Analysts back the plan
“It’s a massive package but Tesla must retain Musk,” said Wedbush analyst Dan Ives. He stressed Musk’s role in driving Tesla’s growth in the AI era.
The board agreed, emphasizing Musk’s unique leadership. The filing revealed Musk warned he might pursue other ventures if not given assurances.
Still, Tesla underlined its succession planning. Musk must design a CEO transition framework to receive the final 70 million shares.
Tesla prepares for the future
The company confirmed it regularly reviews leadership succession for both sudden and long-term scenarios. It praised its internal talent pipeline while also evaluating external candidates.
Musk does not take a salary. His pay depends on stock and options, leaving him unpaid since 2017 due to court battles. By contrast, Jeff Bezos and Mark Zuckerberg have relied on their founding stakes without new stock grants.
Musk demands more control
Musk insists he needs 25% voting control to steer Tesla’s AI and robotics future. Without it, he suggested he may focus outside the company.
Ross Gerber of Gerber Kawasaki said Musk fears losing power. He criticized the package as excessive but admitted it could be justified if Musk meets the ambitious targets.
Big promises face bigger doubts
If Tesla reaches $8.5 trillion, Musk’s fortune could rise by nearly $1 trillion. But he gains nothing until Tesla first doubles to $2 trillion and meets steep operational goals. Targets include deploying one million robots or hitting $50 billion in adjusted operating income, far beyond past performance.
Critics remain doubtful. Musk has promised fully autonomous vehicles since 2014, but the technology has yet to arrive. Analyst Gordon Johnson accused him of inflating Tesla’s value through bold but unfulfilled statements.
Others fear the package encourages hype over fixing real issues. Chinese rival BYD is closing in on Tesla in global EV sales.
Meanwhile, recent US law changes eliminated Tesla’s lucrative revenue from regulatory credits, forcing the company to rely more on core sales.
Johnson dismissed the plan entirely. “Tesla will never hit $8 trillion,” he said.
Tesla shares rose about 5% in early trading after the announcement.
