Elon Musk’s Desire for More Influence over Tesla: A Sense of Disquiet

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Elon Musk has expressed his intention to build AI products outside of Tesla Inc. unless he attains 25% voting control. This suggests that the billionaire is seeking a larger stake in the world’s most valuable electric vehicle manufacturer. Musk, who owns more than 12% of Tesla and is its largest shareholder, responded to a social media post questioning why he would require another significant compensation package to maintain his motivation.

In a post on X, Musk explained that the absence of a new plan is due to the pending decision in a shareholder lawsuit over a previous $55 billion package, which was an unprecedented amount at the time. He argued that Tesla is, in fact, a conglomerate of multiple startups and suggested comparing it to General Motors Corp., a traditional leader in the automotive industry.

Tesla is engaged in various AI endeavors, such as the development of the Optimus robot. The company recently released a video showcasing improvements made to the humanoid prototype. Additionally, Tesla is investing over $1 billion into its Dojo supercomputer project, which will enhance the machine-learning models used in the company’s self-driving systems. Analysts estimate that this project could potentially increase Tesla’s value by $500 billion.

During Tesla’s inaugural AI Day in 2021, Musk emphasized that the company is not just an electric car manufacturer, but also a leader in real-world AI. However, Musk expressed discomfort with growing Tesla’s AI and robotics without having 25% voting control, as he believes this would pave the way for takeovers by dubious interests. He mentioned that having 25% voting control would grant him influence, but he could still be overridden if the number of shareholders voting against him exceeded those voting for him.

Musk expressed willingness to consider a dual-class voting structure to address this concern, but stated that achieving it post-IPO in Delaware is claimed to be impossible.

After experiencing more than a 100% surge in 2023, Tesla shares have fallen by 12% this year, causing a loss of over $94 billion in market value. The world’s wealthiest individual is facing shareholder dissatisfaction across various issues, ranging from Tesla’s succession planning to allegations that his involvement with X, the platform he acquired for $44 billion in 2022 (previously known as Twitter), is a distraction. It is worth noting that Musk sold billions of dollars in Tesla stock to finance this acquisition.

Tesla has also encountered a flurry of negative news, including a reversal on EVs by car rental giant Hertz Global Holdings Inc., a price reduction in China, and indications of increasing labor costs.

“What is Tesla? A car, energy, or AI company,” questioned Daniel Kollar, the head of consultancy Intralink’s automotive and mobility practice. “If it’s not an AI company, then I don’t see an issue establishing a new company. That said, I don’t see his behavior or choice of language benefiting any of his companies now.”