The famous innovator Elon Musk, stated that if he doesn’t have 25% voting control, he would prefer to develop artificial intelligence (AI) products outside of Tesla. This suggests that the billionaire might want a larger ownership stake in the world’s most valuable electric vehicle (EV) company.
The CEO of Tesla, who has over 12% ownership of the company as per Bloomberg data, stated on X that Tesla is like a group of twelve start-ups. He suggested making a comparison between Tesla and General Motors, a longstanding leader in the global auto industry.
Musk’s Ownership Preference and AI Development Beyond Tesla
As an example, Tesla is working on the Optimus robot. In December 2023, they shared a video highlighting enhancements to the humanoid prototype.
The company is also putting over $1 billion (approximately S$1.3 billion) into the Dojo supercomputer project. This supercomputer will train the machine-learning models for Tesla’s self-driving systems. Analysts estimate that this project could potentially increase Tesla’s value by $500 billion.
During Tesla’s first AI Day in 2021, Elon Musk expressed his desire to demonstrate that Tesla is not just an electric car manufacturer but is also, in his words, “arguably the leader in real-world AI.” In response to a post questioning why he would require another significant compensation package for motivation, Mr. Musk, Tesla’s largest single shareholder, provided an answer.
“I am uncomfortable growing Tesla to be a leader in AI and robotics without having ~25 per cent voting control,” the CEO posted on X. “If I have 25 per cent, it means I am influential, but can be overridden if twice as many shareholders vote against me versus for me. At 15 per cent or lower, the for/against ratio to override me makes a takeover by dubious interests too easy.”
Musk’s Moves, Tesla’s Stocks and the Road Ahead
Mr Musk said he would be fine with a dual-class voting structure to allow this, “but am told it is impossible to achieve post-IPO in Delaware”. He explained that the delay in implementing a new compensation plan is due to the ongoing wait for a verdict in a shareholder lawsuit concerning a previous $55 billion package.
Following a more than 100% increase in 2023, Tesla’s stocks have declined by 12% in 2024, erasing over $94 billion in market value.
The wealthiest individual globally is dealing with shareholder discontent related to various concerns, ranging from Tesla’s succession planning to allegations that his focus is divided due to his involvement with X, the platform previously known as Twitter, which he assumed control of in 2022.
The company has faced a series of adverse developments, including a shift in stance on electric vehicles by the car rental giant Hertz Global Holdings, another reduction in prices in China, and indications of increasing labor costs.
Elon Musk wants more control at Tesla, hinting at a crucial turning point. His focus on owning more and developing AI could reshape the electric vehicle giant. Tesla faces challenges like stock ups and downs and internal discontent, marking a critical moment that demands strategic decisions for a successful future.