Tesla’s Shift from EVs to AI & Autonomous Driving Sparks Governance Concerns Over Musk’s Ventures, Conflicts of Interest, and Succession Plan
Tesla Inc. has once again thrust itself into the spotlight—this time not for a new electric vehicle or breakthrough in autonomous driving, but for what is being described as a trillion-dollar compensation package for CEO Elon Musk. While Tesla frames this as part of its long-term Master Plan, critics argue the plan looks more like a corporate ransom than a reward for performance.
A Master Plan Without a Masterpiece
Earlier this year, Tesla unveiled its latest Master Plan, meant to outline the company’s future. Yet the document was widely panned for being vague and lacking substance. Shortly after, the details came into sharper focus via Tesla’s proxy statement, which effectively pitches Musk’s new pay deal as the real centerpiece of Tesla’s future strategy.
This raises eyebrows, as the proxy is less about the EV giant’s roadmap and more about how much it will cost shareholders to keep Musk at the helm.
The current battle stems from a 2018 pay package, originally worth tens of billions, which was struck down earlier this year by a Delaware court. The court ruled the award invalid due to conflicts of interest and poor disclosure, citing that the board failed in its fiduciary duty.
Yet rather than reassess, the Tesla board doubled down. It has pushed shareholders to reapprove the package, shifted Tesla’s incorporation to Texas, and even granted Musk a new “interim” award of restricted stock worth around $32 billion, contingent on him staying for two more years.
The proposed new trillion-dollar plan is essentially a super-sized version of 2018’s award, with even loftier performance thresholds.
The Targets: $8.5 Trillion Dream
The package lays out ambitious goals:
- Tesla’s market cap must grow to $8.5 trillion — nearly double that of today’s most valuable company, Nvidia Corp.
- Adjusted EBITDA to hit $400 billion, which is 26 times the company’s trailing figure.
- Delivery of futuristic products including robotaxis and one million humanoid robots.
- On paper, these goals appear bold. But analysts warn they are borderline fantastical, especially as Tesla’s core EV sales have slowed amid competition, a Cybertruck flop, and ongoing brand controversies.
Shifting the Narrative Away from EVs
The compensation proposal also reveals a subtle but powerful shift: Tesla’s narrative is no longer focused solely on electric vehicles.
Instead, the company increasingly highlights autonomous driving, AI, and robotics as its future growth engines. This is important because these markets are still limitless in theory, allowing Tesla’s valuation to be propped up by belief rather than fundamentals.
Indeed, Tesla stock today is only 29% higher than three years ago, compared to the S&P 500’s much stronger run. Its profitability has declined, but its forward earnings multiple has tripled—a testament to faith in Musk’s vision more than actual results.
Musk’s Stake and the Fairness Debate
Supporters argue Musk deserves a historic payday, noting that Tesla’s market cap has soared since 2018 and that canceling the original award is unfair.
Yet Musk has hardly gone unpaid. He still owns 12.4% of Tesla, even after selling $39 billion worth of stock during his Twitter (now X) acquisition. He has also been granted the $32 billion interim award.
The proxy further shows Musk has pledged $79 billion worth of Tesla shares as collateral for personal loans—raising questions about governance and financial transparency.
A “Hostage Situation”?
The most striking part of Tesla’s proxy may be Musk’s own words. During negotiations, he reportedly insisted that:
- He must secure at least a 25% voting interest in Tesla.
- He must be compensated retroactively for the voided 2018 package.
- Otherwise, he might pursue other interests where he could exercise greater influence.
- In essence: Tesla is worth $1 trillion because of Musk—so pay him or risk losing him.
This “hostage” dynamic underlines how much Tesla’s valuation is tied to faith in Musk personally, not the company’s fundamentals.
Conflicts of Interest: The xAI Connection
One of the biggest red flags is Musk’s growing focus on xAI, his private artificial intelligence venture.
- A new resolution asks Tesla shareholders to authorize an investment in xAI, despite limited disclosures.
- xAI’s bonds currently yield 12.7%—junk status, raising concerns about its financial health.
- Critics warn this could amount to Tesla subsidizing Musk’s side projects, blurring corporate lines.
The Succession Problem
Tesla has been public for 15 years, yet its succession planning remains murky. A steady exodus of senior executives has left Musk even more indispensable. Ironically, part of the new pay package requires Musk himself to develop a succession “framework” before he can vote shares tied to the final tranches.
In other words, the board is outsourcing succession planning to the very man they fear losing—a contradiction that underscores Tesla’s governance flaws.
Governance on Trial
Beyond paychecks and performance targets, the issue at hand is Tesla’s weak board governance.
- The 2018 package was struck down because the board failed in its oversight role.
- The new package, while legally safer under Texas law, still signals a board too deferential to Musk.
- Shareholders are left to question whether Tesla is being run for long-term growth or for Musk’s personal leverage.
What It Means for Tesla’s Future
At a time when competitors like BYD, Hyundai, and legacy automakers are rapidly scaling EV offerings, Tesla risks becoming a company distracted by internal drama.
By tying its identity to one man and trillion-dollar promises, Tesla risks losing focus on its core EV mission. The irony: the company that revolutionized electric mobility now feels more like a tech bet on AI and robotics, with EVs relegated to the sidelines.
Conclusion
The proposed $1 trillion pay package for Elon Musk represents more than executive compensation—it reflects Tesla’s dependence on its CEO, its fragile governance, and its shifting narrative. Supporters will hail the plan as the price of retaining Musk’s vision. Critics see it as a ransom wrapped in stock options. Either way, the decision will shape not just Tesla’s future, but also the trajectory of the global EV industry, which still looks to Tesla as its leader.
