Tesla Shareholder Meeting and Musk’s Compensation Package

In a bullish move, Tesla shareholders gave a resounding thumbs up to Elon Musk’s controversial 2018 compensation package, worth a whopping $46-56 billion, at the 2024 annual meeting.

Tesla Shareholder Meeting – Results of Three Key Proposals

Over 70% of shareholders voted, sending a clear signal to the market.

While this vote doesn’t override the court’s decision, it’s a major morale boost for Musk. The strong shareholder support could light a fire under the CEO, incentivizing him to double down on his efforts to drive Tesla’s growth. Conversely, a rejection could’ve been a major buzzkill, potentially dampening Musk’s enthusiasm after he’s helped the stock price soar tenfold since 2018.

Board Members and HQ Relocation

In what seems like a direct rebuke to the Delaware court’s earlier ruling, shareholders greenlit Tesla’s board nominees, including Musk’s brother Kimbal and media mogul heir James Murdoch. This move signals that investors aren’t fazed by the close-knit relationship between Musk and the board, which was a sticking point in the court’s decision to nix the compensation package.

Another critical decision was rubber-stamping Tesla’s move to Texas. This relocation is now a done deal, regardless of potential appeal outcomes. Tesla has assured the judge that this move isn’t linked to Musk’s compensation case. However, it could be seen as a vote of no confidence in Delaware’s judicial climate and marks the beginning of a new chapter for the EV giant.

Robotaxi

Musk doubled down on his vision for Robotaxi, describing it as the “Airbnb of cars.” The concept would allow Tesla owners to monetize their vehicles during idle times by adding them to a network of self-driving taxis. While Musk acknowledged his tendency to be overly optimistic with timelines, he emphasized that his promises eventually come to fruition. Investors who are bullish on the Robotaxi business may need to exercise patience.

Tesla is cooking up a new affordable model, potentially hitting the market as early as next year. Musk hinted that this new offering might turn heads. Market watchers are speculating about three small car models in the pipeline: a sub $25K-30K version, a “Cybercab” without a steering wheel, and possibly a minivan. However, details remain under wraps.

Optimus

The showstopper of the shareholder meeting was undoubtedly the Optimus humanoid robot program. In a bold prediction, Musk suggested Optimus could catapult Tesla’s market cap to a mind-boggling $25 trillion, dwarfing the combined value of current tech behemoths. While this target seems pie-in-the-sky, it underscores Musk’s unwavering belief in Optimus’s potential.

Tesla plans to deploy over 1,000 Optimus units in its factories next year, with external sales in 2025. Musk projects a cost of $10,000 per unit, a selling price of $20,000, and a juicy 50% gross margin. He estimates global demand could hit 1-2 billion units, with Tesla potentially capturing a 10% market share.

While these figures may be overly optimistic, Optimus’s potential remains significant. Even with more conservative price and volume estimates, it could become a substantial revenue stream for Tesla.

Cybertruck and Semi

Cybertruck production is ramping up, with current weekly output at 1,300 units and monthly production at 5,000. Tesla aims to boost monthly production to 10,000 units by year-end, with an ambitious target of 200,000 units annually by 2025.

The Semi electric truck program is also making strides, with small-scale production slated for 2025 and full-scale production in 2026. While Semi may represent a small slice of overall vehicle production, its potential impact on reducing carbon emissions makes it a crucial piece in Musk’s eco-friendly puzzle.

Hardware

Tesla has completed the design for Hardware 5, with a phased rollout starting in 2026. This upgrade will debut in high-end models before trickling down to all models by 2027. However, Musk emphasized that even the existing Hardware 3 has untapped potential, suggesting current owners shouldn’t fret about hardware obsolescence.

Conclusion: Musk’s Irreplaceability

When asked if Tesla could function without him, Musk conceded that the company could continue operations, but he is the most important “accelerator.” This response underscores Musk’s critical role at Tesla. Without Musk’s audacious vision, Tesla might not have pursued disruptive products like the Cybertruck or ventured into Optimus development so early.

Musk’s presence accelerates Tesla’s innovation pace and pushes the company to embrace first-principles thinking and challenge market norms. This unique value proposition is what sets Tesla apart from its competitors. Therefore, retaining Musk is crucial for Tesla’s long-term growth, explaining why shareholders support his compensation package.