Analysis by Todd Lassa
You probably have caught the business press news item about Tesla CEO Elon Musk’s potential to become the world’s first trillionaire thanks to a pay package approved by more than 75% of the electric car company’s shareholders last Thursday.
The Securities and Exchange Commission was to release the final tally within a few days after the annual shareholder’s meeting in Austin, Texas, but with that sort of preliminary count, Musk can count on receiving 423 million more shares to increase his stake in Tesla to 25%.
Before such a payout, according to Forbes, Tesla’s market capitalization must go from about $1.49 trillion as of Monday morning to $8.5 trillion in 10 years. It must sell 12 million more cars, 10 million automated driving system subscriptions (the National Highway Traffic Safety Administration – NHTSA -- has just opened new investigations into Tesla’s automated “full-self driving” or FSD, over potential “unsafe maneuvers,” Road & Track reported Sunday), operate 1 million Robotaxis (operated by FSD) and sell 1 million Tesla Optimus robots, among other requirements.
Those pro-Musk shareholders reportedly wanted to see this as much as Musk did because they believe it will focus his attention on Tesla and not on his other companies, including SpaceX and its wholly owned subsidiary Starlink, The Boring Company and, of course, X-Twitter. DOGE? Fuggetaboudit.
Two institutional shareholders in Tesla had opposed Musk’s pay plan; Institutional Shareholder Service (ISS) and Glass Lewis, according to Business Insider.
In Tesla’s third quarter earnings call with Wall Street analysts in late October, Musk criticized ISS and Glass Lewis, and said he wants control over the automaker – er, maker of four-wheeled robots, as CFO Vaibhav Taneja describes the company – to assure that the supreme level of artificial intelligence Musk says the company is developing for Optimus robots does not get into the wrong hands.
(I covered this in a news report for Autoweek.)
“The point is, I’d like just enough voting control to give strong influence, but not so much that I can’t be fired if I go insane,” Musk said in the Q3 call.
I’ll let that comment sink in for just a moment.
A decade ago, Musk – who did not found Tesla any more than he is a founder of X-Twitter – convinced Wall Street that Tesla EVs would be by far the most dominant electric vehicles on the Earth’s roads (perhaps on Mars’ as well) and that when the world finally comes to realize that electric vehicles are the only road to sustainable automobility, will be pretty much the only relevant automaker on the face of the Earth.
It worked on analysts and investors. By the time Tesla made its first full-year profit in 2020, its market cap was greater than that of General Motors, Ford Motor Company, Toyota and Mercedes-Benz combined.
Now Musk has more than 75% of Tesla’s shareholders as well as Wall Street analysts riding the AI bubble convinced that, as he said in the Q2 earnings call, Tesla will become the world’s most valuable company in the world “by far” when Optimus is up and running at full speed.
While Musk’s claims that Tesla is the most American of US auto companies (it is, in that it produces everything it sells in the US in US factories, as a German assembly plant serves the European market and a Chinese plant serves China) might seem to appeal to his best old ex-friend Donald J. Trump, Tesla is more likely to cut its number of decent-paying assembly plant jobs here rather than increase it as the CEO tries to meet his 10-year goals.
New jobs instead will go to Optimus robots. Factories all over the world will be Optimus’ first customers. Sure, humans still will have to make sure the robots know how to get to their workstations, but this is not the recipe for increasing the number of relatively good-paying jobs for those without college degrees.
Musk also has described a world in which every human on the face of the Earth will someday have an Optimus helper (will Tesla take food stamps?) and have access to the most perfect doctors. It’s not too early to rethink med school.
The Tesla CEO long has been known for hyperbole that only Wall Street will buy, though that has been enough for Musk so far. But this sort of thinking goes beyond what Sen. Bernie Sanders (I-VT) would call the “tech-broligarchy.”
Another socialist, Greece’s former finance minister Yanis Varofakis calls it “technofeudalism.”
That’s not in the Oxford American Dictionary just yet, but “feudal system” is defined as “medieval social system whereby a vassal held land from a superior in exchange for allegiance and service.”
If Musk never makes up with Trump, will it matter once Musk’s a trillionaire who controls somewhere between 1 million and all the world’s robots?
Lassa is founding editor of The Hustings.