Tesla shares jumped 6 % on Monday after CEO Elon Musk disclosed that he had purchased $1bn price of the corporate’s inventory. The transfer reinforces Musk’s push for better management over Tesla and comes every week after the corporate’s board provided him a $1 trillion pay package deal over the subsequent decade.
Musk’s inventory buy – his first open-market buy-up of shares since 2020 – comes at a crucial time for Tesla, because it races to remodel into a man-made intelligence and robotics agency while additionally grappling with falling gross sales of electrical automobiles (EVs).
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However Musk’s pay packet has are available for intense criticism. Final weekend, Pope Leo decried the widening pay hole between company bosses equivalent to Elon Musk – whose estimated wealth now stands at $367bn – and extraordinary working individuals, which he stated was a significant factor in rising international unrest.
Why is Musk shopping for up Tesla shares?
On September 12, Musk, 54, bought 2.57 million shares (which represents lower than one % of Tesla’s market capitalisation), paying between $372 and $397 per share as the worth diverse by means of the day, in keeping with regulatory filings. He now owns virtually 20 % of Tesla, which seemingly pleases its buyers.
Tesla’s share value rose to round $422 on Monday – nonetheless 12 % decrease than its all-time excessive of $479 (reached in December 2024). Following his latest transfer, Musk posted on X that the rise in Tesla’s worth was “foretold within the prophecy”.
Whereas Musk wasn’t an unique founding father of Tesla – he invested within the firm one 12 months after it was established – he grew to become chairman in 2004. The South African entrepreneur has persistently demanded an even bigger stake and extra voting energy at Tesla, having beforehand stated he would favor to construct AI merchandise and robots outdoors of Tesla if he can not management 25 % voting energy within the agency.
Musk bought greater than $20bn of Tesla’s inventory (or 4.6 % of its market cap) in 2022 to fund his acquisition of Twitter, now X, for $44bn. He additionally owns personal holdings in SpaceX, Neuralink and The Boring Firm.
Is Musk actually being paid $1 trillion?
The Tesla CEO must meet sure performance-related standards first. To unlock the total $1 trillion payout, Musk must increase the corporate’s valuation from roughly $1 trillion at this time to $8.5 trillion over the subsequent 10 years. He will even must promote a million autonomous taxis and a million robots and improve Tesla’s earnings by greater than 24 instances what it earned final 12 months.
Tesla presently operates a couple of dozen autonomous taxis in a restricted space within the metropolis the place it’s headquartered, Austin, Texas within the US. Generally known as “robotaxis“, they’re self-driving automobiles however are accompanied by human “security supervisors”, who can intervene if issues happen.
On the robotics aspect, the corporate unveiled its first humanoid robotic – Optimus – in 2022. In 2024, Musk claimed that Tesla would deploy robots for “inner use [ie for use inside its own factories]” in 2025, and that it could have produced 5,000 models by then. Neither pledge has been met to this point.
Musk additionally just lately stated that “80 % of Tesla’s [future] worth will probably be Optimus”.
How has Musk’s pay at Tesla risen over time?
After Musk joined Tesla in 2004, he took little or no money pay. As an alternative, he selected to be paid in fairness. Then, in 2018, shareholders authorised a landmark 10-year pay package deal for Musk – linked to numerous operational targets – estimated at $2.6bn.
As Tesla’s market worth surged after the beginning of 2020 (when it was buying and selling at simply $29.50 a share), lots of these pay targets had been met, and Musk obtained numerous further Tesla shares. Attributable to broad inventory market positive factors for the reason that COVID-19 pandemic, Musk’s earnings are estimated to have climbed by $40bn-$60bn.
Although Musk’s pay windfall at Tesla has attracted regulatory scrutiny for overcompensation, particularly from Delaware’s Courtroom of Chancery, many of the firm’s shareholders have repeatedly ratified the CEO’s cost packages.
How do CEOs’ pay packets evaluate to these of common US staff?
Tesla doesn’t disclose non-executive salaries, so it’s arduous to say how Musk’s revenue compares to that of the common employee there.
Nonetheless, company pay within the US has typically rallied in latest a long time in comparison with that of staff. In keeping with the Financial Coverage Institute, common pay for CEOs at S&P 500 firms – the five hundred largest listed corporations within the US – rose by virtually 1,000 % over the 50-year interval main as much as 2024.
In contrast, a typical employee at an S&P 500 firm has seen his or her pay packet rise by simply 27 % (adjusted for inflation) over the identical interval. Said otherwise, the CEO-to-worker pay ratio has elevated from 30:1 to 350:1 over the previous 5 a long time.
In an interview final week with Crux, a Catholic information web site, Pope Leo singled out Elon Musk for example of the type of wealth he stated was corroding “the worth of human life, of the household, of the worth of society”.
Requested about Tesla’s proposed $1 trillion pay packet, Leo responded: “What does that imply, and what’s that about? If [personal wealth accumulation] is the one factor that has any worth any extra, then we’re in large hassle.”
Is Tesla in hassle?
Regardless of its latest uptick, to this point this 12 months, Tesla’s inventory market efficiency has been among the many worst of the “Magnificent 7” group of tech giants – which additionally contains Alphabet, Amazon, Apple, Meta, Microsoft and Nvidia – having misplaced round 2 % of its worth this 12 months to this point.
Tesla’s most up-to-date quarterly outcomes confirmed revenue losses amid falling demand for electrical automobiles and elevated import manufacturing prices related to US President Donald Trump’s commerce tariffs. Wanting forward, earnings look set to proceed falling.
Gross sales of Tesla automobiles within the US will probably fall additional within the final three months of 2025, as Trump has refused to increase a tax credit score for EV purchases for US shoppers after October. Thus far, the rebate has performed a vital function in making American EVs extra inexpensive.
