Musk Asks for More Tesla Shares to Grow Company's AI

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Facts

  • Tesla founder Elon Musk on Monday said that he would need a larger stake in the electric vehicle company to feel comfortable growing the business “to be a leader in AI and robotics,” noting that he seeks 25% voting control of Tesla.1
  • The Tesla and SpaceX CEO voiced his request on his social media network X, formerly Twitter, which he bought in 2022 after selling tens of billions of dollars of his Tesla shares. Musk currently owns 13% of Tesla — roughly 411M out of the company’s 3.19B outstanding shares.2
  • Musk said that 25% of voting power would make him influential while noting that he “can be overridden if twice as many shareholders vote against me vs for me.' He added, “At 15% or lower, the for/against ratio to override me makes a takeover by dubious interests too easy.”3
  • He added that he “would prefer to build products outside of Tesla” if he could not get the stake he is seeking. Musk didn’t mention any specific products, but he may be referencing his work in AI, which includes a separate business called X.AI, known for creating the Grok chatbot.4
  • The Tesla board’s decision to increase Musk’s shares will come after a Delaware Chancery Court rules on the independence of a 2018 $55B performance award it gave Musk.5
  • In a different post on X, Musk proposed a dual-class share structure to gain 25% control, but he was reportedly told that such a structure isn't possible after Tesla’s initial public offering. Tesla hasn't responded to Musk’s comments.6

Sources: 1BBC News, 2CNBC, 3FOX News, 4New York Times, 5Yahoo Finance and 6New York Post.

Narratives

  • Narrative A, as provided by ABC News. Elon Musk is holding his own company hostage in order to get his way. Investors have always been wary of Musk’s volatile public persona and brash public statements, and his public demand for 25% control of Tesla does nothing to assuage concerns about the Tesla founder. While Tesla has been successful, it has experienced its worst performance since going public, and Musk is overplaying his hand and harming himself and his company.
  • Narrative B, as provided by Observer (NY). Elon Musk is making a very reasonable request in seeking 25% control of the electric vehicle company he founded. Musk is the brains powering Tesla, and he has many plans that can help the company venture into emerging spheres, such as AI. Musk has the leverage, and he should not give Tesla exclusive access to his outside work without fair compensation.

Predictions