Elon Musk’s $1 trillion pay package is moronically stupid in every conceivable way. But Musk and his cronies know that. They know that anyone with even the tiniest drop of sanity would throw out this proposal. So what do they do? Well, because, like all billionaires, Musk lacks originality, he is holding Tesla to ransom exactly the same way he did with his denied $55 billion pay package. Will this work? That is the question everyone is asking as November 6th approaches, the day shareholders vote on this package. But that isn’t really the question we should be asking. Instead, we should ask why Musk wants this. So, let’s do that instead.
If you don’t know about this $1 trillion pay package and the ways in which it is idiotic, read my previous article here, as you will need the context for this article.
Firstly, how is Musk holding Tesla to ransom?
Well, Musk has threatened to step down as Tesla’s CEO if the pay package isn’t approved. Tesla’s board of directors has supported this statement and issued a warning to shareholders: vote to approve Musk’s $1 trillion pay package or risk losing him as CEO. Tesla’s board has also filed documents with the SEC stating that it is prepared to name a new CEO from within if shareholders reject Musk’s pay package and he steps down, proving there is bite behind this bark. In the lead-up to the vote, Robyn Denholm, the head of Tesla’s board, has engaged in a substantial lobbying campaign, repeatedly stating that Musk will likely leave if this package is rejected.
But is Musk leaving Tesla a bad thing?
Well, if you look at what Musk has done over the past five years, the answer is a resounding no.
What made Tesla so valuable? The Model S, X, 3, and Y cars; the charging network that enabled them; and Tesla’s potential to lead the self-driving car race. While Musk was a slick PR man who could successfully drive hype for these products, he actually had very little input into their design or development. We know this because the engineers who legitimately did the legwork have since fled to rival companies or started their own.
Nowadays, these products are nearly a decade old, and honestly, not much better than they were back then. So, why the stagnation? It is because, from about 2019 on, Musk took a far more proactive role in Tesla, micromanaging every little aspect to the ground. This ego-driven behaviour got so bad that Musk repeatedly overruled executives and engineers to woefully detrimental effects. As such, since 2019, the only things Tesla has delivered are broken promises, fever dreams, dangerous products, total flops, or cancellations.
For example, Musk overruled Tesla engineers to take their Full Self Driving (FSD) vision only, which has made it insanely dangerous and kept them miles behind in the self-driving race (read more here).
The 4680 cell, which was supposed to make Teslas thousands of dollars cheaper to build, has failed to materialise because Musk tried to use unproven proprietary dry-coating technology, which he bought, and then failed to effectively support the development team. Consequently, you can get better, cheaper batteries from elsewhere, and Tesla has no advantage in the battery market at all.
The New Tesla Roadster, which Musk spearheaded, has failed to materialise because what Musk originally promised was both impossible and completely irrational to build. A sports car with an insanely heavy 200 kWh battery? Colour me shocked that there are now better EV sports cars on the market.
The Tesla Semi, which Musk also spearheaded, has failed to make it into proper production because the battery is so heavy it can only carry an incredibly light load, and even then, it never met the efficiency target Musk promised. With both the new Roadster and Semi, these flaws were painfully obvious at the point of conception. Musk should have never greenlit them in the first place.
Musk was heavily involved in the development of the Cybertruck, turning it into the epitome of elite projection, and bet all of Tesla’s vehicle sales growth on its success. Well, thanks to its horrifically poor design, it is now a $10 billion hole in Tesla’s books, making it the largest sales flop in automotive history.
Musk ignored his executives’ calls to focus on developing affordable models and avoid abandoning the company’s core business to chase AI self-driving unicorns, leading to him cancelling the “Model 2” and dumping all of Tesla’s development dollars into a Robotaxi money pit that will never yield returns.
Not to mention Tesla’s Robotaxi rollout is an embarrassing mess, with the cars being caught driving wildly illegally multiple times during just the first few days of operations. Since then, there have been no visible signs of improvement, to the point where Tesla can’t get a licence to operate autonomous cars in cities that already have the likes of Waymo.
Under Musk, Tesla has engaged in some seriously shoddy business practices, leaving it and him incredibly vulnerable to legal recourse. Musk pushed Tesla to oversell the capabilities of FSD, consistently marketed it as a safe, fully autonomous system when it wasn’t, and hid any data that suggested otherwise. This led to Tesla and Musk being investigated for wire fraud for defrauding investors and customers by lying about their technology and even manslaughter, as there have been a sizeable number of deaths caused by people relying on FSD. Indeed, the only reason Musk isn’t facing jail time or Tesla isn’t facing fatal legal action is because Trump won in 2024, allowing Trump and Musk to use DOGE to squash these investigations.
Speaking of DOGE, Musk’s political moves have decimated Tesla’s sales, sparking a global boycott and widespread brand damage. Some estimates suggest Tesla lost a million sales this year as a result of Musk’s actions. In other words, Tesla sales this year are more than 60% below where they would be had Musk not engaged in politics (but he had to in order to avoid potentially facing jail from these federal investigations). Tesla had an annual production capacity of 2.35 million vehicles by the end of 2024 and was in the process of expanding that to just shy of three million by the end of 2025, but this drop in sales has meant they are only going to ship around 1.6 million vehicles by the end of the year. This means Tesla is only operating at about 68% production capacity, assuming they have abandoned production capacity expansion. This makes the manufacturing of each vehicle much more expensive, and means Tesla has lost a huge stack of cash abandoning its expansion plans. Realistically, operational profits are in the low single digits, and Tesla’s profits are in the gutter.
I haven’t even mentioned Hyperloop, the litany of class action lawsuits against Musk, the failure of the Dojo supercomputer, how the Optimus robot is so terrible even its lead engineer called it a dead end, or how Musk enabled the tariffs that are currently squeezing Tesla to death.
Musk should have been ousted as CEO a long time ago. He has failed repeatedly, made irrational decisions, ignored internal experts to great damage, and ruined the brand.
So, is threatening to step down as CEO a threat at all?
It wouldn’t be if Tesla’s value were remotely realistic.
Keep reading with a 7-day free trial
Subscribe to Will Lockett's Newsletter to keep reading this post and get 7 days of free access to the full post archives.