Musk’s biggest pay package hinges on grand promises
At the meeting, Musk unveiled an ambitious roadmap for Tesla’s future. The company, he said, will begin production of its two-seater, steering-less Cybercab robotaxi in April and soon unveil its long-delayed next-generation Roadster sports car. He even floated the idea of building a gigantic chip fab to manufacture AI chips for Tesla’s self-driving technology, hinting at a potential collaboration with Intel. “You know, maybe we’ll, we’ll do something with Intel,” Musk said to cheers. “We haven’t signed any deal, but it’s probably worth having discussions.”Musk’s latest compensation plan ties his personal fortune directly to Tesla’s ability to hit sky-high milestones. The company must reach $8.5 trillion valuation — up from $1.5 trillion today — for Musk to receive the full 12% of stock that could make him eligible for roughly $1 trillion in pay. Each 1% of stock is tied to both operational and valuation targets, including delivering 20 million vehicles, deploying one million robotaxis and selling one million humanoid robots.For Tesla’s board and loyal investors, this structure reinforces their faith in Musk’s vision. They argue that only he can transform Tesla into what they call an AI and robotics juggernaut. But for skeptics, it is a bet that risks pulling Tesla further away from its profitable, even if currently faltering, car business.
The EV giant faces its toughest test
While Musk projects confidence in Tesla’s transformation, the company’s once-dominant position in the electric vehicle market is eroding. Sales in Europe plunged in October, with sharp drops in Germany, the UK, Spain, the Netherlands and the Nordic markets. Tesla’s aging models, particularly the Model 3 and Model Y, are losing ground as established automakers and aggressive Chinese rivals flood the market with fresher, cheaper alternatives.
In China, Tesla’s most important overseas market, sales of China-made vehicles fell 9.9% in October to 61,497 units, reversing a brief uptick in September. Shipments of Shanghai-built Model 3s and Model Ys, including exports to Europe and India, dropped 32.3% from the prior month. Tesla’s market share in China has fallen to 8%, down from a peak of 15.4% early last year.Analysts say Tesla’s lack of new models has made it vulnerable. “The data show that Tesla is like any other brand,” Tom Libby, an S&P Global Mobility analyst, told Reuters. “Over the long term, there’s going to have to be some major product actions or the brand will keep going down.”Tesla’s stalling car business remains overwhelmingly dependent on its 2017 breakthrough, the Model 3, and its sibling, the Model Y. Since then, Tesla has launched only the stainless-steel Cybertruck, which has fallen far short of Musk’s prediction of hundreds of thousands of sales annually. Through September, Tesla sold just 16,000 Cybertrucks.
The cost of politics
Tesla’s recent struggles aren’t confined to product fatigue. Musk’s political controversies since his 2022 acquisition of Twitter, now X, have also damaged the brand, particularly among left-leaning consumers. According to a working paper from the National Bureau of Economic Research by Yale University economists, Tesla’s U.S. sales would have been 67% to 83% higher — roughly one million to 1.26 million more vehicles — between October 2022 and April 2025 if not for what researchers call the “Musk partisan effect.” The same study found that the shift of Democratic-leaning buyers away from Tesla boosted competitors’ electric and hybrid vehicle sales by as much as 22%.
The findings underline how inseparable Tesla’s fortunes have become from Musk’s persona. His social media presence, once a marketing superpower, now risks alienating the very customers who helped make Tesla a household name. Tesla will carry a huge keyman risk as Musk’s activism and ideological stances can impact its business.
Betting the future on robotaxis and robots
Faced with slowing car sales and intensifying competition, Musk is pivoting Tesla toward what he calls the company’s next great frontier — self-driving robotaxis and humanoid robots. He told investors during Tesla’s third-quarter earnings call that the Optimus robot, designed for factories and homes, could one day become “the biggest product of all time.” “It’ll seem so real, that you’ll need to poke it,” Musk quipped, describing Optimus. He also vowed to remove “safety monitors” from the driver’s seat of the Cybercab by the end of this year in Austin and San Francisco, with plans to expand to up to 10 metro areas.
Tesla’s Cybercab will make its Asia-Pacific debut at the China International Import Expo in Shanghai this week, though the company has not confirmed plans to deploy the robotaxi in China. Musk also expects Tesla’s Full Self-Driving (FSD) software to receive full regulatory approval in China by early next year.
But these futuristic ventures come with steep risks. Tesla reported a 37% drop in quarterly profit to $1.4 billion in the third quarter, its fourth consecutive earnings decline. The company’s 88% dependence on car sales underscores how far away its AI and robotics ventures remain from profitability.
While Tesla recalibrates, its competitors are accelerating. Chinese giant BYD launched 17 SUV models between 2020 and 2025, roughly double the number released by Ford over the same period. As Dan Hearsch of AlixPartners told Reuters, “The fast iteration has allowed Chinese EV makers to keep up with trends, keep up with what consumer products are doing. It’s half the time, and it’s also half the fixed costs.” Tesla, by contrast, has launched only six vehicles since 2008. The company’s innovation engine now seems to revolve more around software and robotics than cars. Musk insists this is Tesla’s destiny, and investors are betting billions that he’s right.
But Tesla’s recent performance shows that faith alone won’t sustain growth. Musk may have secured his record-breaking pay package, but to earn it, he will have to prove that Tesla can reinvent itself once again – from a carmaker to a company that truly defines the future of automation. If Musk succeeds, his trillion-dollar payday will seem like a bargain.
(WIth inputs from agencies)
