Tesla hosted their annual shareholder meeting this past week. While most annual shareholder meetings “put you to sleep” (in the words of Elon Musk), Tesla’s meetings often excite investors about the company’s future, and this meeting did just that. With shareholders overwhelmingly voting ‘For’ Mr. Musk’s pay package followed by a preview of futuristic technology the company hopes to deliver, Tesla’s 2025 shareholder meeting was anything but a sleeper.
Musk’s Potential Payday
Tesla shareholders overwhelmingly voted “For” the 2025 CEO Performance Award proposal.1 The proposal sets forth that if Mr. Musk achieves the operational goals and market capitalization milestones listed below within 10 years of the ratification, he will be awarded 423.7 million shares of Tesla stock, or roughly 12% of the company.1
Operational Goals1:
- 20 million Tesla Vehicles Delivered
- 10 million Active FSD Subscriptions
- 1 Million Bots Delivered
- 1 Million Robotaxis in Commercial Operation
- Adjusted EBITDA Milestones ranging from $50 Billion to $400 Billion
Market Cap Milestones1:
- The lowest tranche milestone is a $2 trillion market cap, with tranches at $500 billion increments up to $6.5 trillion, then two others at $7.5 and $8.5 trillion.
To underscore the growth needed to achieve full success, Tesla delivered 1.8 million vehicles in 2024, operates robotaxis in 5 metro areas, and its market cap stood at about $1.45 trillion (as of writing, all FactSet data).
But Mr. Musk has never been one to back down because the task seems daunting. With shareholders’ approval of the plan in hand, he went on to detail his vision of the future and the early progress the company has made to achieve those goals.
FSD Progresses
Tesla’s Full Self Driving (“FSD”) offering continues to become safer. As pictured below, fleet-wide data compiled by Tesla show that cars on FSD incur an accident every 4.92 million miles, compared to the US average of one crash every 0.7 million miles. This large improvement in safety is one of the cornerstones of the company’s hopes to see 10 million active FSD subscriptions. Musk also commented that FSD may soon see a large upgrade “allowing drivers to text and drive while FSD is active,” though regulatory approvals still loom large.
Slide courtesy of Tesla2
Optimus’ Ambitions
One of the showstoppers, in my opinion, was the live Optimus robots dancing alongside Musk as he took center stage. They looked as humanlike as ever. Optimus, a humanoid robot, is one of the company’s nascent products, but figures prominently in the CEO Performance Award which hints at its growth potential.
Musk’s belief in scaling production of Optimus comes from what he called “shared core technology,” as pictured below. Many of the critical functions of a humanoid robot, in Musk’s view, are already at scaled production levels in Tesla cars, such as actuators, AI-focused semiconductors, and low latency camera networks. Underlining his point that scaling Optimus may be more achievable than most believe, Musk said “many of the various pieces you need for a humanoid robot…are in our cars. Optimus is a robot with arms and legs instead of a robot with wheels.”
Slide courtesy of Tesla2
Tesla’s annual shareholder meeting potentially sets the stage for the future of the company. Shareholders voted in favor of the 2025 CEO Performance Award, which may be worth nearly $1 trillion if achieved. Forward-thinking products such as FSD and Optimus continue to get better and feature prominently in the award package. With CEO Elon Musk incentivized to grow the company and introduce new products, it may not be long before autonomous cars and robots become mainstream.
- https://www.sec.gov/ix?doc=/Archives/edgar/data/1318605/000110465925087598/tm252289-4_pre14a.htm
- https://www.youtube.com/watch?v=VGPlvmMjPtE
For more content by Blake Anderson, CFA®, Associate Portfolio Manager click here
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