I’ll Bet the Under On Elon Musk’s $1 Trillion Tesla Package

Elon Musk won one of his oldest battles yesterday, finally capturing additional control over his car robotics company, as 75 percent of Tesla shareholders voted to award a CEO who Tesla was reportedly looking to replace earlier this year with a historic pay package worth up to $1 trillion. This is where headline hysteria comes into play, a game that journalism has played ever since it had to fight for space on a surface, as everyone and their mother in media knows that putting a shocking number like $1 trillion in the headline will get you clicks. I’m doing it here too. As a wise man once said, the game is the game.

But this game sucks because distilling this down to a giant flashing $1 trillion sign is bad information. Musk is not getting a big sack of cash that says $1 trillion on it. He has been given the ability to exercise options to buy discounted Tesla stock, but only if the company hits the various financial targets necessary to unlock this entire package with 12 different tranches, which altogether could be worth around $1 trillion, about a 25 percent stake in the company on top of his existing 15 percent stake. Until Tesla hits each of those targets, Musk gets nothing. So let’s talk about these targets and how this is classic Elon bullshit he has actually tied himself to for once.

The heart of this dispute stems from a 2018 options package that was struck down by Delaware courts which has long been the target of Musk’s ire, and is something of an origin story for how he became more involved in politics once this manchild realized how important judges are. In an October 2nd letter sent by the Comptroller of New York on behalf of the New York City Employees’ Retirement System to Tesla shareholders, they warned that this compensation package was not in the company’s interest, the argument that held this up in court in 2018. “Modeled on the 2018 CEO Performance Award,” wrote the NYC Comptroller, “the 2025 Performance Award purports to establish demanding operational and financial targets for Mr. Musk, in exchange for an extraordinary windfall, commonly reported to be $1 trillion in shares.”

That 2018 CEO Performance Award gave Musk the right to buy Tesla at $350.02 per share. Tesla is currently trading at around $432 per share, and this is a good example of how executive options packages help inflate their net worths to create our modern Gilded Age.

But Musk can only exercise that option on every single one of these 423.7 million Tesla shares over the next ten years if Tesla’s market cap reaches the final target of $8.5 trillion, and half of the targets unlocking the options reside above a $5 trillion market cap, which would make it the biggest company in the world at this moment. Tesla’s current market cap is $1.34 trillion, so mankind’s most over-valued company needs to increase what it is worth 6.34 times to help make Musk the world’s first trillionaire.

Do you see why I’m taking the under now?

This is yet another big bet on AI, as the whole industry is pitching an Underpants Gnomes-style business plan where they build a bunch of data centers far outpacing the present-day demand for AI, have no fucking idea what to do next, then claim we will enter an age of unprecedented prosperity. AI is definitely here to stay to some degree, and OpenAI advertising themselves this week as too big to fail is one example of how we’re stuck with it, but the lesson from the dot com bust is that Amazon and Apple were big winners in large part because there were so many other losers.

And Tesla is a loser. It’s a carbon credits company that sells a couple of cars and launched a truck so shambolic and dangerous it makes the notoriously combustible Ford Pinto look like a Boeing Dreamliner by comparison. I have lived the lesson of never short a cult, and Tesla is the ultimate proof that the market can stay irrational longer than you can stay solvent, but Tesla is the exact kind of Pets.com-ass bubble that got popped in the 2000s. It’s a pinky promise, not a company, and it’s a lot harder to survive through a bear market solely on pinky promises.

If you had never heard of Tesla before this week’s shareholder meeting, you wouldn’t know it was a car company and would think the yet to be distributed Optimus robot was its flagship product. Here’s some snippets from Elon’s celebration yesterday.