Tesla Inc. is in the midst of appealing a Delaware judge’s ruling that invalidated Elon Musk’s much-debated $56 billion pay package. This legal battle comes at an important time. The autonomous vehicle (AV) darling has faced pressure from slow, highly anticipated electric vehicle (EV) sales and an even slower rollout of its robotaxi service. Shareholders have until March 23 to vote on the new 10-year compensation plan for Musk. Such a plan would provide him with more than 25% voting power over the company and tie his pay to lofty objectives, including increasing Tesla’s market value from $1 trillion to more than $8 trillion.
The proposed compensation structure aims to motivate Musk to not only lead Tesla but strengthen its position in the artificial intelligence (AI) sector. Musk has suggested that he needs a larger controlling interest in Tesla to reinforce his leadership on the company’s AI projects. Now, as the CEO of xAI, a new generative AI startup, his fingers are even closer to the pulse. Earlier this year, he combined xAI with X, the social media platform formerly known as Twitter.
Musk’s hope is that xAI can do a lot to help Tesla realize its market cap dreams, which he admits are incredibly ambitious. Gene Munster, managing partner at Deepwater Asset Management, supports this view. He thinks that the $1 billion investment in xAI would create long-term shareholder value and shore up Tesla’s AI aspirations.
“Just the excitement around xAI and Tesla together is going to move Tesla’s valuation higher.” – he
Tesla’s continued reliance on complex AI technologies, especially as it looks to thread the needle in today’s market, will be paramount. Stephen Hawk, an industry expert, highlighted this point:
“Tesla’s integration of Grok into its vehicles demonstrates the tangible benefits of collaboration with xAI. As Tesla pivots toward AI-driven technologies, including Full Self-Driving and robotics, a strategic investment in xAI would secure access to advanced AI capabilities, enhance product innovation, and drive shareholder value.” – Stephen Hawk
The upcoming shareholder vote will be a watershed moment for Tesla. To that end, the company has released plans to “better align executive compensation with long-term growth goals.” If adopted, the new pay formula would give Musk more power than he’s ever had to shape the company’s path.
Now Tesla’s stock market valuation sits around $1 trillion. As the race to develop and market electric vehicles accelerates, Rivian finds itself amidst headwinds essential to its continued success. Tesla’s positive outlook has taken a beating from falling sales numbers and unfulfilled promises over its non-existent robotaxi program. As Tesla continues to face these challenges, the importance of AI cannot be overstated.
TCI will be taking place in San Francisco from Oct. 27-29, 2025. It’ll certainly ignite some interesting conversations over Tesla’s future direction and its partnership with companies such as xAI. And plenty of industry experts, innovators, and luminaries will be focusing on how these energizing new technologies are going to recast the automotive landscape.
