How Tesla’s $2 billion xAI investment may smooth Elon Musk’s path to trillion-dollar pay package — explained
Tesla’s latest $2 billion investment in Elon Musk’s artificial intelligence company xAI, maker of Grok AI, could help the billionaire entrepreneur meet the requirements to unlock some of what could become one of the largest executive pay packages in corporate history.
The investment comes at a time when Musk has secured a compensation package estimated to be worth $1 trillion based on Tesla’s performance, but recently the company has continued to face operational challenges, including production delays and increased competition in the electric vehicle market.
The move also supports Musk’s plan to get ahead of the competition by transforming Tesla from an electric vehicle maker into an artificial intelligence company; which is key to the company’s nearly $1.5 trillion valuation.
Additionally, in an effort to reassure investors, the company also said Wednesday that its Cybercab robotaxi production plans are on track this year despite repeated delays in the past.
What are the conditions of the wage package?
A $1 trillion salary package that comes in the form of a stock grant doesn’t automatically make Musk a trillionaire. According to various reports, the grant will be distributed in 12 tranches conditional on Tesla reaching certain operational milestones.
To win the full package, Musk must help increase Tesla’s market value to $8.5 trillion. The first tranche of shares will only be released if Tesla reaches a market value of $2 trillion. The company’s current market value is around $1.5 trillion.
But Tesla’s core EV business, which still accounts for most of the company’s current revenue, has been under pressure lately as Chinese rivals launch newer models, often at lower prices.
Other milestones include delivering 20 million vehicles, reaching 10 million active Fully Self-Driving (FSD) subscriptions, producing one million Optimus humanoid robots and commercially commissioning one million robotaxis.
How could XAI investment help Musk achieve his goal?
To unlock his massive pay packet, Musk needs to revive Tesla’s fortunes. While executives said the investment in xAI would create efficiencies for Tesla by reducing the need to build costly in-house AI infrastructure, Musk argued that it would ultimately help Tesla manage fleets of autonomous vehicles and Optimus robots. Luck reported.
In fact, xAI is expected to play a critical role in operating both humanoid robots and robotaxis; This is a key requirement for Tesla’s plan to scale production and monetize its AI ambitions.
The billionaire told investors that Tesla will phase out its Model S and
These efforts underscore Musk’s broader strategy to reposition Tesla from a traditional electric vehicle maker to an artificial intelligence and robotics company; It’s a transformation that could play a central role in both Tesla’s valuation and its own compensation package.
Previous delays in fulfilling promises
Musk had previously made a number of predictions about the introduction of robotaxis, but could not fulfill these promises. The company expects to have one-quarter to one-half of the U.S. fully autonomous vehicles by the end of this year, he said at the last shareholder meeting.
He previously said robotaxis would reach half the U.S. population by the end of 2025, but later narrowed that goal to be deployed in America’s eight to 10 largest metropolitan areas. The company has since failed to meet those goals, with a limited robotaxi service in Austin, Texas. Reuters reported.
