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Tesla’s Elon Musk closes in on 4th major payout as TSLA valuation hits 6-month average of $250B

(Credit: Tobias Lindh/YouTube)

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Tesla CEO Elon Musk is heading into what could very well be the fourth major payout from his unique 10-year performance award, which was approved by TSLA investors in 2018. If Tesla maintains its momentum, or better yet, if the company shows another profit for the third quarter, the Tesla CEO could end up putting another $3 billion in his pocket from his fourth payout alone. 

As of Tuesday’s trading, TSLA stock saw a six-month market cap average of $250 billion, a milestone that happens to correspond to the fourth of 12 tranches in Musk’s payment plan. Each tranche provides Musk with the option to purchase 8.44 million Tesla shares for about $70 each. That’s about a sixth of TSLA’s current price. 

(Credit: Reuters)

If Elon Musk sells the shares he acquired from the three tranches that have vested so far and the potential fourth tranche, he could make a combined profit of $11.8 billion, or almost $3 billion per tranche. Interestingly, Musk only earned the first tranche of his performance award in May, which was worth $700 million then. The value of these shares has risen since amidst TSLA’s meteoric rise. 

Elon Musk’s current 10-year performance award is one of the most high-risk, high-reward pay packages that have been granted to top US executives to date. Patterned after his previous 5-year performance award back in 2012 — which helped Tesla grow 17-fold — the current 10-year performance award requires several milestones before the CEO is compensated a single cent. 

Under the terms of the current plan, Musk would only get rewards if he meets 12 milestones, comprised of $50 billion additions to Tesla’s market cap and a series of operational targets. If successful, Musk would end up being one of the wealthiest individuals in the world. But if Tesla fails to attain its goals, Musk would receive zero compensation. 

Elon Musk’s 10-year Performance Award. (Credit: Tesla)

Such a payment plan has unsurprisingly attracted a notable number of critics, with skeptics stating that Musk is getting paid too much for his work in Tesla. What is typically neglected in such criticisms is the fact that every Tesla employee also holds TSLA stock, which means that their net worth grows the more the company meets its milestones. With this in mind, one could argue that Musk’s performance award benefits TSLA shareholders and Tesla employees to a significant degree. 

Tesla has been on a tear this 2020, with TSLA surging 400% this year on increased sales of the Model 3 and the initial ramp of the Model Y. The company has posted a fourth consecutive profitable quarter in Q2 2020 as well, and with Tesla delivering a record 139,300 vehicles in Q3, the electric car maker seems to be within striking distance of yet another profitable quarter. Needless to say, Tesla investors are now eagerly awaiting the company’s quarterly financial report, which will likely be released later this month. 

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Disclosure: I am long TSLA.

Simon is an experienced automotive reporter with a passion for electric cars and clean energy. Fascinated by the world envisioned by Elon Musk, he hopes to make it to Mars (at least as a tourist) someday. For stories or tips--or even to just say a simple hello--send a message to his email, simon@teslarati.com or his handle on X, @ResidentSponge.

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Tesla hints toward Premium Robotaxi offering with Model S testing

Why Tesla has chosen to use a couple of Model S units must have a reason; the company is calculated in its engineering and data collection efforts, so this is definitely more than “we just felt like giving our drivers a change of scenery.”

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Credit: Sawyer Merritt | X

Tesla Model S vehicles were spotted performing validation testing with LiDAR rigs in California today, a pretty big switch-up compared to what we are used to seeing on the roads.

Tesla utilizes the Model Y crossover for its Robotaxi fleet. It is adequately sized, the most popular vehicle in its lineup, and is suitable for a wide variety of applications. It provides enough luxury for a single rider, but enough room for several passengers, if needed.

However, the testing has seemingly expanded to one of Tesla’s premium flagship offerings, as the Model S was spotted with the validation equipment that is seen entirely with Model Y vehicles. We have written several articles on Robotaxi testing mules being spotted across the United States, but this is a first:

Why Tesla has chosen to use a couple of Model S units must have a reason; the company is calculated in its engineering and data collection efforts, so this is definitely more than “we just felt like giving our drivers a change of scenery.”

It seems to hint that Tesla could add a premium, more luxury offering to its Robotaxi platform eventually. Think about it: Uber has Uber Black, Lyft has Lyft Black. These vehicles and services are associated with a more premium cost as they combine luxury models with more catered transportation options.

Tesla could be testing the waters here, and it could be thinking of adding the Model S to its fleet of ride-hailing vehicles.

Reluctant to remove the Model S from its production plans completely despite its low volume contributions to the overall mission of transitioning the world to sustainable energy, the flagship sedan has always meant something. CEO Elon Musk referred to it, along with its sibling Model X, as continuing on production lines due to “sentimental reasons.”

However, its purpose might have been expanded to justify keeping it around, and why not? It is a cozy, premium offering, and it would be great for those who want a little more luxury and are willing to pay a few extra dollars.

Of course, none of this is even close to confirmed. However, it is reasonable to speculate that the Model S could be a potential addition to the Robotaxi fleet. It’s capable of all the same things the Model Y is, but with more luxuriousness, and it could be the perfect addition to the futuristic fleet.

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Rivian unveils self-driving chip and autonomy plans to compete with Tesla

Rivian, a mainstay in the world of electric vehicle startups, said it plans to roll out an Autonomy+ subscription and one-time purchase program, priced at $49.99 per month and $2,500 up front, respectively, for access to its self-driving suite.

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Credit: Rivian

Rivian unveiled its self-driving chip and autonomy plans to compete with Tesla and others at its AI and Autonomy Day on Thursday in Palo Alto, California.

Rivian, a mainstay in the world of electric vehicle startups, said it plans to roll out an Autonomy+ subscription and one-time purchase program, priced at $49.99 per month and $2,500 up front, respectively, for access to its self-driving suite.

CEO RJ Scaringe said it will learn and become more confident and robust as more miles are driven and it gathers more data. This is what Tesla uses through a neural network, as it uses deep learning to improve with every mile traveled.

He said:

“I couldn’t be more excited for the work our teams are driving in autonomy and AI. Our updated hardware platform, which includes our in-house 1600 sparse TOPS inference chip, will enable us to achieve dramatic progress in self-driving to ultimately deliver on our goal of delivering L4. This represents an inflection point for the ownership experience – ultimately being able to give customers their time back when in the car.”

At first, Rivian plans to offer the service to personally-owned vehicles, and not operate as a ride-hailing service. However, ride-sharing is in the plans for the future, he said:

“While our initial focus will be on personally owned vehicles, which today represent a vast majority of the miles to the United States, this also enables us to pursue opportunities in the rideshare space.”

The Hardware

Rivian is not using a vision-only approach as Tesla does, and instead will rely on 11 cameras, five radar sensors, and a single LiDAR that will face forward.

It is also developing a chip in-house, which will be manufactured by TSMC, a supplier of Tesla’s as well. The chip will be known as RAP1 and will be about 50 times as powerful as the chip that is currently in Rivian vehicles. It will also do more than 800 trillion calculations every second.

RAP1 powers the Autonomy Compute Module 3, known as ACM3, which is Rivian’s third-generation autonomy computer.

ACM3 specs include:

  • 1600 sparse INT8 TOPS (Trillion Operations Per Second).
  • The processing power of 5 billion pixels per second.
  • RAP1 features RivLink, a low-latency interconnect technology allowing chips to be connected to multiply processing power, making it inherently extensible.
  • RAP1 is enabled by an in-house developed AI compiler and platform software

As far as LiDAR, Rivian plans to use it in forthcoming R2 cars to enable SAE Level 4 automated driving, which would allow people to sit in the back and, according to the agency’s ratings, “will not require you to take over driving.”

More Details

Rivian said it will also roll out advancements to the second-generation R1 vehicles in the near term with the addition of UHF, or Universal Hands-Free, which will be available on over 3.5 million miles of roadway in the U.S. and Canada.

Rivian will now join the competitive ranks with Tesla, Waymo, Zoox, and others, who are all in the race for autonomy.

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Tesla partners with Lemonade for new insurance program

Tesla recently was offered “almost free” coverage for Full Self-Driving by Lemonade’s Shai Wininger, President and Co-founder, who said it would be “happy to explore insuring Tesla FSD miles for (almost) free.”

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Credit: Tesla

Tesla owners in California, Oregon, and Arizona can now use Lemonade Insurance, the firm that recently said it could cover Full Self-Driving miles for “almost free.”

Lemonade, which offered the new service through its app, has three distinct advantages, it says:

  • Direct Connection for no telematics device needed
  • Better customer service
  • Smarter pricing

The company is known for offering unique, fee-based insurance rates through AI, and instead of keeping unclaimed premiums, it offers coverage through a flat free upfront. The leftover funds are donated to charities by its policyholders.

On Thursday, it announced that cars in three states would be able to be connected directly to the car through its smartphone app, enabling easier access to insurance factors through telematics:

Tesla recently was offered “almost free” coverage for Full Self-Driving by Lemonade’s Shai Wininger, President and Co-founder, who said it would be “happy to explore insuring Tesla FSD miles for (almost) free.”

The strategy would be one of the most unique, as it would provide Tesla drivers with stable, accurate, and consistent insurance rates, while also incentivizing owners to utilize Full Self-Driving for their travel miles.

Tesla Full Self-Driving gets an offer to be insured for ‘almost free’

This would make FSD more cost-effective for owners and contribute to the company’s data collection efforts.

Data also backs Tesla Full Self-Driving’s advantages as a safety net for drivers. Recent figures indicate it was nine times less likely to be in an accident compared to the national average, registering an accident every 6.36 million miles. The NHTSA says a crash occurs approximately every 702,000 miles.

Tesla also offers its own in-house insurance program, which is currently offered in twelve states so far. The company is attempting to enter more areas of the U.S., with recent filings indicating the company wants to enter Florida and offer insurance to drivers in that state.

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