Investor's Corner
Tesla CEO Elon Musk gets investor support amid Glass Lewis rebuke
Tesla CEO Elon Musk’s 10-year Performance Award has attracted both support and criticism, with major investors Baillie Gifford & Co. and T. Rowe Price Group Inc. expressing their favor of the plan, and proxy service firm Glass Lewis asserting its opposition to the CEO’s potential total compensation.
Baillie Gifford & Co. and T. Rowe Price Group Inc. — firms which own a combined 14 percent worth of Tesla shares — have both announced their support for Musk’s proposed 10-year compensation plan. In a statement to Bloomberg, Baillie Gifford partner and fund manager Tom Slater stated that Tesla’s suggested performance award is satisfactory considering that the California-based firm has managed to grow and thrive due to Musk’s drive and vision.
“We think what Tesla has achieved so far is pretty remarkable, but there’s more they can do in not just automotive, but the energy markets. Elon Musk — his drive and his vision — has been a really important part of getting us to this point. Tesla still needs that drive and that vision to push the business,” Slater said.
Joel Grant, an automotive and industrial analyst at T. Rowe Price, further noted that the proposed performance award is a way to keep Elon Musk on the helm of Tesla. According to Grant, T. Rowe Price would prefer it if Elon Musk can lead the electric car maker and energy firm for the foreseeable future.
“The package was designed to retain him, and we are on board with the intention. We want to make sure that Elon stays and uses Tesla as a vehicle for a lot of growth,” the analyst said.
Proxy adviser Glass Lewis, however, begs to differ. In a statement to Market Watch, the shareholder advisor stated that the rewards waiting for Elon Musk if he manages to attain his goals over the next 10 years would be far too large. This compensation, according to Glass Lewis, has encouraged the proxy adviser to oppose the proposed performance award, according to a Market Watch report.
“Tesla’s proposal is peculiar in that it provides increasingly outsized compensation for levels of success ranging from noteworthy to unparalleled, while at the same time allowing Musk to keep his distance from the company.
“The potential up-front and future dilutive impacts to shareholders, along with the possibility of extraordinary pay levels even without commensurately exceptional performance, lead us to recommend that shareholders oppose this proposal.”
Modeled after his 2012 compensation plan, Musk’s new 10-year performance award is a high-risk, high-reward venture. As we noted in a previous report, Musk’s proposed award consists of a 10-year grant on stock options that vests in 12 tranches, with each of the tranches vesting only if the California-based firm can meet both the company’s target market cap and operational milestones. If successful, Elon Musk would raise Tesla’s market cap to $650 billion, and he would own roughly 28.3% of the company. If unsuccessful, however, Elon Musk will receive no pay at all.
Elon Musk’s proposed 10-year compensation plan is set to pass through a votation from the company’s shareholders on March 21, 2018, at 9:00 a.m. PST at the Tesla Training Center in Fremont, CA.
Tesla stock (NASDAQ: TSLA) closed at an all-time high on Tuesday, jumping over 3 percent during the day and finishing at $489.88.
The price beats the previous record close, which was $479.86.
Shares have had a crazy year, dipping more than 40 percent from the start of the year. The stock then started to recover once again around late April, when its price started to climb back up from the low $200 level.
This week, Tesla started to climb toward its highest levels ever, as it was revealed on Sunday that the company was testing driverless Robotaxis in Austin. The spike in value pushed the company’s valuation to $1.63 trillion.
Tesla Robotaxi goes driverless as Musk confirms Safety Monitor removal testing
It is the seventh-most valuable company on the market currently, trailing Nvidia, Apple, Alphabet (Google), Microsoft, Amazon, and Meta.
Shares closed up $14.57 today, up over 3 percent.
The stock has gone through a lot this year, as previously mentioned. Shares tumbled in Q1 due to CEO Elon Musk’s involvement with the Department of Government Efficiency (DOGE), which pulled his attention away from his companies and left a major overhang on their valuations.
However, things started to rebound halfway through the year, and as the government started to phase out the $7,500 tax credit, demand spiked as consumers tried to take advantage of it.
Q3 deliveries were the highest in company history, and Tesla responded to the loss of the tax credit with the launch of the Model 3 and Model Y Standard.
Additionally, analysts have announced high expectations this week for the company on Wall Street as Robotaxi continues to be the focus. With autonomy within Tesla’s sights, things are moving in the direction of Robotaxi being a major catalyst for growth on the Street in the coming year.
Elon Musk
Tesla needs to come through on this one Robotaxi metric, analyst says
“We think the key focus from here will be how fast Tesla can scale driverless operations (including if Tesla’s approach to software/hardware allows it to scale significantly faster than competitors, as the company has argued), and on profitability.”
Tesla needs to come through on this one Robotaxi metric, Mark Delaney of Goldman Sachs says.
Tesla is in the process of rolling out its Robotaxi platform to areas outside of Austin and the California Bay Area. It has plans to launch in five additional cities, including Houston, Dallas, Miami, Las Vegas, and Phoenix.
However, the company’s expansion is not what the focus needs to be, according to Delaney. It’s the speed of deployment.
The analyst said:
“We think the key focus from here will be how fast Tesla can scale driverless operations (including if Tesla’s approach to software/hardware allows it to scale significantly faster than competitors, as the company has argued), and on profitability.”
Profitability will come as the Robotaxi fleet expands. Making that money will be dependent on when Tesla can initiate rides in more areas, giving more customers access to the program.
There are some additional things that the company needs to make happen ahead of the major Robotaxi expansion, one of those things is launching driverless rides in Austin, the first city in which it launched the program.
This week, Tesla started testing driverless Robotaxi rides in Austin, as two different Model Y units were spotted with no occupants, a huge step in the company’s plans for the ride-sharing platform.
Tesla Robotaxi goes driverless as Musk confirms Safety Monitor removal testing
CEO Elon Musk has been hoping to remove Safety Monitors from Robotaxis in Austin for several months, first mentioning the plan to have them out by the end of 2025 in September. He confirmed on Sunday that Tesla had officially removed vehicle occupants and started testing truly unsupervised rides.
Although Safety Monitors in Austin have been sitting in the passenger’s seat, they have still had the ability to override things in case of an emergency. After all, the ultimate goal was safety and avoiding any accidents or injuries.
Goldman Sachs reiterated its ‘Neutral’ rating and its $400 price target. Delaney said, “Tesla is making progress with its autonomous technology,” and recent developments make it evident that this is true.
Investor's Corner
Tesla gets bold Robotaxi prediction from Wall Street firm
Last week, Andrew Percoco took over Tesla analysis for Morgan Stanley from Adam Jonas, who covered the stock for years. Percoco seems to be less optimistic and bullish on Tesla shares, while still being fair and balanced in his analysis.
Tesla (NASDAQ: TSLA) received a bold Robotaxi prediction from Morgan Stanley, which anticipates a dramatic increase in the size of the company’s autonomous ride-hailing suite in the coming years.
Last week, Andrew Percoco took over Tesla analysis for Morgan Stanley from Adam Jonas, who covered the stock for years. Percoco seems to be less optimistic and bullish on Tesla shares, while still being fair and balanced in his analysis.
Percoco dug into the Robotaxi fleet and its expansion in the coming years in his latest note, released on Tuesday. The firm expects Tesla to increase the Robotaxi fleet size to 1,000 vehicles in 2026. However, that’s small-scale compared to what they expect from Tesla in a decade.
Tesla expands Robotaxi app access once again, this time on a global scale
By 2035, Morgan Stanley believes there will be one million Robotaxis on the road across multiple cities, a major jump and a considerable fleet size. We assume this means the fleet of vehicles Tesla will operate internally, and not including passenger-owned vehicles that could be added through software updates.
He also listed three specific catalysts that investors should pay attention to, as these will represent the company being on track to achieve its Robotaxi dreams:
- Opening Robotaxi to the public without a Safety Monitor. Timing is unclear, but it appears that Tesla is getting closer by the day.
- Improvement in safety metrics without the Safety Monitor. Tesla’s ability to improve its safety metrics as it scales miles driven without the Safety Monitor is imperative as it looks to scale in new states and cities in 2026.
- Cybercab start of production, targeted for April 2026. Tesla’s Cybercab is a purpose-built vehicle (no steering wheel or pedals, only two seats) that is expected to be produced through its state-of-the-art unboxed manufacturing process, offering further cost reductions and thus accelerating adoption over time.
Robotaxi stands to be one of Tesla’s most significant revenue contributors, especially as the company plans to continue expanding its ride-hailing service across the world in the coming years.
Its current deployment strategy is controlled and conservative to avoid any drastic and potentially program-ruining incidents.
So far, the program, which is active in Austin and the California Bay Area, has been widely successful.
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