Investor's Corner
Tesla streamlined Model 3 battery pack production time by 96%, says Elon Musk
Tesla CEO Elon Musk stated during Wednesday’s Q1 2018 earnings call that the company has managed to reduce the time it takes to produce a Model 3 battery pack by 94%, from 7 hours to under 17 minutes. According to Musk, addressing the over-generalization of the Model 3’s design, as well as the excessive automation in Gigafactory, proved beneficial to the improvement in the manufacturing rate of the car’s battery packs.
“This still remains to be fixed, but in any case, overgeneralizing the design. For example, the current battery pack has a port for front drive units, which we then put a steel blanking plate on. So essentially, we punched a hole in it and put a blanking plate at the hole. And (we had to) do that for all rear drive unit cars, which is kinda crazy.
“It would have added cost, it would have added a manufacturing step, it would have added a failure mode; and four ports was unnecessary… That’s changed. So, the result was we had a rapid improvement in battery pack production, from taking 7 hrs to make a pack 3 weeks ago to under 17 minutes now. We’re able to also achieve a sustained rate of 3,000 vehicles a week, so we’re actually slightly ahead in battery module and pack production than expected.”
With the optimizations to the line in place, Musk revealed that Tesla is now producing 3,000 battery packs per week at the Nevada Gigafactory, with peak hours of production hitting a rate of 5,000 per week.
“In the last 24 hours at the Gigafactory, we managed to keep a sustained rate of over 3,000 packs per week. We actually reached a peak hour, extrapolated outward would be a rate of over 5,000 cars per week… Every hour is as good as its peak. If you can achieve it even once in an hour, then with continued refinement of the system, and improved operational time of the machinery, you can achieve that sustained rate with more refinement.”
Musk reiterated his previous statement about the company automating too much of its production line. According to Musk, Tesla “went too far and automated some pretty silly things,” including an incredibly complex “fluff machine” that ended up making production complicated.
“One of the things we’ve found is that there are some things that are very well suited to manual operations, and there are some things are very well suited to automated operations. The two should not be confused. We did go too far in the automation front, and automated some pretty silly things.
“One example would be, we have these fiberglass mats on top of the battery pack. They’re basically fluff. We tried to automate the placement and bonding of fluff to the top of the battery pack, which was ridiculous. ‘Flufferbot,’ which was really an incredibly difficult machine to make work. Machines are not good at picking up pieces of fluff. Hands are way better at doing that.
“So we had this super-complicated machine, using a vision system to try and put a piece of fluff on a battery pack. The line kept breaking down because Flufferbot would frequently fail to pick up the fluff, or put it in a random location. So, that was one of the silliest things we’ve found.”
The revelations about the improvements in the pace of Model 3 battery pack production are in line with Elon Musk’s recent statements about relying too much on automation. Musk mentioned this in an interview with Gayle King of CBS This Morning, and later in a tweet, where he coyly stated that humans are “underrated.”
Nevertheless, Tesla pointed to strategic automation as key in its Q1 Update Letter. The company, for one, credits the quality improvements in the Model 3 line to the automation that is involved in manufacturing the vehicles. Tesla expects the Model 3 line to be optimized once more after a planned 10-day shutdown in production during the second quarter. With a hiring ramp underway, Tesla is aiming to adjust overtime hours and staffing levels to meet its production goals even further.
Tesla’s first-quarter earnings for 2018 saw the electric car maker posting $3.4 billion in revenue and beating earnings estimates with a loss of $568 million. Losses per share was listed at -$3.35 per share, lower than Wall Street estimates of -$3.58 per share.
Elon Musk
Tesla board reveals reasoning for CEO Elon Musk’s new $1 trillion pay package
“Yes, you read that correctly: in 2018, Elon had to grow Tesla by billions; in 2025, he has to grow Tesla by trillions — to be exact, he must create nearly $7.5 trillion in value for shareholders for him to receive the full award.”
Tesla’s Board of Directors has proposed a new pay package for company CEO Elon Musk that would result in $1 trillion in stock offerings if he is able to meet several lofty performance targets.
Musk, who has not been meaningfully compensated since 2017, completed his last pay package by delivering billions in shareholder value through a variety of performance-based “tranches,” which were met and resulted in the award of billions in stock.
Elon Musk’s new pay plan ties trillionaire status to Tesla’s $8.5 trillion valuation
However, Musk was unable to claim this award due to a ruling by the Delaware Chancery Court, which deemed the payout an “unfathomable sum.”
Now, the company is taking steps to ensure Musk gets paid, as the Board feels that it is crucial to retain its CEO, who has been responsible for much of the company’s success.
This is not a statement to undermine the work of all of Tesla’s terrific employees, but a ship needs to be captained by someone, and Musk has proven he is the right person for the job.
The Board also believes that, based on a statement made by the company in its proxy, various issues will be discussed during the upcoming Shareholder Meeting.
Robyn Denholm and Kathleen Wilson-Thompson recognized Musk’s contributions in a statement, which encouraged shareholders to vote to approve the payout:
“We’re asking you to approve the 2025 CEO Performance Award. In designing the new performance award, we explored numerous alternatives. Ultimately, the new award aims to build upon the success of the 2018 CEO Performance Award framework, which ensure that Elon was only paid for the performance delivered and incentivized to guide Tesla through a period of meteoric growth. The 2025 CEO Performance Award similarly challegnes Elon to again meet a series of even more aspirational goals, including operational milestones focused on reaching Adjusted EBITDA targets (thresholds that are up to 28 times higher than the 2108 CEO Performance Award’s top Adjusted EBITDA milestone) and rolling out new or expanded product offerings (including 1 million Robotaxis in commercial operation and delivery of 1 million AI Bots), all while growing the company’s market capitalization by trillions of dollars.
Yes, you read that correctly: in 2018, Elon had to grow Tesla by billions; in 2025, he has to grow Tesla by trillions — to be exact, he must create nearly $7.5 trillion in value for shareholders for him to receive the full award.
In addition to these unprecedented performance milestones, the 2025 CEO Performance Award also includes innovative structural features, born out of the special committee’s considered analysis and extensive shareholder feedback. These features include supercharged retention (at least seven and a half years and up to 10 years to vest in the full award), structural protections to minimize stock price volatility due to administration of this award and, thereafter, incentives for Elon to participate in the Board’s continued development of a framework for long-term CEO Succession. If Elon achieves all the performance milestones under this principle-based 2025 CEO Performance Award, his leadership will propel Tesla to become the most valuable company in history.”
Musk will have a lot of things to accomplish to receive the 423,743,904 shares, which are divided into 12 tranches.
However, the Board feels he is the right person for the job, and they want him to remain the CEO. This package should ensure that he stays with Tesla, as long as shareholders feel the same way.
Investor's Corner
Elon Musk’s new pay plan ties trillionaire status to Tesla’s $8.5 trillion valuation
Shareholders are expected to vote on the proposal at the annual meeting on November 6.
Tesla’s board has proposed a new compensation package for CEO Elon Musk that could make him the world’s first trillionaire and Tesla the most valuable company in history.
The 2025 CEO Performance Award, outlined in a securities filing on Friday, would be worth up to $900 billion in Tesla stock (NASDAQ:TSLA) if the automaker achieves a series of aggressive performance and valuation goals, according to the New York Times.
Shareholders are expected to vote on the proposal at the annual meeting on November 6.
Tesla is aiming for an insane $8.5 trillion market cap
The package requires Musk to lift Tesla’s market capitalization from about $1.1 trillion today to $8.5 trillion over the next decade. At that level, Tesla would surpass every major public company in existence. Nvidia, currently the world’s most valuable firm, has a market cap of around $4.2 trillion today, as noted in a Motley Fool report. Microsoft and Apple follow at $3.8 and 3.6 trillion each, while Saudi Aramco is valued at around $1.5 trillion.
If Tesla achieves its $8.5 trillion target, it would be worth more than twice Nvidia’s present valuation and nearly eight times its current size. The compensation plan also requires Tesla’s operating profit to grow from $17 billion last year to $400 billion annually.
Elon Musk’s path to a trillionaire status
Apart from leading Tesla to become the world’s biggest company in history, Musk is also required to hit several product targets for the electric vehicle maker. These include the delivery of 20 million Tesla vehicles cumulatively, 10 million active FSD subscriptions, 1 million Tesla bots delivered, and 1 million Robotaxis in operation.
Tesla board chair Robyn Denholm and director Kathleen Wilson-Thompson said retaining Musk is “fundamental to Tesla achieving these goals and becoming the most valuable company in history.” If successful, the plan would raise Musk’s Tesla stake from 13% to about 25%, further consolidating his control. It would also result in the CEO earning $900 billion in TSLA stock, allowing him to effectvely become a trillionaire.
The proposal mirrors a 2018 compensation plan that was invalidated in Delaware court earlier this year in the way that it is focused on very aggressive targets and operational milestones. Tesla has since shifted its corporate registration to Texas, where challenges from potential activist shareholders are less of a risk.
Tesla’s SEC filing can be viewed below.
www-sec-gov-Archives-edgar-data-1318605-000110465925087598-tm252289-4_pre14a-htm… by Simon Alvarez
Investor's Corner
Shareholder group urges Nasdaq probe into Elon Musk’s Tesla 2025 CEO Interim Award
The SOC Investment Group represents pension funds tied to more than two million union members, many of whom hold shares in TSLA.
An investment group is urging Nasdaq to investigate Tesla (NASDAQ:TSLA) over its recent $29 billion equity award for CEO Elon Musk.
The SOC Investment Group, which represents pension funds tied to more than two million union members—many of whom hold shares in TSLA—sent a letter to the exchange citing “serious concerns” that the package sidestepped shareholder approval and violated compensation rules.
Concerns over Tesla’s 2025 CEO Interim Award
In its August 19 letter to Nasdaq enforcement chief Erik Wittman, SOC alleged that Tesla’s board improperly granted Musk a “2025 CEO Interim Award” under the company’s 2019 Equity Incentive Plan. That plan, the group noted, explicitly excluded Musk when it was approved by shareholders. SOC argued that the new equity grant effectively expanded the plan to cover Musk, a material change that should have required a shareholder vote under Nasdaq rules.
The $29 billion package was designed to replace Musk’s overturned $56 billion award from 2018, which the Delaware Chancery Court struck down, prompting Tesla to file an appeal to the Delaware Supreme Court. The interim award contains restrictions: Musk must remain in a leadership role until August 2027, and vested shares cannot be sold until 2030, as per a Yahoo Finance report.
Even so, critics such as SOC have argued that the plan does not have of performance targets, calling it a “fog-the-mirror” award. This means that “If you’re around and have enough breath left in you to fog the mirror, you get them,” stated Brian Dunn, the director of the Institute for Comprehension Studies at Cornell University.
SOC’s Tesla concerns beyond Elon Musk
SOC’s concerns extend beyond the mechanics of Musk’s pay. The group has long questioned the independence of Tesla’s board, opposing the reelection of directors such as Kimbal Musk and James Murdoch. It has also urged regulators to review Tesla’s governance practices, including past proposals to shrink the board.
SOC has also joined initiatives calling for Tesla to adopt comprehensive labor rights policies, including noninterference with worker organizing and compliance with global labor standards. The investment group has also been involved in webinars and resolutions highlighting the risks related to Tesla’s approach to unions, as well as labor issues across several countries.
Tesla has not yet publicly responded to SOC’s latest letter, nor to requests for comment.
The SOC’s letter can be viewed below.
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