Investor's Corner
What the Tesla Model 3 Means for the Planet’s Future
Tesla CEO Elon Musk’s overarching goal of converting the world from using fossil fuel powered cars to electric vehicles is coming to fruition. Or so it would seem after the company has secured nearly 300,000 reservations on its upcoming mass-market Model 3.
But is the world really on the cusp of a green car revolution? According to the Washington Post, our enthusiasm should be tempered with a healthy dollop of reality. “Even if Tesla manages to scale up and hit its very aggressive target of 500,000 vehicles a year by 2020, that would still represent only about .5 percent of global light-duty vehicle sales,” said Colin McKerracher, head of advanced transport at Bloomberg New Energy Finance. “So it’s hard to have an overall impact from them alone.”
The U.N.’s Intergovernmental Panel on Climate Change estimates that greenhouse gas emissions from transportation transportation total 7 billion tons annually. That number is projected to rise to 12 billion tons by 2050 in the absence of any significant policy shifts. Several experts suggested this week that booming sales of Tesla automobiles won’t have a significant impact on the global vehicle market.
Today, global sales of light duty vehicles are a staggering 88.5 million a year according to Navigant Research. That number is expected to grow dramatically as sales in India and Asia skyrocket in the years ahead. In comparison, 500,000 Teslas are just the proverbial drop in the bucket.
The real question is what effect the success of the Model 3 will have on global cultural norms and other manufacturers. “It’s obviously important for Tesla, but I think it’s going to push other automakers to match what Tesla’s doing, and also get other people to think about switching to electric,” said David Reichmuth, a senior engineer in the clean vehicles program at the Union of Concerned Scientists.
Bloomberg New Energy Finance predicts electric vehicles sales will total less than 5% of total global sales until 2022. After that, falling battery prices will finally make electric cars truly price competitive with conventional cars. Bloomberg thinks it will be 2040 before the number of electric cars sold each year gets really impressive. By then, 35% of cars will be electric and EVs will comprise 25% of the cars in the world.
Regulatory and cultural changes will have a large effect on how rapidly the world decarbonizes the transportation sector. In China, government policies strongly favor electric cars. As a result, sales of so-called "new energy vehicles" -- which include hybrids, plug-in hybrids, and battery electric cars -- are expected to triple this year and continue to expand rapidly in the years to follow. Those policies will alter the Chinese culture. Electric cars will likely be preferred over conventional cars in China within a few years.
Tesla Model X Signature Red offered on Tesla China website (left). Tesla Model S in Chinese showroom (right) [Source: Tesla Motors]
Autonomous cars could also dramatically reduce transportation emissions.That's according to a study by Jeffrey Greenblatt and Samveg Saxena of the Lawrence Berkeley National Laboratory. Tesla obviously is positioning the Model 3 to feature advanced autonomous driving features when it goes into production.
Just like wind and solar power, electric cars may enjoy a period of very rapid growth, but that in and of itself will not solve the world's carbon emissions problem. Will people look back on the introduction of the Model 3 as the "tipping point" when the balance between internal combustion engines and batteries began to shift? Quite possibly. Certainly Tesla is raising awareness about electric cars and forcing other car makers to invest in battery and autonomous technology.
But there could be a long way to go before the people on earth can say they have conquered their carbon emissions problem. A rhetorician would argue that Tesla is doing what's necessary to promote change but not sufficient to make that change complete.
Feature photo credit: Tesla Motors
Investor's Corner
Michael Dell points out practical advantage of Elon Musk’s proposed pay package
As pointed out by the Dell Technologies CEO, Musk will only be rewarded if he delivers extraordinary value to shareholders
Michael Dell has weighed in on Elon Musk’s controversial 2025 CEO Performance Award, offering a grounded perspective amidst the noise surrounding the pay package today.
As pointed out by the Dell Technologies CEO, Musk will only be rewarded if he delivers extraordinary value to shareholders. Musk would quite literally receive no compensation if he fails to achieve his targets.
Dell emphasizes results over rhetoric
Dell shared his thoughts about Musk’s 2025 CEO Performance Award in a post on X.“Vote FOR Elon Musk. The award is only achieved IF he hits exceptionally ambitious market-cap and operational milestones—if he falls short, he gets nothing,” Dell wrote in his post.
“If he succeeds, shareholders will win big through unprecedented value creation, and he will earn added voting rights to continue driving Tesla’s long-term vision.”
Musk replied with a short “Thanks Michael,” acknowledging Dell’s support. Dell’s framing cuts through the debate surrounding Musk’s compensation, as he simply focused on the incentive structure’s risk-reward balance.
Musk’s ambitious pay package
Elon Musk’s 2025 CEO Performance Award requires Tesla’s market capitalization to rise from roughly $1.1 trillion today to $8.5 trillion within a decade. This would make Tesla more valuable than any company in history.
Apart from this, Tesla’s operating profit must also grow from $17 billion to $400 billion annually. Musk must also lead the company to several product-related milestones, such as 20 million cumulative vehicle deliveries, 10 million Full Self-Driving subscriptions, 1 million Tesla Bots, and 1 million operating Robotaxis.
So far, proxy advisors Glass Lewis and ISS have urged shareholders to vote against the plan. Some prominent investors, including ARK Invest CEO Cathie Wood, however, have voiced strong support for the plan. Wood called Musk “the most productive human being on earth,” arguing that his vision and ability to attract talent are central to Tesla’s success.
Investor's Corner
Elon Musk’s 2025 pay package gets support from Tesla’s biggest bull
ARK Invest founder Cathie Wood has previously stated that she is quite confident that the vote on Elon Musk’s 2025 Performance Award would pass.
Cathie Wood, CEO of ARK Invest and one of Tesla’s most ardent bulls, reiterated her support for Elon Musk’s 2025 CEO Performance Award.
Wood highlighted that Musk’s leadership attracts incredible talent, and it has allowed the companies he leads such as Tesla to become disruptors in their respective fields.
ARK Invest supports Musk’s leadership
Elon Musk’s 2025 CEO Performance Award has received a mixed reception. Proxy firms such as Glass Lewis and Institutional Shareholder Services (ISS) have stated that they would be voting against Musk’s pay package. Other entities, such as the State Board of Administration of Florida (SBA), have stated that they would be voting in favor of Tesla’s proposals.
ARK Invest founder Cathie Wood, for her part, has previously stated that she is quite confident that the vote on Elon Musk’s 2025 Performance Award would pass. She also stated that a favorable result to the vote for Musk’s 2025 pay plan would be beneficial for Tesla.
“Elon Musk is the most productive human being on earth. And a human being who attracts incredible talent, people who want to solve the world’s hardest problems. This is a win-win for all of us if Elon succeeds this time,” Wood stated. Musk appreciated Wood’s comments, stating, “Thanks Cathie!” In a post on X.
ARK Invest has been one of Tesla’s most loyal bulls
Tesla is ARK Invest’s single largest holding, with the firm holding an estimated $1 billion worth of TSLA, as noted in an Insider report. Wood previously said she expects the approval of Musk’s pay package to trigger “super-exponential growth” for the automaker, as new products like the Cybercab and Optimus expand Tesla’s offerings.
“Because think about it. It is a convergence among three of our major platforms. So, robots, energy storage, AI, and it’s not stopping with Robotaxis. There’s a story beyond that with humanoid robots, and our $2,600 number has nothing for humanoid robots. We just thought it’d be an investment, period,” Wood stated during an appearance at Steven Bartlett’s podcast The Diary Of A CEO.
Investor's Corner
Tesla VP for AI software makes a case for upcoming Elon Musk shareholder vote
Elluswamy reiterated the idea that Tesla is indeed at a critical point in its history.
Tesla’s Director of Autopilot Software and VP of AI Software Ashok Elluswamy has shared his thoughts about CEO Elon Musk’s 2025 performance award. While the executive typically discusses topics related to the company’s tech and AI initiaives, Elluswamy made it a point to make a case for Musk’s proposed pay package.
Tesla’s VP for AI Software shares his insights
In a post on X, Elluswamy reiterated the idea that Tesla is indeed at a critical point in its history. This is because the company is changing from a leader in electric vehicles and a major player in the energy storage market to a powerhouse pioneer in robotics that are powered by real-world AI. As per the executive, Elon Musk’s leadership of Tesla is more relevant now more than ever. He also reported an X article he previously wrote about Elon Musk and Tesla.
“This note regarding the importance of Elon leading Tesla is more relevant now than ever. Tesla is at a critical juncture, as it is metamorphosing into the world leader in robotics. Creating large-scale, useful robots requires expertise across engineering design, manufacturing, real-world AI software, chips for AI, and more. Elon is, quite likely, the only person on Earth with deep skills and the right instincts across all these domains,” Elluswamy stated.
A push to support Musk’s 2025 performance award
In recent weeks, Tesla executives such as Board Chair Robyn Denholm have been encouraging TSLA shareholders to vote in favor of Elon Musk’s 2025 performance award, as well as other proposals that the company’s directors have argued are critical to the future of the company. These proposals, Tesla executives noted, are necessary to ensure that the company can achieve the ambitious targets of Elon Musk’s Master Plan Part IV.
Elon Musk’s pay package, as well as the company’s proposals, would be decided at the upcoming 2025 Annual Shareholders Meeting, which would be held at Giga Texas on November 6, 2025. Needless to say, Tesla’s future might very well be decided during the event.
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