Investor's Corner
Tesla bear gets shot down after insisting that ‘competition’ is coming for TSLA
A Tesla (NASDAQ:TSLA) bear’s arguments about the impending arrival of competitors in the electric car market was boldly shut down in a recent segment on CNBC’s Squawk Box. During the exchange, veteran journalist Phil LeBeau aired what could only be described as a longtime sentiment from Tesla investors: After all those predictions, where are Tesla’s supposed competitors?
The Squawk Box segment featured Tasha Keeney of Ark Invest and Craig Irwin of Roth Capital Partners, each one representing the bull and bear side for TSLA stock. While Keeney reiterated ARK’s optimistic stance on Tesla and its potential in the full self-driving market, Irwin instead focused on what he alleged was the electric car maker’s disadvantage in battery technology. The Tesla bear insisted that Tesla is currently paying $240/kWh for its cells from Japan while Porsche and Volkswagen are paying $250/kWh. This was a point that Phil LeBeau directly addressed, citing the findings of Sam Jaffe from Cairn Energy Research, who estimated that Tesla has reached costs of around $116 per kWh for its battery cells.
The Roth Capital Partners analyst added that he is taking a bearish stance against Tesla now due to the incoming wave of competitors that are coming to the market. Irwin specifically pointed to the Porsche Taycan as one of these vehicles.
“It’s starting this year. That’s why I chose to initiate with a bearish perspective. Porsche is going to come on with the Taycan, you’ve got Kia, you’ve got the I-PACE… You got to look at the history, so the Cayenne, the first thing they said 10, then they said 20, then it became 40. So it ramped very very quickly. They set expectations low, make a lot of money on the front end, and ramp. Porsche, their business is making money. They’re not about, you know, fluffing numbers. So if they think they can sell 30,000 cars into the market over the next 18 months and make a great profit on it, they’ll do it. But they’re not gonna flood the market to a point you know, it compresses margins,” Irwin claimed.
Irwin’s thesis was immediately met by a rebuttal from LeBeau, who noted that the argument for Tesla competitors has been going on for a long time. The CNBC journalist argued that it is better for other carmakers to start showing (not just telling) how they can actually compete with Tesla by releasing a real, compelling electric vehicle.
“I think it poses a problem for Tesla from the standpoint of ‘Let’s finally see this vehicle.’ I honestly believe based on Tesla owners that I’ve talked with as well as those who track the company, we’re tired of hearing ‘the competitors are coming, the competitors are coming.’ Bring it out. Bring it out, and if Porsche’s Taycan is as impressive as the initial indications are, then it will be a threat to Tesla, but until then, this is a little bit like The Boy (Who) Cried Wolf. We hear it all the time. ‘There’s a wave of vehicles coming.’ Well, that wave of vehicles isn’t here yet. It was supposed to be here by 2019. It’s not here yet. When does it get here? If I’m a Tesla investor, I’m not too worried about this argument until we start to see these vehicles,” LeBeau retorted.
Phil LeBeau was actually being quite generous when he noted that the Porsche Taycan will be a threat to Tesla. Porsche is a niche carmaker, and it is a company that prioritizes the exclusivity of its vehicles. At most, the Taycan will eat into the Model S’ sales since they compete in the same segment. The German-made all-electric car from Porsche will not compete in the same mass-market segment as the Model 3, or the Model Y for that matter.
One thing that Tesla skeptics always seem to forget is that electric vehicles from other carmakers will not kill or overwhelm Tesla. Instead, they are vehicles that contribute to the mission of the electric car maker, which is to encourage the world to shift away from the internal combustion engine. Thus, every Taycan and I-PACE that is sold is not a lost sale for Tesla; it is a lost sale for gas and diesel-powered vehicles.
Watch the recent TSLA bull vs. bear debate in CNBC’s Squawk Box in the video below.
Disclosure: I have no ownership in shares of TSLA and have no plans to initiate any positions within 72 hours.
Elon Musk
Analyst: Elon Musk’s $1 trillion Tesla pay deal modest against robot market potential
Jonas highlighted Tesla’s longer-term ambitions in robotics as a key factor in his assessment.
Morgan Stanley analyst Adam Jonas, one of Wall Street’s most ardent Tesla (NASDAQ:TSLA) bulls today, has described Elon Musk’s newly proposed $1 trillion performance-based compensation package as a “good deal” for investors.
In a note shared this week, Jonas argued that the package helps align the interests of Musk and Tesla’s minority shareholders, despite its shockingly high headline number.
Future market opportunities
Jonas highlighted Tesla’s longer-term ambitions in robotics as a key factor in his assessment. “Yes, a trillion bucks is a big number, but (it) is rather modest compared to the size of the market opportunity,” Jonas wrote. He added that the humanoid robot market could ultimately surpass the size of today’s global labor market “by a significant multiple.”
“We have entertained scenarios where the humanoid robot market can exceed the size of today’s global labor market… by a significant multiple,” Jonas wrote, as shared on X by Tesla watcher Sawyer Merritt.
The analyst likened the arrival of AI-powered robotics to the transformative effect of electricity, noting that “contemplating future global GDP before AI robots is like contemplating global GDP before electricity.” The Morgan Stanley analyst’s insights align with the idea that as much as 80% of Tesla’s future valuation could be tied to its Optimus humanoid robot program.
Elon Musk’s pay package
Tesla’s board has tied Elon Musk’s proposed compensation package to some of the most ambitious targets in corporate history. The 2025 CEO Performance Award requires the automaker’s valuation to soar from roughly $1.1 trillion today to $8.5 trillion over the next decade, a level that would make Tesla the most valuable company in existence.
The plan also demands a leap in Tesla’s operating profit, from $17 billion in 2024 to $400 billion annually. It also ties the CEO’s compensation to a number of product milestones, including the delivery of 20 million vehicles in total, 10 million active Full Self-Driving subscriptions, 1 million Tesla Bots, and 1 million Robotaxis in operation. Tesla’s board emphasized that Musk’s leadership was fundamental to achieving such ambitious goals, with Chair Robyn Denholm noting the award would align the CEO’s incentives with long-term shareholder value.
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
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