Tesla shares jumped 6 % on Monday after CEO Elon Musk disclosed that he had purchased $1bn value of the corporate’s inventory. The transfer reinforces Musk’s push for higher management over Tesla and comes per week after the corporate’s board supplied him a $1 trillion pay bundle over the subsequent decade.
Musk’s inventory buy – his first open-market buy-up of shares since 2020 – comes at a vital time for Tesla, because it races to rework into a synthetic intelligence and robotics agency while additionally grappling with falling gross sales of electrical automobiles (EVs).
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However Musk’s pay packet has are available for intense criticism. Final weekend, Pope Leo decried the widening pay hole between company bosses resembling Elon Musk – whose estimated wealth now stands at $367bn – and abnormal working folks, which he stated was a significant component in rising international unrest.
Why is Musk shopping for up Tesla shares?
On September 12, Musk, 54, bought 2.57 million shares (which represents lower than one % of Tesla’s market capitalisation), paying between $372 and $397 per share as the value assorted by the day, in accordance with regulatory filings. He now owns nearly 20 % of Tesla, which seemingly pleases its traders.
Tesla’s share value rose to round $422 on Monday – nonetheless 12 % decrease than its all-time excessive of $479 (reached in December 2024). Following his latest transfer, Musk posted on X that the rise in Tesla’s worth was “foretold within the prophecy”.
Whereas Musk wasn’t an unique founding father of Tesla – he invested within the firm one yr after it was established – he grew to become chairman in 2004. The South African entrepreneur has persistently demanded a much bigger stake and extra voting energy at Tesla, having beforehand stated he would favor to construct AI merchandise and robots exterior of Tesla if he can’t management 25 % voting energy within the agency.
Musk bought greater than $20bn of Tesla’s inventory (or 4.6 % of its market cap) in 2022 to fund his acquisition of Twitter, now X, for $44bn. He additionally owns non-public holdings in SpaceX, Neuralink and The Boring Firm.
Is Musk actually being paid $1 trillion?
The Tesla CEO should meet sure performance-related standards first. To unlock the complete $1 trillion payout, Musk should elevate the corporate’s valuation from roughly $1 trillion right now to $8.5 trillion over the subsequent 10 years. He can even must promote a million autonomous taxis and a million robots and enhance Tesla’s earnings by greater than 24 instances what it earned final yr.
Tesla at the moment operates a couple of dozen autonomous taxis in a restricted space within the metropolis the place it’s headquartered, Austin, Texas within the US. Often known as “robotaxis“, they’re self-driving automobiles however are accompanied by human “security supervisors”, who can intervene if issues happen.
On the robotics facet, the corporate unveiled its first humanoid robotic – Optimus – in 2022. In 2024, Musk claimed that Tesla would deploy robots for “inner use [ie for use inside its own factories]” in 2025, and that it could have produced 5,000 models by then. Neither pledge has been met thus far.
Musk additionally lately stated that “80 % of Tesla’s [future] worth might be Optimus”.
How has Musk’s pay at Tesla risen over time?
After Musk joined Tesla in 2004, he took little or no money pay. As an alternative, he selected to be paid in fairness. Then, in 2018, shareholders accepted a landmark 10-year pay bundle for Musk – linked to numerous operational targets – estimated at $2.6bn.
As Tesla’s market worth surged after the beginning of 2020 (when it was buying and selling at simply $29.50 a share), lots of these pay targets had been met, and Musk obtained a lot of extra Tesla shares. As a result of broad inventory market features for the reason that COVID-19 pandemic, Musk’s earnings are estimated to have climbed by $40bn-$60bn.
Although Musk’s pay windfall at Tesla has attracted regulatory scrutiny for overcompensation, particularly from Delaware’s Court docket of Chancery, a lot of the firm’s shareholders have repeatedly ratified the CEO’s cost packages.
How do CEOs’ pay packets examine to these of common US employees?
Tesla doesn’t disclose non-executive salaries, so it’s onerous to say how Musk’s earnings compares to that of the common employee there.
Nevertheless, company pay within the US has usually rallied in latest many years in comparison with that of employees. In response to the Financial Coverage Institute, common pay for CEOs at S&P 500 corporations – the five hundred greatest listed corporations within the US – rose by nearly 1,000 % over the 50-year interval main as much as 2024.
Against this, a typical employee at an S&P 500 firm has seen his or her pay packet rise by simply 27 % (adjusted for inflation) over the identical interval. Said in a different way, the CEO-to-worker pay ratio has elevated from 30:1 to 350:1 over the previous 5 many years.
In an interview final week with Crux, a Catholic information web site, Pope Leo singled out Elon Musk for example of the sort of wealth he stated was corroding “the worth of human life, of the household, of the worth of society”.
Requested about Tesla’s proposed $1 trillion pay packet, Leo responded: “What does that imply, and what’s that about? If [personal wealth accumulation] is the one factor that has any worth any extra, then we’re in massive hassle.”
Is Tesla in hassle?
Regardless of its latest uptick, thus far this yr, Tesla’s inventory market efficiency has been among the many worst of the “Magnificent 7” group of tech giants – which additionally consists of Alphabet, Amazon, Apple, Meta, Microsoft and Nvidia – having misplaced round 2 % of its worth this yr thus far.
Tesla’s most up-to-date quarterly outcomes confirmed revenue losses amid falling demand for electrical automobiles and elevated import manufacturing prices related to US President Donald Trump’s commerce tariffs. Trying forward, earnings look set to proceed falling.
Gross sales of Tesla vehicles within the US will seemingly fall additional within the final three months of 2025, as Trump has refused to increase a tax credit score for EV purchases for US shoppers after October. So far, the rebate has performed an important position in making American EVs extra reasonably priced.