Tesla has once again arrived at a juncture where it needs to demonstrate its innovation and growth potential with a tangible, commercially successful product.
At half past 4 in the morning, Beijing time, June 14th, the Tesla 2024 shareholder meeting officially commenced. Overall, this meeting showed stark differentiation from past ones in many ways.
The context is one aspect. Ageing Tesla products and a recent hefty round of global layoffs add to the mounting evidence that the company’s energy is dwindling compared to previous years.
On the other hand, intriguing information included not only Musk’s vision of Tesla’s AI-centric development plans, but also the uproar about his $56 billion remuneration.
Therefore, this year’s Tesla shareholder meeting had much more dramatic flair compared to previous years.
Approval of Musk’s $56 billion pay
Before Musk officially took the stage, the Tesla shareholder meeting revolved around a series of resolution proposals, the two most significant and controversial points being:
- Whether Musk’s $56 billion remuneration proposal was approved;
- Whether the Tesla’s headquarters was to be relocated from Delaware to Texas.
The origin of these two resolution proposals was back in 2018, when the Tesla shareholder meeting approved an unprecedented pay performance plan for Musk – if he achieves his goals, Musk could receive a $56 billion in stock rewards.
However, by the end of 2018, a retail investor owning only 9 shares sued Tesla, publicly accusing Musk of covert manipulation of the board and claiming that the Tesla board lacks independence. In January this year, a final judgement was made by the Delaware Court in the United States, rejecting the $56 billion remuneration plan for Musk proposed by Tesla.
This led to Musk’s extreme displeasure and a fallout with the Delaware government, thus prompting shareholder voting on the two above-mentioned topics and frequent lobbying on his own behalf.
Simultaneously, the Tesla board had been rallying for Musk.
A little while before the start of the shareholder meeting, Tesla board chairman Robyn Denholm had mentioned in a letter to shareholders that since 2018 Musk has made indelible contributions to Tesla, including approximately 1,100% total shareholder return, and led the company from a net loss of $2.2 billion in 2017 to a net profit of $15 billion in 2023 – contributions which “deserve recognition”.
In addition, Robyn Denholm stated:
Fairness and respect require us to fulfil our collective commitment to Elon – a commitment that essentially remains that we must keep Elon’s attention and motivate him to focus on achieving astonishing growth for our company.Musk’s personal influence, work capabilities, and contributions to Tesla are well recognized. Therefore, these two resolutions were effectively passed by shareholders with an overwhelming majority a day before the shareholder’s meeting commenced.
Interestingly, Musk began jiving enthusiastically onto the stage when the two resolutions were officially announced as passed at the shareholder’s meeting, expressing “Wow, I truly love you guys.” However, Musk quickly noted that he probably would’ve stepped down if the compensation plan wasn’t approved, despite that not being his preference.
Tesla’s Market Cap to Surpass 10 Apples?
Upon officially stepping onto the stage, Musk summarized some of Tesla’s achievements in areas such as Optimus, autonomous driving, manufacturing, and energy storage.
Of all these, Musk talked most extensively about Optimus.
According to Musk, there are currently two Optimus at work at Tesla’s Fremont factory. By next year, Tesla plans to start limited production of Optimus. At that time, there will be more than 1,000 or even several thousand Optimus working in the factory.
Besides manufacturing, Musk also mentioned that Optimus can learn and complete tasks by watching videos of human operations. The next-generation Optimus will have 22 degrees of freedom and will be capable of playing the piano. In the future, Optimus could even serve as human companions and help take care of children. As a humorous aside, Musk also made sure to emphasize the importance of ensuring that a “Terminator-like scenario” does not arise from Optimus.
Additionally, Musk made some predictions on the profit contribution that Optimus could bring to Tesla in the future. He suggested that Optimus could retail for around 10 to 20 thousand dollars, and with mass production, it could possibly bring Tesla an annual profit of 1 trillion dollars.
With the growth of robotics represented by Optimus, Musk envisions that in the future, the ratio of robots to humans could be two-to-one or even one-to-one, meaning that almost every individual could own a robot.
According to Musk, Tesla has become the leader in the robotics industry with an unassailable advantage in manufacturing robots over its competitors. He believes that designing a robot different to Optimus would require redesigning motors and other hardware, developing software, and having the capacity for mass production. Tesla has a clear lead in all these aspects.
On this basis, Musk foresees that Tesla will hold an even higher valuation in the future, possibly 10 times higher than the current most valued company globally. According to the latest data, the highest market cap companies globally are Apple and Microsoft, both valued at 33 trillion dollars. Consequently, Musk envisions that Tesla’s future market cap could exceed 330 trillion dollars.Apart from Optimus, Musk has also shared details in other regards.
In the realm of autonomous driving, Musk stated that Tesla is approaching full autonomy at an exponential rate.
According to Musk, the design for HW 5 has already been completed within the past year by Tesla. HW 5 is expected to be implemented within the next 18 months, promising a 10 times increase in capabilities compared to HW 4.
Of course, HW 3 has not been overlooked by Tesla either. Musk mentioned that further improvements will be made to enhance the capacity of HW 3, unlocking more of its potential.
Turning our gaze from the near future to a more distant one, Musk expressed that future Teslas equipped with FSD will function like a combination of Airbnb and Uber. As long as they are not required by their owners, they can be added to a fleet to earn money autonomously through an app. The income may even exceed the monthly car loan repayments. Musk added:
I admit I’m fairly optimistic, but without it, none of this would exist, not even this factory (referring to the Tesla headquarters in Texas, the venue of the shareholders’ meeting).
On the product front, Musk stated that by the end of this year, Tesla’s preserved volume will surpass 7 million units, with the Model Y potentially becoming the best-selling single car model worldwide once again.
Moreover, Musk mentioned the Cybertruck and profoundly described it as “Tough”.
He commented that the Cybertuck is a rare vehicle, with its weekly delivery volume already reaching 1,300 cars, despite continually facing cost challenges.
Concerning the prospect of introducing Cybertruck to other markets, Musk stated that the Cybertruck would be well-received in any market. However, as the Cybertruck has only been developed according to North American requirements, it might be tested in other nations next year, necessitating further development, hence a tricky task indeed.
Regarding the battery, Musk didn’t reveal much information about the 4680 battery. He noted that Tesla has already identified a cost-effective pathway for the 4680 battery. In the long run, the returns from the 4680 battery will greatly exceed people’s expectations, however, from a current perspective, procuring supplies from battery providers would be more cost-effective.
Musk believes that Tesla should persist with the R&D and production of batteries to mitigate operational risks caused by geopolitical uncertainties.At the close of the shareholder meeting, Tesla shared a potentially Robotaxi-related video.
From the video content, users can hail a ride on the mobile APP before getting in the car, select the number of passengers, and pre-control the air conditioning temperature. After getting in the car, users can control the car’s music playing through the APP.
As for the specific experience and when it will be implemented and applied in China, it’s worth looking forward to.
In conclusion
Throughout the shareholder meeting, the word that Musk mentioned the most was ‘optimism,’ and Musk firmly said:
We are not only opening a new chapter for Tesla, but we are also starting to write a new book.
Interestingly, some individuals’ questioning voices about Tesla at the shareholder meeting are very thought-provoking, a representative one is how Tesla prepares for the day when it might lose Musk, this superman.
In response, Musk gave a simple answer, saying that Tesla would still have a promising future without him, though he did not elaborate on the issue.
However, from Tesla’s perspective, at least until now, without Musk, Tesla’s development would face great risks. After all, in the eyes of Tesla’s chairman, Robyn Denholm, Musk’s leadership is becoming more critical than ever as Tesla enters the next growth stage.
It appears that for Tesla, Musk is the most crucial factor in Tesla maintaining its innovation and growth capability. On the contrary, Musk is also the biggest uncertainty factor for Tesla’s innovative and growing capability.
Nevertheless, for Tesla and Musk, the most urgent things right now are to accomplish the Robotaxi, planned to launch in August, demonstrating their continuous innovation and growing ability, and keep telling the high-profile story about autonomous driving and AI.
This article is a translation by AI of a Chinese report from 42HOW. If you have any questions about it, please email bd@42how.com.