Elon Musk Could Walk Out of Tesla and Not Come Back
Tesla Inc. (NASDAQ: TSLA) Chair Robyn Denholm wrote a letter attached to a document filed with the U.S. Securities and Exchange Commission. In it, she makes clear that without a new $1 trillion incentive package, Elon Musk might leave Tesla. She adds that he does not get the reward unless he clears very high hurdles. The proposal from the board would lock Musk in for over seven years. But he would need to grow the company to a market cap of $7.5 trillion, which is about five times where it is today and close to double that of Nvidia, which has the highest market cap of any public company in the world.
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- Without a new $1 trillion incentive package, would Elon Musk leave Tesla Inc. (NASDAQ: TSLA) behind?
- If he does depart, will the company survive without him?
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The letter is married to a largely unspoken threat that if Musk leaves, much of his work on artificial intelligence and robotics would go with him. That leaves open the issue of intellectual property. However, he already has one of the world’s largest AI companies in xAI. He presumably could simply move his attention to its success.
The Musk situation also raises the issue again of whether Tesla is a car company or one with a future based on AI or robotics. Tesla’s market cap is $1.5 trillion, while Ford’s is $53 billion. This argues that Tesla’s future is well beyond cars as they are today. A truly self-driving car is on Tesla’s horizon within the next year or two, it would seem. The same is so of a robot that can perform many human tasks. Skeptics believe Musk can deliver neither, or that rivals will soon crowd these markets.
No one can predict what will happen if Musk leaves. It is difficult to see the skills of people just below him in the company. They are overshadowed by the brightness of Musk’s star.
There is an argument that Musk is not alone in his role as an extremely precious CEO. The same might be said of Warren Buffett at Berkshire Hathaway. Its stock has traded down since he said he would give up the job as CEO but remain as board chair. Jack Welch, who was probably the greatest CEO of the 20th century, left GE in 2001 after a 20-year run. The company started to fall apart shortly thereafter and never recovered.
In the present day, candidates for the absolute essential chief executive include Mark Zuckerberg, the CEO and founder of Meta, once known as Facebook. On the other hand, CEO and founder of Amazon, Jeff Bezos, left as CEO in 2021. Andy Jassy took up the reins there and has done extremely well.
The only proof of Denholm’s argument is what happens if Musk leaves.
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