Musk said he would feel “uncomfortable” expanding Tesla’s AI and robotics capabilities without controlling 25% of the votes.
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By demanding more power at Tesla, Elon Musk has effectively issued an ultimatum. The billionaire has been clear that he wants more control — 25% of the voting block, to be precise.His blunt and unexpected comments have thrown investors into a frenzy.
Elon Musk has issued an ultimatum to Tesla‘s board: hand over control of 25% of the votes, or he’ll put the breaks on AI development.
In a post on X, the billionaire said he would feel “uncomfortable” expanding the EV company’s AI and robotics capabilities without controlling a quarter of the voting block. Musk added that the voting power would make him “influential” but ultimately overrideable regarding major decisions.
The blunt and unexpected post threw investors into a frenzy, with Wedbush’s Dan Ives saying Musk’s comment had sparked a “firestorm.”
Part car company, part tech firm, Tesla is recognized as a disruptive leader within the automobile industry. Musk himself has consistently touted the company’s tech as the “best real-world AI.”
This makes the threat of moving AI development out of Tesla potentially disastrous for the company’s future growth.
“The Street views Tesla correctly (in our view) as a disruptive tech leader and if Musk ultimately went down the path to create his own company (separate from Tesla for his next generation AI projects this would clearly be a big negative for the Tesla story,” Ives wrote in a note.
Musk, however, is already working on AI projects outside Tesla through his new company, xAI.
His AI startup slash bid to mitigate “woke” AI has already launched a product to compete with Google’s Bard and OpenAI’s ChatGPT.
Despite cofounding OpenAI, Musk was largely left out of the early generative AI boom, and the new company is seen by many as an attempt to get a seat at the table.
The billionaire’s Tesla ultimatum may be rooted in his fears about the existential risks of advanced AI and his desire to control development. Musk has long warned the risks posed by AI are comparable to nuclear weapons.
Nonetheless, putting Tesla’s future at risk also has major consequences for Musk as most of the billionaire’s $206 billion fortune is tied to the EV company.
The billionaire has a stake in Tesla of about 13%, per company filings. However, this could be bumped up to 20.6% if the Delaware court approves his 2018 compensation plan.
Musk claims the board has been delaying updating his compensation package until the court decides on a verdict. If the plan is rejected, it could be complicated for the board to give Musk what he wants.
Still, if he digs his heels in, the billionaire is likelier to get what he wants.
As Ives notes: “Musk is Tesla and Tesla is Musk.”
“At the end of the day, we believe the Board and Musk will be able to resolve this issue over the next 3-6 months,” he said.