The plan, disclosed in a regulatory filing on 5 September 2025, is aimed at keeping Musk focused on Tesla as the company pursues its next stage of growth. Central to the proposal is a valuation goal: increasing Tesla’s market capitalisation from $1.1 trillion to $8.5 trillion within 10 years. That represents a 7.7-fold increase.

While five out of the 10 most valued US companies, including Tesla, have seen that growth in the past 10 years, none have done it from a trillion-dollar base. Nvidia, the current most valuable company, is valued at around $4.16 trillion, up over 12 times from five years ago, driven by the AI boom.

To unlock the full payout, Musk would need to meet a series of operational milestones by 2035. These include delivering 20 million vehicles (cumulatively), putting 1 million robotaxis into commercial service, deploying 1 million Optimus humanoid robots, and generating $400 billion in adjusted Ebitda.

The package has drawn criticism in light of Tesla’s recent performance. The company has faced slowing sales, rising competition, and reputational risks tied to Musk’s political activities. Tesla’s earnings reflect these pressures. It reported a year-on-year decline in its Ebitda in seven of the past eight quarters. Despite this, Tesla’s board believes Elon Musk can achieve the stretch goals and that the trillion-dollar compensation is needed to retain him. Shareholders will vote on the package in November.

EV strains

Tesla’s electric vehicle business, the foundation of its success, is under growing strain.

Chinese rival BYD has overtaken Tesla as the world’s largest EV maker, reporting higher revenue in 2024 and narrowly surpassing Tesla in pure electric vehicle production. Including hybrids, BYD sold more than 3 million vehicles last year, far ahead of Tesla’s total. Tesla’s total deliveries fell 1.1% year-over-year to 1.79 million vehicles, marking its first annual decline. For the EV industry, price cuts are squeezing margins, especially in China, where more than 50 automakers are competing in a crowded market.

Even in the United States, Tesla’s dominance has eroded as rivals launch more affordable models. Its share in the EV market has fallen from a peak of 60% in 2020-2021 to about 38% in August 2025. In Europe, consumer pushback and new tariffs have added to the headwinds, underscoring the limits of EVs alone in driving Tesla’s next phase of growth.

Robot gamble

With EV growth slowing, Tesla is pivoting to AI and autonomy-driven ventures. On 12 June 2025, it launched a limited paid robotaxi service in Austin, Texas, using modified Model Y vehicles equipped with full self-driving software. This could generate recurring, high-margin revenue if Tesla overcomes technical and regulatory challenges.

More importantly, Tesla is advancing its humanoid robot, Optimus, unveiled in 2021. Optimus targets factory work, caregiving, and household tasks. Analysis by Goldman Sachs projects that a 15% substitution rate for humanoid robots in hazardous tasks and auto manufacturing could drive global demand to 3.5 million units by 2035.

Elon Musk claims 80% of Tesla’s future value will stem from Optimus. However, competition is intense from Boston Dynamics, Agility Robotics, and Chinese firms like Fourier Intelligence and Unitree. While Tesla faces public scepticism, safety concerns, and regulatory hurdles, Musk has a track record of defying critics, even though he has constantly missed deadlines.

Pay debate

Elon Musk’s compensation at Tesla is now linked to achieving goals within set timelines, but its size remains controversial. A $56 billion package from 2018, the largest in US history, was voided by a Delaware court in 2024 for governance issues. Tesla is appealing. Meanwhile, in August, its board approved a $29 billion interim award of restricted shares to retain Musk during litigation. It was criticised for rewarding presence over performance.

High CEO pay is inviting increasing scrutiny in the US. The trend is not limited to the big tech CEOs. The median CEO pay for S&P 500 companies hit $17.1 million in 2024, driven by stock awards. High-profile CEO packages, like those of Starbucks’ Brian Niccol, have sparked scrutiny over fairness and inequality concerns, amid shareholder activism.

Tesla’s board proposal elevates CEO compensation to unprecedented levels, aligning with Musk’s ambitious goals. In November, investors will decide if they support this approach or prefer a more grounded stance.