Elon Musk, the chief executive of Tesla, has stunned investors by demanding that the company’s board of directors give him more than $80 billion worth of stock if he wants to continue developing products based on artificial intelligence.
In the latest show of his disregard for conventional ways of communicating with investors, Mr. Musk said late Monday on X, the social networking site he owns, that he needed to own 25 percent of Tesla to avoid takeovers and have enough control of the company. as it develops robots and other artificial intelligence technologies.
If his demands are not met, Mr. Musk said, he will pursue unspecified ventures outside of Tesla. In addition to electric cars, Tesla has developed a humanoid robot called Optimus that uses artificial intelligence to develop self-driving technology, a cornerstone of the company’s strategy. These businesses belong to Tesla, and Mr. Musk couldn’t just walk away.
The company’s market valuation of nearly $700 billion — more than double that of Toyota Motor, the world’s largest automaker by annual car sales — is based in part on investors’ belief that the company will lead the rest of the industry in developing cars that can drives from place to place without human intervention. Investors are also betting that advanced automation will allow Tesla to build cars far more efficiently and profitably than competitors.
Mr. Musk owns 13 percent of Tesla after selling a significant portion of his stake to finance his $44 billion acquisition of Twitter, which he renamed X. The social networking site has struggled under his leadership and has fall in value. An additional 12 percent of Tesla would be worth $83 billion at the stock’s current price, effectively recouping Mr. Musk’s investment in Twitter — which he has said he regrets — and then some.
“I feel uncomfortable growing Tesla to be a leader in AI and robotics without having ~25% voting control,” Mr. Musk wrote on X. “Enough to be influential, but not so much that I can’t overthrow me.”
And he continued: “Unless that’s the case, I’d rather make products outside of Tesla.” But he also said the board would not take any action until a Delaware judge rules on a lawsuit brought by a Tesla shareholder challenging an earlier compensation plan that was instrumental in making Mr. Musk the world’s richest man.
Mr. Musk testified in the Delaware case in late 2022. Gregory Varallo, who is representing shareholders in the lawsuit, said he did not know when a decision would be made. No documents have been filed in the case since July.
Tesla did not respond to a request for comment.
Mr. Musk’s request underscored the extent to which Tesla, which sold 1.8 million vehicles last year, is subject to his impulses.
“You’re never really sure what you’re going to read from Elon Musk when you get back to the office after a three-day weekend,” said Ben Rose, president of Battle Road Research, which advises institutional investors. Mr. Rose called Mr. Musk’s demand “strange and untimely,” noting that Tesla faces increasing competition and difficult economic conditions.
Tesla’s success under Mr. Musk has forced traditional automakers to start offering electric vehicles, which are essential to reducing greenhouse gas emissions from transportation. But Mr. Musk’s behavior and statements have weighed on the stock price and landed him in trouble with regulators.
Tesla shares fell after Mr Musk sold some of his stake to buy Twitter. Shares also suffered when Mr. Musk said in 2018 that he had the money to take Tesla private and delist it. Mr. Musk was unable to execute the plan. That statement led to a lawsuit from the Securities and Exchange Commission, which Tesla settled for $40 million, while agreeing that lawyers will look into what Mr. Musk says on Twitter. It was unclear whether Mr. Musk’s statement to X late Monday had been approved by lawyers.
It would be difficult for Tesla’s board, which has been criticized for not doing enough to check Mr. Musk, to grant his wish immediately or unconditionally. The company will have to issue new shares, said Mr. Rose of Battle Research. That would dilute the value of existing shares without raising additional capital for Tesla and could trigger shareholder lawsuits.
But Mr. Rose added that the board could grant Mr. Musk stock options that he would receive only if he hits certain milestones for five or more years. That would be similar to a compensation package Mr. Musk received in 2018, which was contingent on Tesla achieving stock market valuations that were then seen as unrealistically ambitious. Mr. Musk became the world’s richest man by defying expectations and hitting targets.
The company’s stock is down about 11 percent so far this year, but is up about 70 percent over the past 12 months.
Mr. Musk did not specify what products he might develop outside the company. It has already launched a separate AI business called X.AI, which last year released the Grok chatbot to select users, although it has also highlighted the risks of the technology in public comments.
The main use of Tesla’s artificial intelligence has been in the Autopilot and Full Self Driving systems, which assist drivers by taking on certain tasks in certain driving situations. Mr. Musk has said many times over the years that the company was close to perfecting the technology that would allow a car to drive itself. But self-driving technology has taken longer to perfect than Mr Musk predicted, and many experts believe it is still years away.
The automaker is also working on a robot called Optimus. The device can fold a shirt, according to a video posted on X by Tesla on Monday, but it hasn’t become a major source of revenue.
At X, some of Mr. Musk’s fans applauded his request for a 25% stake, saying he earned the money. But others said it was his fault his stake in the company fell. “They didn’t force you to sell your shares,” one user wrote, adding, “why should the board do anything to fix this?”
A stake of less than 15% of the company, Mr. Musk said, “makes it very easy to be taken over by dubious interests.”
