Tesla has proposed an enormous new $1 trillion compensation bundle for its CEO Elon Musk, and lots of the benchmarks he must hit are merely watered-down variations of guarantees he’s spent years making in regards to the firm.
That’s not the image Tesla’s board of administrators paints within the firm’s annual proxy statement, the place they revealed the proposed pay bundle. As a substitute, the board focuses on the way it plans to create “probably the most priceless firm in historical past.”
To make sure, if Tesla accomplishes all that it goals for with this deal, it is going to appear like a a lot totally different firm on the finish of the 10-year interval it covers. That doesn’t change the truth that the milestones the corporate is asking Musk to intention for are much less formidable than his personal previously-stated targets.
Whereas the unprecedented pay bundle nonetheless must be authorized by shareholders at a gathering in November, it’s straightforward to see the corporate’s fervent fan base voting “sure.” Earlier votes on Musk’s compensation have been overwhelmingly authorized by Tesla’s shareholders.
With that in thoughts, let’s check out what Musk wants to perform with a purpose to obtain the complete payout.
20 million vehicles … whole
Musk spent years claiming Tesla would have the ability to make 20 million electrical automobiles per 12 months by 2030. This was again when he and his firm had been nonetheless promising to develop at a charge of fifty% every year.
However Tesla walked away from these guarantees as gross sales development stalled, after which reversed in 2024. The corporate then pulled the 20-million-per-year aim from its affect report last year, and stopped constructing a deliberate manufacturing unit in Mexico that would have increased production.
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Now, the primary “product aim” that Tesla’s board of administrators laid out for Musk to realize on his path to changing into a trillionaire is to ship 20 million automobiles whole. Tesla has already offered eight million vehicles so far, and even with gross sales slumping, is transferring simply shy of two million per 12 months.
With the brand new pay bundle being laid out over a 10-year interval, which means the goal has gone from 20 million EVs per 12 months by 2030 to only 20 million whole by 2035.
A million robotaxis*
Certainly one of Musk’s most notorious and outrageous guarantees about Tesla got here in 2019, when he claimed that the corporate would have one million robotaxis on the road in 2020. It’s now 2025, and Tesla has solely simply begun to trial a robotaxi service in Austin, Texas that has, at most, round 20 or 30 vehicles with safety drivers on board.
To entry his full proposed pay bundle, Tesla is asking Musk to assist the corporate notice an altered model of that promise, as one other product aim listed is to have “1 million Robotaxis in Business Operation.”
It’s a aim with caveats. The nice print reveals that Tesla is barely requiring there to be a “each day common combination” of 1 million robotaxis “commercially operated by or on behalf of [Tesla] over a consecutive three-month interval, as a part of a transportation service.”
Tesla goes on to outline “Robotaxi” as any Tesla car, together with however not restricted to the purpose-built “Cybercab” it’s creating, that’s utilizing the corporate’s Full Self-Driving software program to supply rides to folks.
This contains customer-owned automobiles, which is one other factor Musk has lengthy promised however by no means delivered. He’s spent years claiming that Tesla may flip a digital change and switch present automobiles into fully-autonomous ones, and that homeowners may add and subtract these automobiles to a bigger robotaxi fleet at will.
However Musk has since stated many of the Teslas currently on the road don’t have the necessary hardware for the previous to occur, and the corporate has but to exhibit the latter. Regardless, Musk now has a good looser timeline to try to make each issues occur.
A million “bots”?
Musk sees Tesla’s future being all in regards to the humanoid robotic that it’s creating, referred to as Optimus. Simply this week he claimed it may make up as a lot as 80% of the corporate’s future income.
As he turned more and more centered on Optimus, Musk made some fairly wild guarantees about what that future would appear like. Certainly one of his core claims was that Tesla might be making a million Optimus bots per 12 months by as early as 2029.
And but, Tesla’s board is barely asking Musk to ship a million “bots” whole as a part of this proposed compensation plan. Tesla additionally defines “bots” as “any robotic or different bodily product with mobility utilizing synthetic intelligence manufactured by or on behalf of the Firm” — although the corporate’s automobiles don’t rely.
The administrators appear to agree that Optimus has “the potential to be Tesla’s bestselling product,” they usually say it reperesents “the clearest instance of how Tesla has the power to make autonomy profit all of humanity.”
However the board additionally notes that “commercialization plans” for Optimus are “nonetheless in growth,” and Musk now has till 2035 to succeed in the a million mark.
The whole lot else
The fourth and remaining product aim Musk has to realize is to notch 10 million energetic subscriptions to Tesla’s Full Self-Driving (FSD) software program. It’s arguably probably the most formidable product aim. The corporate doesn’t say what number of present homeowners have paid for FSD, although executives have lately stated the adoption rate is within the “teenagers.” At finest, which means wherever from just a few hundred thousand to the low hundreds of thousands of Tesla automobiles have the software program put in.
The whole lot else Tesla’s board is asking of Musk is tied to cash. Finally, Musk wants to assist Tesla attain an $8.5 trillion valuation with a purpose to unlock the complete worth of the compensation bundle and turn out to be a trillionaire himself.
Musk already had grand designs to perform one thing comparable. He has typically claimed that Tesla may sooner or later turn out to be extra priceless than Apple and Saudi Aramco mixed. At their present valuations, these two firms are collectively value round $5.5 trillion. However earlier this 12 months, the CEO claimed Tesla may very well be value greater than the next five most-valuable companies combined — which on the time meant he was aiming nearer to the $15 trillion mark.
Together with the aim of blowing up Tesla’s valuation, Musk is being requested to extend the corporate’s earnings to, primarily, $400 billion per 12 months — an unlimited determine in comparison with final 12 months’s earnings of round $17 billion.
Lastly, Tesla’s board has requested for 2 notable assurances from Musk with a purpose to unlock the complete worth of the compensation bundle. One is that he should work with the corporate to develop a plan for the way he might be succeeded as CEO of Tesla (and the plan primarily locks him to the corporate for at the least 7.5 years).
The opposite, buried in a footnote, is that Tesla acquired “assurances that Musk’s involvement with the political sphere would wind down in a well timed method.”
Taken as an entire, it’s a fancy settlement with a lot of really pie-in-the-sky concepts about the place Tesla may go beneath Musk’s management over the subsequent decade. The identical was stated in regards to the earlier compensation deal that Tesla struck with Musk again in 2018, and but the corporate hit all of these seemingly-outrageous targets. (Musk’s award was in the end dusted by Delaware’s Chancery Court.)
Nonetheless, it’s arduous to not discover simply how a lot these new targets seem to come back from the corporate making an attempt to tug its CEO’s guarantees again right down to Earth.