Tesla is Paying Up to Keep Elon Musk’s Eyes On the Road

First came the stick, now comes the carrot. A 24 karat gold carrot.

After prominent Tesla shareholders earlier this year threatened to oust CEO Elon Musk if he couldn’t give the electric vehicle firm more of his very divided attention, the company’s board on Monday approved an interim stock award to Musk worth roughly $30 billion in a bid to keep his attention. It comes just as Tesla faces an endless obstacle course of roadblocks and speed bumps.

Flat Tires

During the company’s second-quarter earnings report last month, Musk admitted the company may be headed for “a few rough quarters.” In a chat Saturday with customers and retail investors, longtime Tesla engineering executive Lars Moravy was a smidge more optimistic, saying, “We take big swings… We’re in a big swing moment right now with autonomy, Robotaxis, with Optimus, and with Semi.” The company’s EV business, on the other hand, looks like it’s in a major downswing — not just ahead, but right now.

On Monday, new preliminary data released by China’s Passenger Car Association showed that Tesla delivered just 67,886 units from its massive Shanghai manufacturing gigafactory in July. That marks the sixth shipments decline in the past seven months, and an over 8% decrease year-over-year as the company continues to face steep competition from Chinese firms like Xiaomi and BYD. 

It’s more evidence of an overall sales slump — total deliveries were down 14% year-over-year in the second quarter, while automotive revenue fell 16% year-over-year — a problem that looks likely to persist moving forward:

• Monday also delivered the news that the newest model of BMW’s iX3, an electric SUV, will offer a driving range of about 497 miles with a maximum charging rate of 400 kilowatts — blowing away the Tesla Model Y’s roughly 386-mile range and 250 kW charging rate.
• That makes BMW just the latest competitor to out-innovate Tesla in the battery department, and adds to the evidence that Tesla’s Model Y refresh earlier this year didn’t pack a big enough punch. The Model Y typically accounts for about two-thirds of Tesla’s car sales; Cox Automotives estimates that Model Y sales in the US were down 15% year-over-year in the second quarter.

Stay Awhile: In other words, Tesla shareholders have a lot of reason to hope Musk sticks around (Monday’s compensation package only vests if he stays in an executive role for two more years, and compensates somewhat for the $56 billion pay package still stuck in Delaware court legal limbo). It seems that Tesla’s board thinks of the company a lot like how a Florida jury last week thought of the company’s Autopilot cars: Not quite ready to drive itself.