Jeff Gritchen/The Orange County Register via AP
Drivers charge their Teslas in Santa Ana, California, March 20, 2024.
Tesla is in trouble.
Yesterday, the company announced that its profits for the first three months of this year fell by 55 percent from the first three months of 2023. Sales declined by 8.5 percent. Its stock price has fallen by 65 percent since its high point three years ago, and by roughly 40 percent just since January 1. The company recently laid off 10,000 of its workers.
So what’s a CEO to do? What investments can Tesla make to restore its plummeting industry leadership? Build a more affordable product? That was the hope some investors had for later this year, though yesterday, the company announced it wouldn’t get around to that until late 2025. Its chief focus, CEO Elon Musk made clear, was building partly autonomous robotaxis—its own model of the robocabs that have been crashing their way around San Francisco.
Perhaps Musk could also focus a bit more on the company, since his associates have noted that he seems more interested in SpaceX and X (the company that used to be Twitter) these days. Perhaps he could be less of an obstreperous right-wing jerk, since the percentage of Democrats buying Teslas, which they once patronized because of their inherently green aspects, has fallen by 60 percent, according to a survey reported in The Wall Street Journal, ever since Musk began broadcasting his ideological and characterological affinities with Donald Trump.
More broadly, the days when Tesla was the only, and then the dominant, player in the electric-car market are long gone. Even without its lassitude in producing more affordable vehicles, even without the siren songs of space shots and Twitter calumnies that have distracted Musk from his cars, Tesla’s role in the market has inevitably shrunk as U.S., Asian, and European competitors have scaled up their own production.
So, are a chastened Tesla and Musk redirecting the company’s resources into building a better, more affordable car? Not exactly.
Instead, the company reaffirmed yesterday that it will ask its shareholders to authorize a special payment to Musk of roughly $56 billion.
Now, there’s a well-established American corporate tradition of rewarding their CEO fuckups with large paychecks. David Calhoun, whom Boeing recently showed the door after various other doors were found to be loosely attached, if attached at all, to some Boeing-made planes, will get a going-away present of between $26 million and $45 million, according to a report in Fortune. Warner Bros. Discovery had a lousy year in 2023, losing $3 billion, but it somehow managed to reward its CEO, David Zaslav, with a $50 million paycheck.
All this is chump change, of course, compared to what Musk has asked Tesla to pay him. Fifty billion dollars is a thousand times more than Zaslav’s puny 50 million. It’s roughly the same size as the GDP of Montana—not our richest state, to be sure, but not our poorest either. Unlike every other payoff to fuckup CEOs, or, for that matter, to non-fuckup CEOs, it’s so large it could make a measurable difference in America’s Gini coefficient, which tracks a nation’s levels of economic inequality.
Why does Musk, already the world’s richest human, want a $56 billion paycheck from Tesla? Some reporting has suggested he wants to recoup the roughly $44 billion he shelled out to purchase Twitter—a purchase that was bad for Tesla, bad for Twitter, and bad for truth.
Why is Tesla’s board so insistent on shoveling the equivalent of the economic value of Montana to Musk? For one thing, the board doesn’t exactly run herd on Elon. The Wall Street Journal’s reporting has made clear Musk’s domination of his ostensible overseers, as this passage from one of the Journal’s stories suggests:
In the culture Musk has created around him, some friends, including directors, feel there is an expectation to consume drugs with him because they think refraining could upset the billionaire, who has made them a lot of money, some of the people said. More so, they don’t want to risk losing the social capital that comes from being close to Musk, which for some feels akin to having proximity to a king.
Which makes clear why Tesla’s board announced earlier this month that, notwithstanding a Delaware court’s ruling that struck down a previous version of this payout, they were going to submit it again to the company’s shareholders.
And finally, why have those corporate shakedown artists whom the media refer to as “activist investors” been silent in the face of this massive misappropriation of shareholders’ money? When corporations pay their workers “too much,” or go in for affirmative action hiring, the cries of outrage from the likes of Bill Ackman, Carl Icahn, and Nelson Peltz assault the heavens, assuming the heavens tune in to CNBC. But when the world’s richest man appropriates $56 billion for himself, these billionaires, in a burst of either class solidarity or naked envy, remain strategically mute. So much for Ackman, Icahn, and Peltz.
There is, however, one positive by-product to Elon Musk’s determination to grab $56 billion from his shareholders and employees: It strengthens the case—growing stronger every day—for expropriating the fortunes of the rich.
