Elon Musk Eyes 25% Voting Power in Tesla for AI Expansion

Elon Musk Eyes 25% Voting Power in Tesla for AI Expansion

Elon Musk, the CEO of Tesla, expressed his reluctance on Monday to expand Tesla’s role in artificial intelligence (AI) and robotics without securing at least 25% voting control. This requirement significantly exceeds his current stake. On the social media platform X, previously known as Twitter, Musk highlighted his desire for a balance in stock ownership – substantial enough to be influential, yet not so dominant as unchallengeable. He hinted at a preference to develop new products outside of Tesla if his conditions are unmet.

Tesla’s Journey and Musk’s Ownership

Tesla, primarily known for its electric vehicles, is also making strides in AI, notably with its “Full Self-Driving” software and humanoid robot prototypes. Despite these advancements, the company’s primary income source remains its automotive segment. Musk, who owns X and is considered the wealthiest individual globally, holds about 13% of Tesla’s shares. His share sales in 2022, amounting to billions, were partly to fund his acquisition of Twitter for $44 billion.

Musk suggested a dual-class share structure as a solution to reach his 25% voting control goal. However, he was informed that this was not feasible post-IPO. He compared this situation with Meta’s multi-class share structure, which offers substantial control to its founder, Mark Zuckerberg, and his successors.

Tesla’s Stock Structure and Legal Challenges

The concept of a dual-class structure, where different share types offer varying voting rights, is common in some companies. Founders or early investors often hold shares with more voting power compared to other shareholders. However, Tesla has not yet responded to this proposition.

Additionally, Musk faces a lawsuit regarding his compensation package from Tesla shareholder Richard Tornetta. Tornetta alleges that Musk used his influence to obtain an excessive compensation package without a full-time commitment to Tesla. Musk dismissed any notion of a dispute with the board regarding this matter and mentioned that the ongoing legal case is delaying further discussions.

Source: https://finance.yahoo.com/news/musk-seeks-25-voting-share-013237600.html