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Tesla shareholders probably didn’t think they were proving Barack Obama right when they approved a compensation plan on Thursday that could make CEO Elon Musk the world’s first trillionaire. But in endorsing the plan, Tesla’s investors showed how spot-on the former president was when he said in 2011 that wealthy executives don’t accumulate business successes overnight or amass fortunes all on their own — they often rely on government assistance.
Obama’s “you didn't build that” speech sprang to mind with the news that Tesla — which has benefited from as much as $38 billion in government subsidies, in one analysis — is preparing to make the world’s (current) richest man even richer. CNBC reported that Musk would receive the full $1 trillion in Tesla stock if the company reaches an $8.5 trillion market cap and hits several milestones related to its autonomous vehicles:
Other goals tied to the newly approved pay plan include reaching 20 million vehicle deliveries, 10 million active FSD (Full Self-Driving) subscriptions, 1 million bots (Optimus humanoid robots) delivered and 1 million robotaxis in commercial operation. To date, Tesla has delivered more than 8 million vehicles, according to its September proxy statement.
Those goals seem quite lofty.
You might wonder how shareholders could support such a rosy incentive package at the moment, given Tesla’s numerous recalls over the past year due to faulty parts, its ongoing European sales slump apparently in response to Musk’s far-right politicking, and the Trump administration’s demonization of electric vehicles.
The answer seems pretty obvious: Tesla has been built on the backs of U.S. taxpayers, having already benefited from billions of dollars in government spending. The president literally turned the White House lawn into a Tesla showroom earlier this year. And Tesla enthusiasts see little reason to expect things to change.
Yahoo Finance reported in October that analyst Dan Ives told clients that he expected Tesla to benefit from the Trump administration’s artificial intelligence-related incentives — and from more government contracts:
But what’s most striking about Tesla’s bull case is that even as the company says farewell to special tax breaks, its most optimistic forecasts rely on — and perhaps even take for granted — another kind of government assistance elevating the company to multitrillion-dollar heights. Ives said he expects the Trump White House to fast-track Tesla’s autonomous initiatives. As Washington battles Beijing in an AI arms race, companies like Tesla serve a useful purpose to the U.S. government, the thinking goes. American AI leadership aligns the goals of the administration with those of Musk and his investors.
Donald Trump literally campaigned on a vow to “make life good for our smart people” such as Musk, his biggest campaign donor. Trump handed control of his administration to Musk to kick off the year, and despite a war of words between the two in June, the president has shown little sign he’s willing to defy the wishes of his biggest benefactor. In fact, Trump recently renominated a Musk ally to run NASA after having previously pulled his nomination.
So it really isn’t a mystery as to why Tesla investors might arrive at the conclusion that the company’s CEO is primed to bring historic value in the years ahead. Even when you consider the untethered valuations of many Big Tech companies these days, it’s hard to see why Tesla investors would have agreed to this compensation package were it not for Musk’s influence with the administration.
The president, for his part, suggested the two were still on great terms. “He had a bad spell, he had a bad period. He had a bad moment,” Trump said recently of his spat with Musk. “It was a stupid moment in his life, very stupid. I’m sure he’d tell you that. But I like Elon, and I suspect I always will.”