Tesla has put forward a staggering $1 trillion compensation plan for CEO Elon Musk, but many of the targets he must achieve are essentially toned-down versions of longstanding ambitions he’s previously set for the company.
However, in Tesla’s annual proxy statement where the proposed pay plan was disclosed, the board of directors presents a different narrative. They highlight their intent to create “the most valuable company in history.”
If Tesla manages to achieve all the objectives tied to this compensation plan, the company could look dramatically different by the end of the 10-year timeframe. Still, these new milestones are less ambitious than the bold goals Musk himself has proclaimed in the past.
Shareholders must still approve this unprecedented compensation at a November meeting, but considering Tesla fans’ enthusiasm, a “yes” vote is likely. Earlier pay packages for Musk have seen overwhelming support from investors.
With that context, let’s examine what Musk needs to accomplish to unlock his full payout.
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Image Credits:Justin Sullivan / Getty Images
20 million vehicles … in total
For years, Musk has asserted that Tesla would produce 20 million electric vehicles annually by 2030. These claims were made during a time when Tesla aspired to grow at a 50% annual rate.
Yet, as growth slowed and even reversed in 2024, Tesla abandoned those projections. The company removed the 20-million-per-year target from its impact report last year and halted construction of a new factory in Mexico that would have expanded capacity.
Now, the first “product goal” presented by Tesla’s board is for Musk to deliver 20 million vehicles in total. Tesla has already sold eight million vehicles so far, and even with current slumps, it sells just under 2 million per year.
Given the new decade-long compensation structure, the goal has shifted from 20 million cars each year by 2030 to a cumulative 20 million by 2035.
A Tesla Cybercab prototype at a Tesla store in San Jose, California, US, on Tuesday, Nov. 12, 2024. Tesla CEO Elon Musk said the robotaxi, which has no steering wheel or pedals, could cost less than $30,000 and “probably” will go into production in 2026. Photographer: David Paul Morris/Bloomberg
Image Credits:David Paul Morris/Bloomberg / Getty Images
A million robotaxis*
Back in 2019, Musk famously declared that Tesla would have one million robotaxis on the streets by 2020. Fast forward to 2025, and Tesla has only just started pilot robotaxi operations in Austin, Texas, with just a couple dozen vehicles, all with safety drivers.
To qualify for the entire proposed pay package, Tesla now wants Musk to fulfill a revised version of that vision: achieving “1 million Robotaxis in Commercial Operation.”
However, there are important conditions. The details specify that Tesla only requires a “daily average aggregate” of one million robotaxis “commercially operated by or on behalf of [Tesla] over a consecutive three-month period, as part of a transportation service.”
Tesla’s definition of “Robotaxi” includes any Tesla vehicle, not just the purpose-built “Cybercab,” that is using the company’s Full Self-Driving system to provide rides to passengers.
That means customer-owned vehicles count as well—something Musk has long said would be possible but has yet to deliver. For years, he has suggested Tesla could remotely activate full autonomy for existing cars, allowing owners to add or remove their vehicles from a shared robotaxi fleet at will.
But Musk has since acknowledged that many Teslas on the road lack the hardware needed for true autonomy, and the company has not yet shown that such a flexible robotaxi network is possible. Even so, he now has a more relaxed deadline to achieve these goals.
Image: Tesla
Image Credits:Tesla
A million “bots”?
Musk envisions Tesla’s future as being driven by its humanoid robot, Optimus. Just this week, he suggested it could eventually account for as much as 80% of Tesla’s revenue.
As his attention shifted to Optimus, Musk made increasingly ambitious statements about what the company might accomplish. One of his more notable claims was that Tesla could be producing a million Optimus robots per year as soon as 2029.
Yet, for this compensation plan, the board is only asking Musk to deliver a total of one million “bots.” Tesla defines “bots” broadly as “any robot or other physical product with mobility using artificial intelligence manufactured by or on behalf of the Company,” but specifically excludes vehicles.
The board agrees that Optimus could become “Tesla’s top-selling product,” calling it “the strongest example of how Tesla can leverage autonomy to benefit humanity as a whole.”
Still, the board acknowledges that “commercialization plans” for Optimus are “still in development,” and Musk now has until 2035 to reach a million units delivered.
Image Credits:Tesla India / X
All the rest
The fourth and last product milestone Musk must reach is to secure 10 million active subscriptions for Tesla’s Full Self-Driving (FSD) software, which may be the boldest goal of all. Tesla hasn’t disclosed exact numbers of current FSD users, but executives have recently mentioned figures in the “teens” as a percentage. At most, this translates to a few hundred thousand up to a couple million vehicles currently using FSD.
Beyond these product objectives, the rest of the board’s requirements for Musk focus on financial performance. To gain the full value of his compensation, Musk must help Tesla achieve a market capitalization of $8.5 trillion—making him a trillionaire in the process.
Musk has repeatedly claimed that Tesla could one day surpass Apple and Saudi Aramco’s combined value. As of now, those two giants are worth about $5.5 trillion together. Earlier this year, Musk even claimed Tesla could outpace the next five most valuable companies combined, raising his target to roughly $15 trillion.
Alongside boosting Tesla’s market cap, Musk is also expected to grow the company’s annual earnings to around $400 billion—a huge leap from last year’s approximately $17 billion in profit.
Finally, to unlock the full payout, Tesla’s board requires two key commitments from Musk. First, he must work with the board to develop a CEO succession plan—which effectively ties him to Tesla for at least another 7.5 years.
Second, as noted in the fine print, Tesla has secured a commitment that Musk will reduce his political activities in a timely fashion.
Altogether, the agreement is highly complex and filled with extraordinary, almost fantastical visions for Tesla’s future under Musk’s direction over the next decade. The same types of things were said about Musk’s prior compensation plan in 2018, but Tesla ultimately achieved all those seemingly impossible targets. (Though the award was later overturned by Delaware’s Chancery Court.)
Nonetheless, it’s striking how these new targets seem designed to bring Musk’s lofty aspirations back down to reality.
