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Let me tell you we have a new star. A star is born.
Elon humped up on Mars Jus and Kennemy. He is the Thomas Edison plus plus plus of our age. Probably his whole life is from a position of insecurity. I feel for the guy.
I would say ninety eight percent really appreciate what he does.
But those two percent that are nasty, they are out in four post. We were meant for great things in the United States of America, and Elon reminds us of that.
I'm very disappointed in Elan.
I've helped Elon a lot.
At Welcome to Elan and Bloomberg's weekly podcast about Elon Musk. It's Tuesday, September ninth. I'm your host, David Popatoppolos. Okay, So Elon, it appears, just may have himself a new Tesla package. I'm I mean a very very big pay package. If all goes well, and you know, every home in America has an optimist robot wiping baby bottoms and a driverless car to parked in the driveway, and Tesla's stock is worth many times more than it is today, well,
then the package could be worth one trillion dollars. Max, that's that's trillion with the T. Yeah, I'm getting this right.
I mean, if it's wiping the baby bottoms though, that's a trillion dollar opportunity right there.
Okay, you know that guy, that's co host Max Chafkin. Now, all the package needs is shareholder approval. The vote comes at the company's annual shareholder meeting on November sixth. We'll look ahead to that vote and break down the inns and the outs and the whys of the package the Tesla board is proposing. And also at that meeting, less dramatic perhaps, but also very important, shareholders will vote to determine if Tesla should start investing in Elon's AI company XAI.
Will be joined a little later by Bloomberg Tech reporter Kurt Wagner at the sci Us that potential Tesla XA ideal. But first for Elon's payday. Sitting here with me is that guy, Max. Hey, Max, Hey, David, and over in Oakland Bloomberg's top muscologist, Dana Hall. Dana Hello, Hey, Hey, okay, so but wait a minute, by the way, Max, congratulations, you have big book news today.
Yep, that's right, David and listeners. The paperback of my book The Contrarian, which is a biography of Peter Teal, is out today as we're recording this Tuesday, September ninth. I actually originally wrote it in twenty twenty one, but I updated it for the paperback. I wrote a new essay trying to kind of make sense of Elon and how he related to some of the stuff I wrote about back then. And yeah, I wrote a whole whole
new essay about it. Basically, the argument in it, I'll keep the Church Sweet, is that Peter Teal's kind of activism and advocacy and waste and his money became kind of a model for Elon during the last election cycle. So hopefully it's something for people listen to this podcast.
I've read it.
I'd really appreciate it if you checked it out and review it.
And so, oh, I already read it.
Do I need to reread it?
Yeah? You do from cover to cover?
Jeez, Okay, then I shall excellent. Congratulations again, Max, very cool. All right, So Dan, before we talk about this new or potentially new Musk pay package, let's just step back a little for a minute and talk about the old Musk pay package, the one that ran into trouble in Delaware court.
What exactly is the status of that? Is it totally dead? Mostly dead?
What?
No, not at all? So the Delaware Chance recurt struck down the pay package. Tesla appealed the pay package to the Delaware Supreme Court. Oral arguments for that are in October. In the interim, Tesla has already awarded Musk like a third of that twenty eighteen pay package, as like a hedge, depending on which way where it goes. But then you know, in Elon's mind, he still hasn't been paid, and he would like very much like to get paid, particularly if they want him to stick around. So this is a
new it's like the go forward pay package. Like, forget about Delaware, forget about twenty eighteen. That's all up in the courts. How do we incentivize Elon to stick around for this new wave of growth which he sees as all being about optimism and robotics at AI.
But to Dana's point, Tesla very much still plans to give him that money, that old pay package.
What was that old one worth?
I mean, it was like fifty billion dollars at the time.
Jump change.
Max.
Yeah, yeah, but it's fluctuated a bit because it's the it reflects the stock press under So so fifty ish billion, give or take, still significantly smaller, I think if my math is right, then one trillion.
Yes, So, Dana, here's the thing.
When he had that package, and as you always reminded us, and as Max is doing again, so now there was no like truly set number on it because the value of the package, that old package fluctuated with the value of the stock and some other things. But that package was deemed, if I'm remembering correctly, totally unprecedented and slightly inconceivable to us mere masses. So how do we go from a number that already seemed large to a number
that seems inconceivable. Why did the board feel obligated to say, hey, Elon, here's up to potentially one trillion.
Dollars because Elon threatened to quit. So here's the thing that you need to understand about Elon and Max and I have talked about this a lot. Like money alone does not motivate Elon.
He is already the.
Richest person in the world. What motivates him is really huge Swinging from the fence's goals that everyone thinks is crazy and control, and what he wants is a bigger
stake in Tesla. He wants twenty five percent. So the new pay package is a series of twelve trenches, and it's like a video game, like as you hit these milestone, you unlock a trnch, and the tronch is both market cap which goes up with these you know, the first tronch you have to hit two trillion dollars, the second tronch is two point five trillion, all the way up
to the over eight trillion dollar mark. But you also have to hit operational milestones that have to do with revenue and like products like robotaxis, FSD, take rate, all this other kind of stuff. And with each tranch that Elon unlocks, presumably I mean shareholders win too, right, Like if the company goes for me worth a trillion dollars to over eight trillion, everybody wins. That is the premise of the pay package. And with each trnch, Elon gets
more stock, which gives him more control. So conceivably, by the end of this he'll be a trillionaire and I'll have a twenty five percent stake in the company.
I would amend what Dana said just slightly, which is to say, I agree with her that Elon does not care about money really, but he does care about really, really large amounts. And I think Dana's right, like a big part of this, like the money is part of it. And of course he has big plans, right he wants to colonize Mars. He can definitely find a use White Baby trillion dollars. But also like, this is a way I think to take the focus away from Tesla's current issues.
And I went back to look at the context of that twenty eighteen award, because you're right, David, like at the time there were headlines like this is the biggest this is like more money than anyone could could conceivably be and the headlines were very similar. But on the other hand, like, if he were to do this, it would be like an amazing, unprecedented amount of growth. Now, what was happening in early twenty eighteen when that award was made, Well, Tesla was basically in crisis. They were
frantically struggling to produce Model three Sedans. They were in what Elon you know, would took to calling quote unquote production hell, this all kind of seems quaint, but at the time it didn't seem totally clear that he was going to figure out a way to like actually mass
produce this car and do so profitably. And as Dana remembers, well, they were short sellers who were convinced the company was going out of business, and this was kind of a way back then to say, Okay, let's ignore the problems for a second and think about what the future could look like. And I think that's what's happening again. This is a way, in addition to incentivize must to keep them from quitting, to from the point of view of a lot of Tesla investors, to pay them what is worth.
It's a way to change the channel and to create some sort of defined goals. Elon loves talking about these kind of abstract, far off goals, stuff like optimize wiping baby butts without a clear timeline for doing so. But now look, we have a timeline. Sort of yeah.
I mean, there is seemingly a somewhat fantastical quality to it all, and the changing the narrative thought is an interesting one, although I guess it's not super intuitive to me, And yet I look at the stock price, and the stock price Loan and Behold is grinding ever higher? Is that I don't I know, you don't follow every twist and turn of the stock price. But is some of that rebound in the stock predicated on the fact that it looks like the board has Elon signed on for the long haul?
I think so, I mean, that's always you know, they're sort of in this like mutually assured chokehold right where like the board needs Elon, Elon threatens to quit, the board tries to appease him. He is the sort of singular person who's got the vision of the company. He's
been the CEO since two thousand and eight. But another way to think about the pay packages is if the twenty eighteen package was described as like a moonshot that everyone thought was crazy, like he did actually achieve all the milestones and then some So now they're sort of re upping the same conceit, although now it's like a Mars shot and we're talking trillions not billions. And Musk has always said that he thinks that there's a path for Tesla to be the most valuable company in the world,
and if that's what it takes to motivate him. I think the board has made the deduction like, well, why not, let's do whatever we can to motivate it and Wall win in the process. And I think that this will easily pass at the shareholder meeting on November sixth, And clearly there's gonna be like a whole campaign to get people engaged with shareholders, particularly the retail fan base. And yeah, it's like unprecedented incorporated America. But but Elon is an unprecedented figure.
That's I was going to ask you that, so you see it totally sailing through, Max, you as well. This is like a ninety nine to one vote.
Yeah, this is like Vladimir Putin's Latimer reelection. Yes, it's going to pass. This is a huge amount of money. And if you're if you're mad about inequity in the world, there are lots of reasons to sort of think this is a bad idea. I mean, it is kind of funny that like Elon Musk has spent the last I don't know a year or so, like just unbelie alienating his customers, like just totally taking essentially like a boring
company flamethrower to his existing business. And the board has turning around thanking him and going to write him like a gigantic check. But as Danna says, what they're doing is saying, hey, if you can back up these these very brand statements that you've been making, Yeah, sure, we'll pay you. There's one thing I don't did Dana mention that that there's a succession planning part of this as well? I don't know that, like the latter tranches.
With one of his kids, require him to.
Come up with a succession plan and for the board to approve it. I think that also does kind of answer some of the concerns that you were seeing even from Tesla bulls around the time when Elon was kind of at his most erratic earlier.
This my money's on X.
If that's what they're he's grooming him at a young age, just get him, get him right there within twenty five years actually running the show.
All right?
So Dan, it sails through a November sixth in the shareholder meeting. Is there potentially any other court obstacles to overcome on this one too? Just like the prior one or the fact that Tesla is now domicile in Texas means that are no longer domicile than Delaware means nah, it's the core problems are a thing of the past.
Yeah, I think that now that they are you know, legally domiciled in Texas, it will be much harder to bring a lawsuit, in part because there's also like the shareholder that brought the lawsuit in Delaware was like it was like a pocket plainiff, right, Like it's you know, basically the way these things work is you have plainiffs attorneys who like find a plaintiff to bring suit, and the plaintiff might own like ten shares. It's gonna be much harder to do that in Texas, and you have
to have a larger shareholder. So I just think that they moved to Texas for a reason and they've got a very favorable court system there. The proxy also has some interesting language about how Muscus to quote unquote like wind down his political work within a reasonable timeframe, but it doesn't exactly specify what that means, Like does that mean he can no longer like fund you know, candidates
and like elections. Does it mean that he has to stop like, you know, ripping on politics on X Like It's very ill defined.
Yeah, I mean he's been doing a lot of politicking over the last last couple of days even so I know, so I don't know.
But is that just can eat politic abroad or is it just domestic politics or all politics? I mean, can you, I don't know, go on and on about UK politics as long as you don't mention US politics, Hey.
Dana, just question the political thing? Is that this proposal for political neutrality or that's a different No, it's separate, Okay, Okay.
There's a sharel of our resolution about political neutrality that the Tesla board is urging everyone to vote know on. But within the proxy itself there's language about how they would like Musk to wind down his political activities in a reasonable fashion.
Dana, before we move on to Tesla and Xai, anything else we need to know about this package.
I just would really encourage all listeners of the show and investors to actually read the proxy. It's over three hundred pages long. Three board members are up for reelection, there are sixteen resolutions. It's a big package. If you're an investor, you really need to read the proxy.
You know, Max is funny. The other day, I think when we had talked about a similar musk package. But if Elon's worth one trillion dollars, come on, you can't tell me that I'm not worth a billion. That I don't I'm not one one thousandth right as good as Elon.
Give me a give me a give me a billion. Misplayed this negotiation.
You gotta spend uh, you gotta start a political party, spend months fighting with the president. There's just a lot of lot of you haven't done that. Elon has done that.
That fine, pam, Okay. So we're now joined by Bloomberg Ace Tech reporter Kurt Wagner. Kurt, Hello, and Kurt, by the way, no hard feelings. I think the last time I introduced you, it got you know, I kind of got in your face.
You're good with that. We're good, We're cool.
I'm sorry, who's talking to me about your name against sir?
Of course we're good.
We're always good on this pod. Yeah, that's all good.
Welcome back, Hurt. So listen, we just talked about the pay package, which will be voted on at the shareholder meeting and no members six and then shareholders are also going to vote on whether Tesla should go ahead and invest in Xai tell Us a little bit about what this investment would look like.
So Xai is Elon Musk's ai startup. It's been around for a little over two years now, and it's been raising money like crazy because the company is out buying all these expensive GPUs and data centers and trying to keep pace with the open aies of the world, the Googles of the world on the ai race, and so Elon has been fundraising heavily. He has talked publicly on several occasions on his x account about the idea of
Tesla becoming an investor in Xai. But you know, instead of just simply making that decision himself, he says, we are going to put this to a shareholder vote, and so that is what will happen in November, is that the shareholders will decide should they essentially encourage the board to invest in Xai. Now, there's a few things I would point out, at least my interpretation of the proxy. The first is that they're not stipulating a dollar amount.
They would leave that up to the board. Whatever the board deems appropriate would be sort of the decision here. But second, I my understanding, if you go to page one seventy six of the proxy. I'm sure everybody has been scouring this thing. It seems that this is a recommendation. It is not a binding vote. So even if shareholders say yes, we should invest inn XA, or even know
we should not, those are just recommendations from shareholders. My understanding is that the board can make this decision one way or the other on its own, regardless of the outcome of.
The vote, So non binding. In other words, to eat right. Indeed, even if shareholders this doesn't seem terribly likely, but shareholders say no, we're not going for this, the board just says, hey, no, we're going to do it anyways.
That's my understanding. You know, it says that it's a non binding vote and that the board will continue to invest in AI based on its fiduciary responsibility. So in theory, even if shareholders say, please, don't do this, but the board believes it's in the best interest of shareholders. Okay, My again reading of it is that they can kind of make the decision they want, right.
So Max, I ask you, sir, is this a bailout for Xai and Albatross going forward for Tesla or a great opportunity because what's hotter in the world, my friend than Ai.
I mean it could be either, right, and I think if you're looking at Tesla like a normal company, this would be insane. I mean, you have a CEO who is ostensibly working on AI, the hottest industry there is, who has a side project started this other ostensibly maybe competing AI thing, kind of started.
Poaching competing with Tesla. He's poaching employees. Xai is poaching from Tesla.
Well, their employees have gone from Tesla at XAI. I don't think Elon Musk would would do something as as ruthless as try to try to poach employees from one.
Company to the other.
But I'm just saying, like from a normal perspective, like this is crazy. It raises so many different issues. From an Elon in perspective, I hate to say it, but it's totally normal. This is just like this is like Elon being Elon. He in so many different ways, doesn't
operate as if these companies are separate. I'm sure that we're good reasons in his mind to create Xai as a separate and he allows it to raise money, you know, on private markets take advantage of this boom and venture capital like you can probably compensate these AI engineers in ways that are are helpful if you're especially if you're trying to recruit from some of the other privately held AI companies. So so, I don't know, I mean, it seems like this could turn into an albatross at the time.
I think in retrospect, Tesla's purchase of Solar City, which Elon Musk also co founded.
Yeah, I was gonna go there. So now that you've jumped the shark, so tell us remind us a little bit about the Tesla Solar City saga from years ago.
Well, right, So, so Elon Musk started this solar company, Solar City, that went public and then ran into a lot of issues. Basically, it's its main business, which was installing solar panels, became less and less profitable, and Tesla eventually bought it in what, at the time to some critics looked like a bailout. I think in retrospect it does look that way, because Tesla has not done as much with solar than as I think some some sort
of solar fans, you know, would have hoped. I think, you know, we could look back at this that way. On the other hand, you know, if when the singularity comes and when we're all praying to our robot gods and they're not already Yeah, not me, but I know that I understand that some are. But you know, maybe this will look like a smart move if Tesla's in the AI business, Elon Musk is somewhat distracted, has this
other AI company. I do get the argument that even if you're just a Tesla shareholder being totally kind of rational about this, that you would just say it'd be better if these were one thing.
Dnaholl what say you?
Well, this is where related party transactions get super interesting because you have to remember that Xai is a customer of Tesla. Tesla sells their megapacks, which are the batteries that power utilities, you know, the big energy storage product that Tesla is banking on to Xai. This data center in Memphis that Xai is building is like now filled with megapacks. And so there's a lot of ways in which the companies are already overlapping with each other. Groc
is now being integrated into Tesla's cars. So I guess I'm curious for Kurt, like, do you think there's do you think that Tesla would buy Xai or would like which vehicle is more important to elon going forward?
Before you answer that question, Kurt, I will say, right, so you have Xai buys x right, indeed, now does Tesla buy Xai or to I mean, like one fish keeps eating the other, what's the next fish to get consumed here?
I think it really depends on the amount of money invested. We saw SpaceX, for example, already invest in Xai, and I believe it was a two billion dollar investment. In the world of tech right now, and certainly in the world of AI, that's relatively small, right. This is not a massive we are chaining ourselves to this company forever and if they go down, we go down with them kind of situation. And so if that's what we see from Tesla, is you know, hey, here's two billion dollars,
here's five billion dollars. Other than the fact that it's a massive conflict of interest, I think we probably all agree this same person running two companies. I don't think it's that dramatic of an idea to say, hey, there's this up and coming AI startup, let's pick our horse here. If they decide to go the opposite, and I think Xai is raising money somewhere around two hundred billion dollars
or something like that. So if Tesla were to try to swallow this whale hole, that is where I think things become incredibly not only you know, probably inappropriate if you're a Tesla shareholder, but become much more potentially damaging for Tesla too, because now all of a sudden, you are in that situation where if Xai goes down, you're probably going to have a meaningful decline with it. And so until we know the investment amount, it's a little bit hard for me to say whether this is like
the worst idea or the best idea ever. We have heard Elon say he doesn't believe Tesla should buy Xai. Now we all know that Elon's saying one thing doesn't necessarily make it so, But as far as what he has said publicly, he sees this as an investment, not an acquisition, And I think until we know the dollar amount, we kind of have to reserve a little bit.
And he did a poll a while back where he floated the idea of was it wasn't it five billion? But then the I think it was five billion, and figure.
But then what were what were the pole results? It's like flat putin.
Well, you'd be shocked, David to learn that the pole that Elon put out on X was in favor of such a thing. So I'm sure that's surprising.
Even at two billion or five billion or whatever. Sure, Like, what's the argument for a Tesla shareholder that this is a good use of their cash because like they could also invest in open Ai or Anthropic or one.
Of the other.
I don't understand, except like, what's gonna make our CEO happy? And he's gonna he's gonna baby be happy, like if a happy Elon is a happy Tesla, Like.
I mean, like, what's going to go out and sink money at the Sam Altman's company. Come on, he'll be He'll go around Poudy phase for months.
Two things, one part of the investments, like, yes, could they invest two billion dollars in open Ai they I'm sure sureholders would. But the open ay is not going to take Elon in Tesla's money, right, So okay, So some of these avenues are close to them. But the thing you just said actually in Elon Inc. In the world of Elon, is a real thing, like do you keep Elon happy, do you keep him motivated? Do you keep him feeling like, yeah, spending money on and time
on his Ai startup? That does not benefit a Tesla shareholder. And so if you're sitting there saying, hey, I think Xai and everything Elon touches is going to go from two hundred billion to a trillion, then you're a shareholder saying this is my chance to five x my my
investment in Xai. So again, these are all hypothetical, but you have to and I know you know this, Max, but if you are an Elon fan and Elon stan and investor, this is the way you think of it is that you are building and buying into the world of Elon Musk. And that's what makes sense, I think to a lot of people.
All Right, Dane, so you told us the Musk pay package totally sales through November six, So too, then does does this one? Whether it turns out to be exactly binding or not, this one gets thumbs up from shareholders.
As well, I think. So, I mean Elon has signed that he approves it, and we have to remember that Tesla has a very engaged shareholder base. Retail investors actually do vote their shares. You know, the board will be doing a lot of discussions with the big institutional investors, and I'm sure they'll be campaigns around these various items that will be before everyone.
I mean, if you do think about the challenges that some of these AI companies face, which is that, like it's not clear that the returns from using large language models are awesome. You also wonder, like how easy is it going to be for them to say, like double sales from where they are now. Like, obviously a lot of big companies are purchasing licenses for large language models.
This is potentially a growth field, Like if you buy into the idea that Elon's going to put a million starts on a million optimizer year or whatever, like this is definitely perhaps a more promising growth channel than like Rock's current like number one revenue stream, which is I think memes.
Basically, yeah, that's a big that's a big business.
Soon to be video games, and I think like an AI movie.
So for posterity, here here's my call. Right Indeed, Xai bought X, Tesla will at some point in the not so distant future buy XAI SpaceX, then buys Tesla and then the last one. The US government buys the whole thing, buy SpaceX.
For fifty dollars the Russian nestindl of Ink.
All right, let's sen Kurt stick with us for a second here, because we're actually this is a little gift that we were handed. In a story from Politico yesterdays, I feel like we have another. Cage match is still a thing, Max. We haven't done a cage match in a long long time. But you remember the Scott Bess and Elon musk Uh streaming match where apparently there was even maybe a little there was a little freakus.
There was a little altercation, a little rough housing.
There are some reports of a shove, I believe maybe like a physical alter It depends on who you're who you're listening to. I think Steve Bannon mentioned a physical something, a physical present.
Elon is a big guy. Yeah, he's a pretty big.
Guy too, And apparently at one point bessn't the Treasury secretary. This is back when Elon was in Washington twenty four to seven, back in the winter and early spring. Best In at one point it said to musk as they were going nose to nose about some some point or another.
You you you now.
At the time, we all thought and assumed it was just Musk that like, you know, obviously Musk.
Had just brought it out of it, brought it out of him Ian.
I think the Atlantic wrote that, you know, Musk brought it out of this mild mannered billionaire. Turns out, we find out this week Scott Bessen is no mild mannered billionaire. He and Bill Poulty, right of of now rising fame, head of the Federal Housing Finance Agency and a and a prominent Trump loyalist, went toe to toe themselves just the other day, with Bessen getting in Poultice's face and saying to him, why the are you talking to the
president about me? He likes the word I'm noticing here, I'm gonna punch you in your face, So.
The same phrase basically.
So kind of yes, the same word at least. So what I'm thinking is it's either the best in Musk. One has to happen, because Besson still seems like he's got some of these anger, some of the animosity I feel like is still for Musk, or so we get that, make that happen, or we go the three of them are ringing.
So, Okay, I'm really glad you brought this up, David. This really brings up a lot of important questions. I think you're right that you could you could say, well, actually, what we've learned is that Scott Beson is just like a guy likes to pix it up, you know, who can get physical, and that reputation of being mild mannered was like not true all along, and we just you know, we were lulled into that sense. But he has a Southern accent, he's from like us. He seems like a
you know whatever. But anyway, I think what it could be is that bessent't like essentially was transformed by this experience with Musk.
Now, recall that I'm.
Joking mostly, but I do think you think about the conflict between the two men, it was not clear to me or I think to anyone else, that Bessnt prevails in that conflict. Remember, Elon is Trump's number one donor. He's like the the certified best friend. He's in family photos, like, like, who is Scott Besson? Exactly right, He's a prominent hedge fund guy, but certainly not as high profile as Elon Musk.
It would have been possible for Bessint to go toe to toe with Elon Musk and for this to end with bessentt in some kind of weird Oval office exit with his own black eye, just like Elon had hot, But instead it ended with Elon of Cour exiting the Trump administration, essentially like Taylor.
Well, you're telling me best, I'm saying Bolden.
In Bolden, he has figured out like this is this could be a way to take on.
Mosk and Bolden he turned Scott Besson into a different man. Kurt Wagner, what say you?
Oh my gosh, I mean, I feel like the least qualified person to comment on this thing. But what I will say is that we have seen instance defense several instances here of Elon also sort of picking some fights with people. So I think we just have two two rowdy boys over there who are trying to who are trying to show their uh this.
Is I mean, this gets this gets pretty far removed from Elon, But I think this is an intelligent way to deal with a rival in the Trump administration. And that is what Scott Bessont learned in the Elon thing. Because the way these feuds play out is in the media. The way you get media attention is yeah, by like a big room of people to reporters and and sam f word, which I would never do.
I feel like Dana, this conversation is beneath Dana.
She's just she's written.
Over here, like breaking news or answers, embarrassing ourselves exactly.
Someone's got to work around here. All right, good stuff, Kurt, thank you for joining. Thank you, Dana, Max brilliant as always.
Of course, always great to be with you, David and Dana and Kurt.
This episode was produced by Stacy Wong and edited by Annamasirakas, Blake Maples handles engineering, and Dave Purcell fact checks. Delon Ink theme is written and performed by Taki Yasusau and Alex Sugiurra. Our supervising producer is Magnus Hendrickson. Sage Bauman is the head of Bloomberg Podcasts. A big thanks to our supporters Joel Weber and Brad Stone.
I'm David Papadopolis.
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