Hey everybody. Welcome back to the Elon Musk Podcast. This is a show where we discuss the critical crossroads, the Shape, SpaceX, Tesla X, The Boring Company, and Neuralink. I'm your host, Will Walden. Tesla has embarked on a legal fight to reinstate Elon Musk's pay package valued at about $56 billion. This is despite the company's shareholders reapproving the
package for a second time. There's a stark divide between the visionary leadership that Musk embodies and the practical realities of running a car manufacturing business now. The repercussions of this decision may significantly impact Tesla's future, given Musk's business strategies in the past. Now, Tesla has long juggled 2
competing identities. On one hand, it operates as a car manufacturer facing the tough realities of producing and selling complex EVs, and on the other, it function as a dream factory driven by Musk's grandiose visions and market magic. This dual nature has historically worked to Tesla's advantage, with Musk's charisma and storytelling often over shattering operational challenges. So this landscape is shifting
though. Tesla score business is struggling right now, and Musk's hype is pushing the boundaries of fantasy, leading to reputational damage and also legal entanglements. Despite these issues, Tesla shareholders have thrown their support behind Musk's visionary identity, choosing to risk the company's future on his ambitious dreamweaving. Starting in 2013, Musk crafted a new kind of social financial phenomenon blending high tech
hype with online virality. His ability to inspire confidence in Tesla's future dominance and ambitious technical goals has been his primary value to the company. Other than his technical abilities now more than his managerial or engineering skills as well. What began is exaggerations of achievable goals like solar powered superchargers has escalating to taking pre payments for self driving capabilities that remain
unfulfilled. Now, I want you to know I am a big supporter of Tesla, but you can't overlook these things. Musk's grand visions, including robotaxis and humanoid robots, have distance Tesla from reality for a lot of people. These ideas are now central to Tesla's new values. Despite being under a federal fraud investigation and numerous civil lawsuits, this hype began to diverge from Musk from reality around the same time his power over Tesla's governance
solidified. A pivotal moment was in 2018 when Musk demanded Tesla's board to vouch for his indiacrity following SC CS fraud charges over his quote funding secured tweet. Now, that year, the board approved his $56 billion compensation package focused more on market capitalization than operational performance, studying the stage for ongoing fantastical narratives. For much of the past five years, Tesla's operational challenges were mitigated by favorable market conditions.
The model wise release coincided with peak EV hype and supply chain constraints, allowing Tesla to charge premium prices. However, as supply constraints eased and competition increased, Tesla's sales and profits have began to weigh and waver. With Tesla Score business no longer showing endless growth, Musk's leadership style faces increasing criticism. His purchase of Twitter and subsequent involvement in culture wars has further distracted him from Tesla,
according to some people. And it's also damaging its inclusive brand and market appeal, according to those people. I want to reiterate, I don't feel this way now. Instead of expanding Tesla's market with affordable vehicles, Musk invested in the divisive cyber truck. The vehicle, designed more as kind of a meme than a serious contender in the truck market, reflects Musk's penchant for creating viral yet impractical
products. Heading to Tesla's woes, Musk and SpaceX both face lawsuits from former employees alleging a toxic workplace culture and Musk's inappropriate behavior. These issues, coupled with his publicized romantic entanglements, paint a troubling picture of leadership. Tesla's recent reincorporation in Texas, which was approved by shareholders, is about more than saving $255,000 annually in
state fees. It's Musk's attempt to distance Tesla from Delaware's stringent shareholder protections after losing a case over his pay package. According to people that don't like Elon Musk, this move is seen by some as a gamble on Musk's critical role in the
company. Now, Texas, which has been attracting businesses with lower taxes and a new business court system, offers a potentially more favorable legal environment for Tesla. However, the uncertainty of new courts and potentially influential judges raises concerns about predictability in legal outcomes. Tesla's not the first company to move away from Delaware, though. Companies like Microsoft and TripAdvisor have also set more
favorable legal environments. This trend reflects broader concerns about Delaware's stringent corporate governance standards. And while the legal differences between Delaware and Texas are kind of minor, they can impact corporate decisions. For instance, mergers may require higher shareholder approval in Texas, and it's harder for shareholders to inspect company books there. These nuances can influence corporate strategies and also
governance. Now, Delaware's extensive legal precedents provide A level of predictability that Texas lacks. This predictability is valuable for corporate boards and attorneys in assessing legal risks and outcomes, something Texas courts will need time to develop. And Tesla justifies its move to Texas by highlighting its innovative spirit in the minor financial benefits.
The company argues that embracing new approaches aligns with its culture and history of taking bold steps now, despite this relocation, legal battles over Musk's pay package are likely to continue in Delaware courts. This ongoing litigation underscores the complexities and risks of corporate governance under Elon Musk's leadership. And as Tesla navigates these challenges, the future hinges on Musk's ability to balance his very ambitious, visionary ways with practical business realities.
The company's success will depend on addressing operational hurdles while maintaining the innovative edge that is defined as brand now. Tesla's journey under Musk's leadership remains a high stakes balance act between visionary innovation and operational execution. The legal battles and corporate decisions unfolding now will shape the company's trajectory in the years to come. Hey, thank you so much for listening today. I really do appreciate your support.
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