Tesla Just Laid Off 10% Of Its Workforce. Now Elon Musk Wants More Money

Tesla Just Laid Off 10% Of Its Workforce. Now Elon Musk Wants More Money

Elon Musk is no longer the world’s richest person. In fact, he’s fallen all the way down to third place on Forbes‘ real-time billionaire list, behind LVMH CEO Bernard Arnault and Amazon’s Jeff Bezos. But that could all change if a court-rejected 2018 pay package is approved by Tesla shareholders.

Welcome to Critical Materials, your daily roundup for all things EV and automotive tech. Today, we’re talking about Musk’s big payday. Plus, Rivian is laying off more workers and Mexico looks to put a stop to incentives for Chinese EV makers.

30%: Tesla Lobbies For Elon Musk’s $56 Billion Payday

Elon Musk

After a judge ruled in favor of a lawsuit challenging Tesla’s unprecedentedly large $56 billion compensation package for CEO Elon Musk, Tesla’s board is asking its shareholders to vote in favor of granting it to Musk based on performance merit of previous years. And it’s doing so in perhaps one of the most unhinged ways possible: an independent website that puts the CEO on a pedestal. The site “Support Tesla Value” is all about “Protecting Your Investment and Tesla’s Future.” 

The site shows off stats around Musk’s performance, praising him for delivering “results that most thought were impossible” and urges shareholders to vote in favor of the CEO’s multi-billion dollar compensation package.

Musk’s pay was stymied after an investor filed suit back in 2018 regarding the disclosure of the compensation package. And after sitting in legal limbo for five years, a Delaware judge rejected the compensation package earlier this year, sending the CEO into a public tirade regarding incorporating Tesla in Delaware.

The board is now putting the compensation package back on the table for shareholders to vote for, along with a proposal to incorporate the company in Texas. According to Reuters, Tesla did not modify the compensation package that was thrown out in court. Instead, it is using a Delaware corporate law meant to fix small procedural defects via a shareholder vote.

To show support of the board, the site also features a personalized letter penned by Robyn Denholm, who replaced Elon Musk as Tesla’s board chairperson as part of a $20 million fraud settlement to the U.S. Securities and Exchange Commission (SEC) in 2018.

Separately, Denholm wrote the following to Tesla investors:

Because the Delaware Court second-guessed your decision, Elon has not been paid for any of his work for Tesla for the past six years which has helped to generate significant growth and stockholder value.

That strikes us—and the many stockholders from whom we already have heard—as fundamentally unfair, and inconsistent with the will of the stockholders who voted for it.

Now, Tesla is no stranger to guiding its investors on how to vote for options that it deems to be in the company’s best interest. The company regularly issues advice on how it prefers shareholders to vote for certain matters, but typically that is performed on its central investor site, not a brand new domain.

Tesla is in a strange place right now advocating for this particular pay package. Its sales are way down, reports of its $25,000 car being shelved in favor of a robotaxi are ravaging headlines, and its stock price is down 37% this year (which makes the 2018 package previously valued at $56 billion worth around $45 billion today).

Keep in mind that Tesla also cut around 15,000 jobs this week. Musk’s $56 billion package would be the equivalent of each one of these employees earning $3.7 million. Granted, a salary payment is not the same as the compensation package being debated for Musk, but it certainly puts compensation disparity into perspective.

If Musk’s pay package is approved, it could potentially open up a door for companies to nullify the decisions of Delaware’s chancery court with a shareholder vote—even if it breaches fiduciary duties.

60%: Rivian Cuts Another 1% Of Its Workforce

Rivian R1S Production

Rivian will commence its second round of layoffs this year by slashing another 1% of its workforce.

The electric automaker announced on Wednesday that it will cutting additional positions as part of ongoing cost-cutting measures aimed at offsetting a lower-than-anticipated 2024 production output. This is the second time Rivian has cut positions in 2024, the first time being a 10% cut of its salaried staff in February.

At the end of 2023, Rivian employed 16,790 individuals, meaning this job cut could affect as many as 150 workers.

“We continue to work to right-size the business and ensure alignment to our priorities,” the company said in a statement to Reuters. “This was a difficult decision, but a necessary one to support our goal to be gross margin positive by the end of the year.”

Rivian has also taken on a number of other cost-cutting methods over the past year. Not only has it re-negotiated certain contracts and began to build certain parts in-house, but it also is working to upgrade its production line to be more efficient in an effort to reduce cost.

But perhaps the biggest cost-cutting measure Rivian has announced in recent weeks surrounds plans for its upcoming $5 billion factory in Georgia. The automaker has effectively paused the building of this site, which was slated to be the future home of the smaller Rivian R2 and R3 vehicles. Instead, it will begin production at its existing facility in Normal, Illinois.

90%: Mexico Effectively Halts Incentives Offered to Chinese Automakers

BYD Yuan Up

Following mounting pressure from U.S. officials, Mexico has reportedly begun to halt offering incentives to Chinese automakers looking to set up shop within the country.

Sources familiar with the matter have reported to Reuters that Mexican officials haven’t had a meeting with Chinese car companies in months. Typically, these meetings discuss incentives to do business within the country—tax breaks, land deals, or other monetary means—to promote economic growth within its borders.

The stoppage comes just as U.S. lawmakers are pushing to rework the trade laws governed by the United States-Mexico-Canada Agreement (USMCA) due to the possibility of foreign automakers using the agreement to backdoor cheap EVs into the U.S. market without facing heavy tariffs.

Reuters explains the current state of things:

The last meeting between top Mexican officials and a Chinese automaker was in January, the sources said, with executives of BYD Co—one of the world’s largest electric vehicle makers by sales.

At the meeting, Mexican officials made clear they would not give incentives like those awarded to automakers in the past and that officials would be putting on pause any future meetings with Chinese automakers, said the sources, who asked not to be identified.

Presently, about 20 China-based automakers sell vehicles in Mexico. However, none of those manufacturers actually have plants within the country itself.

U.S. automakers have been pushing for protectionist regulations against Chinese automakers for some time. Recently, a trade group called a flood of cheap, made-in-China EVs “an extinction-level event for America’s auto industry,” specifically calling out the loophole in the USMCA that would allow these automakers to easily slip their cars into the U.S. market at prices well below domestic manufacturers.

While the report is currently unconfirmed by both Mexican President Andres Manuel Lopez Obrador and U.S. officials, a White House spokesperson told Reuters that President Joe Biden would “not let Chinese automakers flood the market with vehicles that pose a threat to national security.”

100%: How Cheap Do EVs Need To Go In Order To Combat China?

A Chevrolet Bolt EV charging from a FreeWire battery-powered fast charger

With eyes on affordable Chinese EVs that are threatening the U.S. auto market, manufacturers and trade groups are trembling. Still, no single car company has managed to offer an EV in the price range of, say, the $14,000 BYD Yuan Up.

In fact, you’ll be paying double that if you want the nation’s cheapest new EV, the Nissan Leaf. That leaves a rather large gap that is currently slotted by cheaper gas-powered cars like the Nissan Versa, Mitsubishi Mirage, Kia Forte, Chevy Trax, and more.

No wonder why American car companies are worried about an influx of affordable EVs.

So how low would U.S. automakers need to offer vehicles at to compete, and what trade-offs would you be willing to sacrifice for that sweet, sweet price?

Tesla, the renowned electric​ car company led by CEO Elon Musk, recently announced a significant workforce reduction by laying off⁣ approximately 10% of its employees. This move, aimed at cutting costs and improving profitability, comes as Tesla faces mounting ⁢pressure to meet production targets‌ for its Model 3 sedan.

The decision to lay off​ employees, while a common tactic employed by companies seeking‍ to streamline operations, has raised concerns about ⁣the⁣ state of Tesla’s finances. In a leaked email to employees, Musk cited the need to trim costs​ in order to achieve ‌long-term sustainability and profitability. This announcement comes on the heels of Musk’s earlier statement that Tesla ⁣was ⁤undergoing‍ a “thorough​ reorganization” to address production bottlenecks and other challenges.

Despite ⁤the layoffs, Musk⁤ has made ⁢it clear that Tesla is still in⁣ need⁤ of additional capital to fund its ambitious growth plans.⁢ In a recent shareholder ⁤meeting, Musk alluded to the possibility ⁣of raising more capital through debt or equity financing in the near future. This statement has led to widespread speculation about the financial health of Tesla and raised questions about the company’s ability to meet its obligations.

The news⁤ of the layoffs and Musk’s plea for more ‍money have sparked mixed‍ reactions from investors‌ and ⁣analysts. While some view this as a necessary step to ensure Tesla’s long-term viability, others ​have expressed doubts about the company’s ability to navigate the ‌challenging landscape of ⁢the electric car industry. With‍ competition heating up‍ from ⁣traditional automakers and other tech companies, Tesla faces an uphill battle to‌ maintain ‌its position as a‍ leader in the‌ electric ⁢car market.

In the midst of ⁢these developments, Musk remains steadfast in his ⁣vision for Tesla and​ its potential to revolutionize ⁣the ⁢transportation industry. Despite the challenges​ ahead,‌ Musk continues to push forward with new initiatives such as the development ‌of electric semi-trucks‌ and solar energy products. Whether Tesla will‍ be able to weather the storm and emerge stronger remains ⁢to be seen, but one thing is certain: Elon ‌Musk’s determination and drive will continue to shape the future of ⁤the‍ company.