(NEW YORK) — Tesla CEO Elon Musk is seeking greater voting control of the electric carmaker, threatening to otherwise pursue major projects such as artificial intelligence outside of the company, he said in a post on X.
The Tesla board, Musk said, should grant him 25% voting control, an amount that would nearly double the vote share currently afforded to Musk through his stake in the company.
The move would tie the company’s fate even more closely to its high-profile leader, ensuring Tesla will develop AI in-house at a time when the technology stands poised to shape the auto industry and a range of other sectors, proponents say.
Critics, however, caution of a risky precedent if the company’s board were to comply with the request, empowering Musk in any future dispute with shareholders little more than a year after he sold a large number of Tesla shares to help fund his acquisition of X, formerly known as Twitter.
“Musk is Tesla and Tesla is Musk and AI is a key to the future of Tesla,” Dan Ives, a managing director of equity research at the investment firm Wedbush, who is bullish on Tesla, said in a memo to investors on Tuesday.
Tesla did not immediately respond to ABC News’ request for comment.
According to Ives, Musk currently owns roughly 13% of Tesla. Before selling shares in 2022 to fund the $44 billion acquisition of X, Musk owned about 22% of Tesla, Ives added.
Musk, who co-founded ChatGPT-maker OpenAI but left the organization in 2018, announced the formation of a new AI company in July.
The possible development of AI outside of Tesla would deliver a significant blow to the company’s prospects, Ives said, citing the critical role of the technology in projects like full self-driving capability.
“If Musk ultimately went down the path to create his own company separate from Tesla for his next generation AI projects this would clearly be a big negative for the Tesla story,” Ives added.
Ultimately, the board and Musk could reach a compensation agreement in as few as three months that leaves both sides satisfied, Ives said, adding that the move would ensure some viewed by many as a tech visionary would lead “the new era of AI technology coming to Tesla.”
Gary Black, managing partner at the Future Fund, who is also bullish on Tesla, echoed the sentiment in a post on X. “Still plenty of time for the [Tesla] Board and Elon to come up with a new comp plan that properly aligns incentives,” Black said.
However, an agreement that expands Musk’s stake in the company could embolden him to assert even greater control down the road.
Such a prospect is especially concerning at a time when Tesla has weathered multiple product recalls and declining profit margins, Gordon Johnson, CEO and founder of data firm GLJ Research, who is bearish on Tesla, told ABC News.
“Musk is holding the company hostage,” Johnson said.
“The prospects for Tesla are dismal,” Johnson added, saying the demand from Musk offers him a pretext for departing the company. “He sees the writing on the wall.”
In December, Tesla agreed to recall about 2 million cars over a safety issue tied to its autopilot system, the National Highway Traffic Safety Administration said. Earlier this month, the company recalled an additional 1.6 million vehicles exported to China, citing a problem with the car’s assisted steering system.
The request for greater voting control suggests that Musk anticipates a substantial clash with shareholders over the direction of the company, Craig Irwin, an analyst at Roth MKM, who is also bearish on the company, told ABC News.
“He’s obviously worried about something,” Irwin said.
Further, Irwin downplayed the role of AI in the company, disputing the key claim made by Musk about his need for greater voting control.
“Tesla has done a great job with self-driving but it’s mostly a misnomer and cake dressing,” Irwin said. “Is this an AI or robotics company? How much do they really have? In my view, not much.”
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