Tesla Board Backs Musk with Massive Share Grant Amidst Growing Challenges
CEO’s Future Secured as Company Faces Declining Loyalty and Legal Setbacks
Tesla’s board has approved a substantial new share award for CEO Elon Musk, valued at nearly $30 billion. This move aims to solidify his leadership during a critical period, as the company grapples with waning customer loyalty, slowing sales, and a significant legal judgment.
Massive Share Award Aims to Retain Musk’s Focus
The approved grant, comprising 96 million shares, follows a contentious 2018 compensation package that was voided by a Delaware court in December 2024 due to procedural flaws. Musk is appealing this decision, but Tesla’s board has opted to move forward with the new award, citing the need to “incentivize him to remain focused on Tesla” following a period where his political involvement reportedly harmed the brand.
Customer Loyalty Plummets Amidst Brand Association with CEO
This significant share allocation appears to have provided an initial boost to Tesla’s stock, which had seen a 24% decline year-to-date. However, the overall outlook remains precarious. Tesla’s brand is increasingly intertwined with its often polarizing CEO. Following an endorsement from Donald Trump, customer retention has suffered significantly in the United States. Data from S&P Global Mobility indicates that repeat purchase rates have dropped from 73% to just 49.9% in under a year, with a sharp decrease in new customer acquisition.
Competitors like Rivian and Polestar are now attracting more customers than they are losing from Tesla. The struggles are not confined to the U.S. Tesla’s European performance has also faltered, with sales down 45% in recent months, allowing Chinese automaker BYD to surpass Tesla in registrations in April. Recent registration figures from Sweden, Denmark, and France further highlight these difficulties.
China Deliveries Show Sixth Decline in Seven Months
Deliveries from Tesla’s Shanghai plant continue to be a source of concern. Preliminary data from the manufacturers’ association shows an 8.4% year-over-year decrease in July shipments, marking the sixth decline in seven months. Intense competition from domestic brands such as BYD, Xpeng, and Xiaomi is intensifying, prompting Tesla to prepare a new six-seater Model Y variant for the Chinese market.
Florida Jury Awards $243 Million in Fatal Autopilot Accident Case
Adding to Tesla’s challenges, a federal jury in Florida has ordered the company to pay $243 million in damages stemming from a 2019 accident. In this incident, a Model S operating on Autopilot failed to stop at a stop sign, resulting in the death of a young woman and severe injuries to her partner. This verdict represents a significant legal setback for Tesla, marking its first major jury loss after numerous out-of-court settlements and favorable rulings.
The reliance on advanced driver-assistance systems, like Tesla’s Autopilot and its Full Self-Driving capability, remains a central tenet of Musk‘s vision for the company’s future in autonomous driving. However, this recent judgment underscores the potential legal and safety risks associated with the technology.
