We all know that the board is spineless. My guess is that the "reach out" was first CYA, and second a gentle hint to Musk to get it together. But mostly CYA. They're afraid of being sued again.
But the WSJ story and other accounts also discuss Musk wanting more money:
"Musk has complained both in public and private that despite owning roughly 13% of the company, he has been working without pay for the last seven years. The Tesla board recently formed a special compensation committee to address CEO compensation."
So a bit of push back? It's clear they don't think that he'll win the DE case. And even if Texas, if they have to vote a new package (and Musk will want one regardless!), it's going to be very hard to justify. With car sales falling, with Musk now being a drag on the company's image, with internal leadership being hollowed out, and with his announced initiatives all being on a failing trajectory, it's clear that he neither wants to run the company nor is capable of making it successful.
As for the DE SC, yes, this forms an underlying substratum of "entirely unfair". But not to Musk.
For the rest of us, the Tesla trajectory is a warning about not giving execs these types of packages. It has been a complete disaster for Tesla.
Insightful, as always. But this was a very inept way of attempting CYA, no? Putting a big story out there, only to emphatically deny it and express your confidence in Elon?
I imagine Robin was not the original source, but another board member. But the CYA would be in taking the action.
The way this year is shaping up for Tesla, Musk may just throw a temper tantrum and walk. Or may be willing to put in a COO or something of the sort to take the blame.
The situation with FSD is going to get hot very quickly. It carries huge liability risks either way. It's clear that they can't say it's autonomous on the customer cars. It's clear that they are not nearly ready to deploy autonomy on a company fleet. There's no cavalry in the distance.
Here a thoughtful meditation on the fate of Cruise is warranted. Musk's greatest desire was to get the NHTSA accident reporting order lifted. He did not get that. So now they are in a terrible fix.
On a more serious note, what about an action for breach of fiduciary Duty against the spineless members of the board, or a shareholder derivative action. Call John "For the People" Morgan
“aging and increasingly outclassed lineup.” …. he only has the top-selling sedan on the planet, lolol
As for Robotaxis, the question isn’t whether there will be accidents & deaths - there will be. The question is how many per mile driven … If that number is lower than Human drivers, he will have the auto world by the balls. As someone who has ridden extensively in Teslas with his latest FSD, I’m telling you, he has nailed it. His penchant for hyperbole may have stretched the meaning of the word imminent, but he understands it is better to get it right and be late than get it wrong and be early.
Curious, how do you consider yourself qualified to dismiss his FSD when you have openly admitted to never trying it?
You are entirely wrong about what's needed to run robotaxis. For Uber, op costs plus liability on their fleet is close to two-thirds of the fee. But robotaxis carry a much higher liability cost. And unlike Uber, they carry it for every mile they drive - not just revenue miles.
The minimum bar at which a company can even begin to think about deploying robotaxis is about five times safer. At 8-10 times safer, one should be able to begin to make money, but not much. FSD appears to be years away from 2-3 times safer. Also new hardware with higher computational capacity will be required, plus better anti-glare precautions.
I can't believe how blithely investors drink the Musk Kool-Aid.
Tesla’s op costs are lower than Uber (no Labor) and Tesla’s liability cost will be lower as well provided FSD is safer than humans. Whether FSD is safer than humans is the entire argument….. At the end of the day liability insurance costs will be determined by the efficiency of FSD.
Despite the corporate liability you claim to be so onerous, Uber posted 33% gross margins last year - placing them just ahead of Apple, and in the 98 percentile among S&P companies. The idea that a company could come along and remove the labor costs from the Uber business model, which is about 70% of those Op costs (dwarfing liability), and struggle to turn a profit is patently absurd.
I know I’m answering this late, but the data concerning Tesla’s Level 2 driver assist system is very conflicted. The robotaxi model, using that software and even backed up by remote human monitors, will be strictly liable for any accident for which it is determined the Tesla vehicle was at fault. That will affect the company’s bottom line.
Regarding your observation concerning potential robotaxi accidents, you are forgetting that unlike crashes involving occupants of privately owned vehicles with the owner behind the wheel, liability for any property damage, personal injury or death will accrue directly to Tesla. I doubt that Tesla will find any independent insurance carrier willing to take a risk and underwrite a policy. The cash drain will affect the company’s bottom line.
I suspect they will keep the insurance in-house & factor it into the cost of a ride even though there will be a line of insurance companies offering their services. Insurance companies will insure anything for the right price. That price will be based off the accidents per mile (and severity). If FSD accident numbers are lower than humans, the insurance will be lower as well - and of course, if the accident numbers are higher, the insurance will be higher ..... You also assume they keep the robotaxi fleet for themselves, which I hope they do as the free cash flow would be staggering. Unfortunately, their corporate guidance has said repeatedly it will not be the case. Guess I could hope Elon is lying ....
I carry high personal liability. Tesla would need a multi-million policy, and nothing prevents the insurance company from turning around and suing Tesla to collect if FSD is determined to be at fault.
Even though I have decades of no-claim driving, my liability insurance costs me a lot. I've been through this with a number of insurance companies. The more liability you carry, the higher the chance that you will be sued for what may or may not be frivolous damages. So the higher the projected loss per mile. The situation has become worse because of low mandated coverage limits, which now often don't even cover the cost of the vehicle involved.
Corporate liability is much higher than any personal liability. There is a huge pot of gold behind every corporate vehicle. You have no idea what you are talking about. None.
FYI, Tesla's Texas car insurance is offered through Redpoint County Mutual Insurance Company, which is a shaky proposition at best. I doubt Redpoint can legally underwrite "robotaxis" without defrauding its policyholders/ shareholders.
I'll tell you what: check back with us in July and tell us about Tesla's big robotaxi success.
You raise good points. I hold that it’s most likely that Tesla will self-insure. Insurance companies are incredibly risk averse. They certainly won’t underwrite policies during the rollout period. Any risk of claims frequency (defined aggressively in my experience) will result in termination of coverage. And the claim does not have to be catastrophic. As little as three fender benders resulting in what might be considered minor damage ($5,000 or more) can trigger cancellation of a policy. We both agree that Tesla’s driver assist system can result in accidents. How many payouts for “fender benders” do you think Tesla’s bottom line do you think Tesla can afford? From personal experience I can state that even paint damage can cost over $2,000. Replacing or straightening body work quickly ups the cost. As few as one hundred $5,000 fender benders results in a $500,000 hit to Tesla’s bottom line.
And aside from the cost in the event of accidents, another consideration is the cost of cleaning robotaxis at the end of each shift (possibly even during a shift if someone spills food or a drink or gets sick in a vehicle). Clean vehicles are essential for building a repeat customer base.
Like many economic sectors (i.e. retail and grocery stores), taxi service is a low profit, labor-intensive business. This is not the money-maker that Elon claims.
Robotaxis are not as labor-intensive as Uber/taxis. The insurance cost is still to be determined, but it won't be a liability to Tesla, it will be a cash-flowing asset. The insurance cost will be factored into the cost of rides, and I suspect Elon, a savvy businessman, will not be passing on the cost of that insurance to the riders without tacking on some profit. Having used FSD extensively, I can say with certainty it drives better & safer than most humans I know - and it's not even close.
Tell me you’ve rarely or never ridden in a common carrier (taxi, bus, metro, or regional rail) without telling me you’ve rarely or never ridden in a common carrier. Simple cleanup of public vehicles takes hours. And the mess that these workers can have to deal with can sometimes require deep cleaning which is even more labor-intensive.
Let's talk about the money...should Tornetta prevail at the Delaware Supreme Court, does the 345 million judgment handed down by the Court of Chancery+ 12% interest reserved for by the supersedeas bond associated with the appeal immediately transfer to the plaintiffs unencumbered by any fits of pique by the defendants?
The interest rate is closer to 7.5%. I'm not sure of the exact procedure in Delaware, but the bond is there to pay plaintiff's counsel if defendants fail to do so immediately after any final judgement in plaintiff's favor is entered.
I don't think so. The board is obviously terrified of what happens to the share price if Elon leaves, or is pushed out. I think our friend Mr. Bernhard Zinkhofer may have hit the nail on the head.
But they're out of options. Tesla's objective position is likely to worsen with the drop in vehicle sales. FSD is a long-shot deal that won't begin contributing any more than it now does for years, and, if they try to rush it a la Cruise, may start subtracting this year if the accounting is correct.
By the middle of next year, something's going to give. Tesla has probably reached the tipping point.
We are aligned on the state of the business, just not on the BOD state of mind.
They are hand-picked loyalists who have intertwined personal and professional relationships with Musk. I think that they are not independent enough, would fear his wrath if they went against him, and for a large part are believers.
What is more likely:
They've studied LIDAR and tracked FSD progress and don't think it will work
or they watched him succeed building rockets and the #1 electric car brand in the world and say to themselves ..."Never bet against Elon...at least until my shares vest"
While the 'coup' idea would typically make sense, these directors are chosen specifically because they're loyal and I can't think of one time there has been an action that wasn't started and decided by Elon.
My bet (and I'm a betting man) is still that this was coordinated with Elon's knowledge - but just as an option should he have decided to keep doging and/or focus on xAI - particularly given the comp stuff noted by others.
Actions:
Robin would retire
He would become Chair (See Twitter playbook) and blame Delaware
Bring in a yes man who will, for a price, take the blame for the fact that the robo-taxi doesn't work, the $25K car has terrible margins, and China is now lost.
If you read the WSJ article closely, Musk was pressuring the board for a replacement package, and apparently complaining that he hadn't been paid in seven years and that he was willing to walk away. Then came the political involvement. A compensation committee was formed.
The feint with the search for a replacement was a form of pushback.
I see now. Thank you. Sometimes I'm a bit obtuse...
Yet I find it impossible to imagine that, today, the shareholders would approve a munificent compensation package (I assume a shareholder vote would be needed under Texas corporate law, too, but perhaps that's not the case). I realize you recognize that it would be difficult.
We all know that the board is spineless. My guess is that the "reach out" was first CYA, and second a gentle hint to Musk to get it together. But mostly CYA. They're afraid of being sued again.
But the WSJ story and other accounts also discuss Musk wanting more money:
"Musk has complained both in public and private that despite owning roughly 13% of the company, he has been working without pay for the last seven years. The Tesla board recently formed a special compensation committee to address CEO compensation."
So a bit of push back? It's clear they don't think that he'll win the DE case. And even if Texas, if they have to vote a new package (and Musk will want one regardless!), it's going to be very hard to justify. With car sales falling, with Musk now being a drag on the company's image, with internal leadership being hollowed out, and with his announced initiatives all being on a failing trajectory, it's clear that he neither wants to run the company nor is capable of making it successful.
As for the DE SC, yes, this forms an underlying substratum of "entirely unfair". But not to Musk.
For the rest of us, the Tesla trajectory is a warning about not giving execs these types of packages. It has been a complete disaster for Tesla.
Insightful, as always. But this was a very inept way of attempting CYA, no? Putting a big story out there, only to emphatically deny it and express your confidence in Elon?
I imagine Robin was not the original source, but another board member. But the CYA would be in taking the action.
The way this year is shaping up for Tesla, Musk may just throw a temper tantrum and walk. Or may be willing to put in a COO or something of the sort to take the blame.
The situation with FSD is going to get hot very quickly. It carries huge liability risks either way. It's clear that they can't say it's autonomous on the customer cars. It's clear that they are not nearly ready to deploy autonomy on a company fleet. There's no cavalry in the distance.
Here a thoughtful meditation on the fate of Cruise is warranted. Musk's greatest desire was to get the NHTSA accident reporting order lifted. He did not get that. So now they are in a terrible fix.
The board ought to try to get Zach back.
Good article. The WSJ story and aftermath had a real July 20th, 1944 feel to it.
It really does. I'm afraid Rommel is in for it now.
Unfortunately board’s failings don’t matter until the stock nosedives. After that, it will be too late.
Tesla’s core business of selling EVs is rapidly deteriorating. This reality should eventually sink the stock.
What's going to take the stock is going free cash flow negative. Interest on the cash pile is now a significant part of profit!
According to the following link, on 2025-05-01 Ms. Denholm cancelled or partially cancelled some stock options.
https://www.sec.gov/Archives/edgar/data/1242782/000110465925043635/xslF345X05/tm2513581-2_4seq1.xml
this was as ordered as part of the settlement of
The Police and Fire Retirement System of the City of Detroit v. Elon Musk et al., C.A. No. 2020-0477-KSJM
https://courts.delaware.gov/Opinions/Download.aspx?id=343600
She is down to 85,000 shares. The last insider to buy any was Mr. Joseph Gebbia, who bought 4,000 on 2025-04-24.
Thanks. "Forfeiture 4s" were filed just as I was pushing the publish button. I'll revise my footnote when time allows.
On a more serious note, what about an action for breach of fiduciary Duty against the spineless members of the board, or a shareholder derivative action. Call John "For the People" Morgan
There will be blood.
Loved The iron laws of economics have no regard for the idiotic blathering of Peter Navarro and Howard Lutnick.
No chance Elon is replaced. The board was interested in case he stayed on at DOGE.
“aging and increasingly outclassed lineup.” …. he only has the top-selling sedan on the planet, lolol
As for Robotaxis, the question isn’t whether there will be accidents & deaths - there will be. The question is how many per mile driven … If that number is lower than Human drivers, he will have the auto world by the balls. As someone who has ridden extensively in Teslas with his latest FSD, I’m telling you, he has nailed it. His penchant for hyperbole may have stretched the meaning of the word imminent, but he understands it is better to get it right and be late than get it wrong and be early.
Curious, how do you consider yourself qualified to dismiss his FSD when you have openly admitted to never trying it?
You are entirely wrong about what's needed to run robotaxis. For Uber, op costs plus liability on their fleet is close to two-thirds of the fee. But robotaxis carry a much higher liability cost. And unlike Uber, they carry it for every mile they drive - not just revenue miles.
The minimum bar at which a company can even begin to think about deploying robotaxis is about five times safer. At 8-10 times safer, one should be able to begin to make money, but not much. FSD appears to be years away from 2-3 times safer. Also new hardware with higher computational capacity will be required, plus better anti-glare precautions.
I can't believe how blithely investors drink the Musk Kool-Aid.
Tesla’s op costs are lower than Uber (no Labor) and Tesla’s liability cost will be lower as well provided FSD is safer than humans. Whether FSD is safer than humans is the entire argument….. At the end of the day liability insurance costs will be determined by the efficiency of FSD.
Despite the corporate liability you claim to be so onerous, Uber posted 33% gross margins last year - placing them just ahead of Apple, and in the 98 percentile among S&P companies. The idea that a company could come along and remove the labor costs from the Uber business model, which is about 70% of those Op costs (dwarfing liability), and struggle to turn a profit is patently absurd.
I know I’m answering this late, but the data concerning Tesla’s Level 2 driver assist system is very conflicted. The robotaxi model, using that software and even backed up by remote human monitors, will be strictly liable for any accident for which it is determined the Tesla vehicle was at fault. That will affect the company’s bottom line.
Regarding your observation concerning potential robotaxi accidents, you are forgetting that unlike crashes involving occupants of privately owned vehicles with the owner behind the wheel, liability for any property damage, personal injury or death will accrue directly to Tesla. I doubt that Tesla will find any independent insurance carrier willing to take a risk and underwrite a policy. The cash drain will affect the company’s bottom line.
I suspect they will keep the insurance in-house & factor it into the cost of a ride even though there will be a line of insurance companies offering their services. Insurance companies will insure anything for the right price. That price will be based off the accidents per mile (and severity). If FSD accident numbers are lower than humans, the insurance will be lower as well - and of course, if the accident numbers are higher, the insurance will be higher ..... You also assume they keep the robotaxi fleet for themselves, which I hope they do as the free cash flow would be staggering. Unfortunately, their corporate guidance has said repeatedly it will not be the case. Guess I could hope Elon is lying ....
I carry high personal liability. Tesla would need a multi-million policy, and nothing prevents the insurance company from turning around and suing Tesla to collect if FSD is determined to be at fault.
Even though I have decades of no-claim driving, my liability insurance costs me a lot. I've been through this with a number of insurance companies. The more liability you carry, the higher the chance that you will be sued for what may or may not be frivolous damages. So the higher the projected loss per mile. The situation has become worse because of low mandated coverage limits, which now often don't even cover the cost of the vehicle involved.
Corporate liability is much higher than any personal liability. There is a huge pot of gold behind every corporate vehicle. You have no idea what you are talking about. None.
"You have no idea what you are talking about. None."
This response perfectly fits every Bagholder comment ever made at my Substack posts.
The fact that you repeatedly insist on demeaning me personally, rather than refuting my arguments, speaks volumes about the validity of your position.
MaxedOutMama refuted your arguments.
FYI, Tesla's Texas car insurance is offered through Redpoint County Mutual Insurance Company, which is a shaky proposition at best. I doubt Redpoint can legally underwrite "robotaxis" without defrauding its policyholders/ shareholders.
I'll tell you what: check back with us in July and tell us about Tesla's big robotaxi success.
You raise good points. I hold that it’s most likely that Tesla will self-insure. Insurance companies are incredibly risk averse. They certainly won’t underwrite policies during the rollout period. Any risk of claims frequency (defined aggressively in my experience) will result in termination of coverage. And the claim does not have to be catastrophic. As little as three fender benders resulting in what might be considered minor damage ($5,000 or more) can trigger cancellation of a policy. We both agree that Tesla’s driver assist system can result in accidents. How many payouts for “fender benders” do you think Tesla’s bottom line do you think Tesla can afford? From personal experience I can state that even paint damage can cost over $2,000. Replacing or straightening body work quickly ups the cost. As few as one hundred $5,000 fender benders results in a $500,000 hit to Tesla’s bottom line.
And aside from the cost in the event of accidents, another consideration is the cost of cleaning robotaxis at the end of each shift (possibly even during a shift if someone spills food or a drink or gets sick in a vehicle). Clean vehicles are essential for building a repeat customer base.
Like many economic sectors (i.e. retail and grocery stores), taxi service is a low profit, labor-intensive business. This is not the money-maker that Elon claims.
Robotaxis are not as labor-intensive as Uber/taxis. The insurance cost is still to be determined, but it won't be a liability to Tesla, it will be a cash-flowing asset. The insurance cost will be factored into the cost of rides, and I suspect Elon, a savvy businessman, will not be passing on the cost of that insurance to the riders without tacking on some profit. Having used FSD extensively, I can say with certainty it drives better & safer than most humans I know - and it's not even close.
Tell me you’ve rarely or never ridden in a common carrier (taxi, bus, metro, or regional rail) without telling me you’ve rarely or never ridden in a common carrier. Simple cleanup of public vehicles takes hours. And the mess that these workers can have to deal with can sometimes require deep cleaning which is even more labor-intensive.
Let's talk about the money...should Tornetta prevail at the Delaware Supreme Court, does the 345 million judgment handed down by the Court of Chancery+ 12% interest reserved for by the supersedeas bond associated with the appeal immediately transfer to the plaintiffs unencumbered by any fits of pique by the defendants?
The interest rate is closer to 7.5%. I'm not sure of the exact procedure in Delaware, but the bond is there to pay plaintiff's counsel if defendants fail to do so immediately after any final judgement in plaintiff's favor is entered.
I'm sure this gives the plaintiffs great comfort in this case.
Couldn’t the story be that Musk was considering stepping down and the BOD was doing some prep work?
I don't think so. The board is obviously terrified of what happens to the share price if Elon leaves, or is pushed out. I think our friend Mr. Bernhard Zinkhofer may have hit the nail on the head.
But they're out of options. Tesla's objective position is likely to worsen with the drop in vehicle sales. FSD is a long-shot deal that won't begin contributing any more than it now does for years, and, if they try to rush it a la Cruise, may start subtracting this year if the accounting is correct.
By the middle of next year, something's going to give. Tesla has probably reached the tipping point.
Responding to the above and below posts:
We are aligned on the state of the business, just not on the BOD state of mind.
They are hand-picked loyalists who have intertwined personal and professional relationships with Musk. I think that they are not independent enough, would fear his wrath if they went against him, and for a large part are believers.
What is more likely:
They've studied LIDAR and tracked FSD progress and don't think it will work
or they watched him succeed building rockets and the #1 electric car brand in the world and say to themselves ..."Never bet against Elon...at least until my shares vest"
While the 'coup' idea would typically make sense, these directors are chosen specifically because they're loyal and I can't think of one time there has been an action that wasn't started and decided by Elon.
My bet (and I'm a betting man) is still that this was coordinated with Elon's knowledge - but just as an option should he have decided to keep doging and/or focus on xAI - particularly given the comp stuff noted by others.
Actions:
Robin would retire
He would become Chair (See Twitter playbook) and blame Delaware
Bring in a yes man who will, for a price, take the blame for the fact that the robo-taxi doesn't work, the $25K car has terrible margins, and China is now lost.
If you read the WSJ article closely, Musk was pressuring the board for a replacement package, and apparently complaining that he hadn't been paid in seven years and that he was willing to walk away. Then came the political involvement. A compensation committee was formed.
The feint with the search for a replacement was a form of pushback.
I see now. Thank you. Sometimes I'm a bit obtuse...
Yet I find it impossible to imagine that, today, the shareholders would approve a munificent compensation package (I assume a shareholder vote would be needed under Texas corporate law, too, but perhaps that's not the case). I realize you recognize that it would be difficult.