Elon Musk's Fiery Response to Delaware Court Ruling: Tesla's Future and Musk's Influence Hang in the Balance

Musk $55.8 billion compensation package rescinded

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In the wake of the Delaware Chancery Court's landmark decision to rescind his $55.8 billion compensation package, Elon Musk did not hold back on expressing his views. Taking to X, Musk's posts resonated with a blend of frustration, defiance, and contemplation of Tesla's future.

This is insulting to shareholders

— Elon Musk (@elonmusk) January 31, 2024

Musk called the decision "insulting to shareholders." Furthermore, Musk's suggestion to avoid incorporation in Delaware and his query about relocating Tesla's incorporation to Texas echo his discontent and hint at a potential strategic shift.

Unfathomable Compensation and Controlled Mindset

The 201 page Delaware Court's decision, as articulated by Judge Kathaleen St. J. McCormick, delved deep into the complexities of Musk's compensation package and the process behind its approval. The judge described the package as an "unfathomable sum," highlighting its sheer magnitude and deviation from standard executive compensation practices.

Central to the court's ruling was the notion that Musk exerted undue influence over Tesla's board of directors. The court found that Musk's control over the board and his relationships with its members significantly compromised their ability to act independently. According to the ruling, this control resulted in a compensation negotiation process that lacked objectivity and transparency.

In her ruling, McCormick noted, "Musk had extensive ties with the persons tasked with negotiating on Tesla’s behalf." She pointed out the conflicts inherent in this arrangement, emphasizing the need for a more rigorous standard in such situations. "The process leading to the approval of Musk’s compensation plan was deeply flawed," she wrote, highlighting the controlled mindset of the board and its failure to recognize the conflict of interest.

Shareholder Disenfranchisement and Material Omissions

Another critical aspect of the court's decision was the inadequate information provided to shareholders during the vote on Musk's compensation. The ruling emphasized the omission of material information about potential conflicts of interest and the overall negotiation process, which were crucial for shareholders to make an informed decision.

"The record establishes that the Proxy failed to disclose the Compensation Committee members’ potential conflicts and omitted material information concerning the process," the court observed. This lack of transparency was seen as a significant factor in the decision to overturn the package, indicating that Tesla shareholders were not equipped with all the necessary information to make an informed choice.

Musk's compensation was initially perceived as a step toward a "good future for humanity," including ambitions like colonizing Mars, but the judgment stated, “Some might question whether colonizing Mars is the logical next step. But, in all events, that “get” had no relation to Tesla’s goals with the compensation plan.” The court's analysis highlighted that the package's extraordinary size was disconnected from the automaker's objectives.

Stepping back to 2017

The court's narrative begins with Musk's own words, extracted from a 2017 email, where he expressed confidence that Tesla shareholders would be "super happy" with the compensation plan. Musk believed that the package would be perceived positively, projecting an "ultra-bullish view of the future" and symbolizing his commitment to ensuring a "good future for humanity." This ambition, while laudable, was disconnected from the immediate operational goals of Tesla, according to the court.

Emails from Musk during the compensation discussions in 2017 reveal his desire for a significant increase in Tesla ownership upon reaching a $550 billion valuation. He suggested a structure that would effectively boost his ownership stake, considering future dilutions, to around 25% over a decade, underscoring his long-term vision for Tesla. It also underscores the lack of a succession plan that exists to this day.

Testimonies from key Tesla figures like Ira Ehrenpreis and Antonio Gracias provided insight into the compensation committee's approach. They emphasized a subjective sense of fairness and collaboration with Musk, rather than objective market data or arm's length negotiations. This approach was echoed by Todd Maron, Tesla's general counsel, who described the process as cooperative and collaborative, lacking a recognized conflict of interest.

Musk's Recent Compensation Discussion

Two weeks before the court's decision, Musk discussed on X his engagement with Tesla and future compensation plans. An X user expressed concerns about Musk's apparent lack of a new incentive plan since completing his 2018 compensation milestones. In response, Musk's four-word reply, "That would be nice," hinted at his openness to discussing future compensation aligned with his contributions and ambitions in AI, automation, and space exploration.

Musk later elaborated on his desire for approximately 25% voting control within Tesla, which he believes is substantial yet not overwhelming. This statement came amidst Musk's concerns over his influence in the company, especially in growing Tesla as a leader in AI and robotics. On the same day as the ruling Musk posted an update on Tesla’s robot.

Going for a walk with Optimus pic.twitter.com/6mLJCUp30F

— Elon Musk (@elonmusk) January 31, 2024

Musk & Tesla's Future and Potential Move to Texas

Musk's suggestion of moving Tesla's incorporation to Texas, where its physical headquarters are located, has stirred discussions about the company's future corporate structure. Relating to Texas, known for its business-friendly environment, could be a strategic response to the legal and corporate challenges Tesla faces in Delaware.

Should Tesla change its state of incorporation to Texas, home of its physical headquarters?

— Elon Musk (@elonmusk) January 31, 2024

This potential move raises questions about the implications for Tesla's governance, legal framework, and operational strategy. A shift to Texas could signal a new chapter for Tesla as it navigates through the fallout of the court's decision and reevaluates its position in the corporate landscape.

Despite focusing on voting control and compensation, Musk's vision for Tesla extends beyond financial incentives. He is keen on advancing significant developments in AI and robotics, aiming to position Tesla at the forefront of technological innovation. This aligns with his broader goals of advancing human progress through technology.

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Tesla Updates FSD From V12.3.6 to V12.5 on Update 2024.44

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Tesla maintains two primary software branches: the main feature branch and the FSD branch. In general, the FSD branch lags behind on new features pushed to the main branch but provides a more recent FSD version.

However, now Tesla is updating the main branch to a much more recent version of FSD.

Current FSD Build & Shadow Mode

Nowadays, the main branch always includes an older but stable build of FSD. It’s been on FSD V12.3.6 since July 2024. So, if you subscribe to FSD in North America, this is the FSD version you’ll receive until you get added to the FSD track.

Even if you don’t subscribe to or have purchased FSD, your vehicle has v12.3.6 on it. That includes vehicles in regions where FSD isn’t available for general use, such as Europe and China. In those cases, FSD runs in Shadow Mode, providing training data to Tesla if you’ve agreed to their data privacy policies. So Tesla is always analyzing what the vehicle would do compared to what the driver does. When there are contradictions, these are the clips and data Tesla will want to analyze.

FSD V12.5.4.2 on Main Branch

For the first time in five months, Tesla has now updated the baseline version of FSD in the main branch. The new version included with 2024.44 updates is FSD v12.5.4.2. This Tesla is updating the baseline FSD version to FSD V12.5.4.2

FSD 12.5 includes many features for a much smoother experience compared to FSD 12.3.6. Many users will appreciate that it gets rid of the steering wheel nag and instead relies on the cabin camera to provide real-time driver monitoring. This version also includes support for sunglasses with driver monitoring. It’ll be a big upgrade for anyone coming from FSD 12.3.6.

It's always a good thing when Tesla updates the baseline FSD version—that means that Tesla is confident that this new baseline is considerably safer and will continue to train the fleet against it.

What Update Am I Getting?

If you’re already on FSD V12.5.4.2, you’ll likely remain on that FSD build unless V13.3 manages to make its way to the public as Tesla originally planned, but that’s unlikely to happen before the Thanksgiving holiday. In all likelihood, you’ll be getting update 2024.44, which will give you some additional Tesla features while keeping you on the same FSD version.

For those who are already on 2024.44 - if you subscribe now, you’ll have V12.5.4.2 enabled on your vehicle.

If you have a Cybertruck, then you’ll receive update 2024.39.5 with FSD V12.5.5.3. They’re on a unique build for the moment, and this will likely be the case until Tesla acquires enough training data from the Cybertruck fleet.

What About FSD V12.5.6? V13?

FSD V12.5.6 is currently the build being provided to early access testers who have AI4 vehicles. It has new features like Driver Profiles, better lane change decisions, improved Max Speed Offset, and a few others. Tesla last pushed an update to FSD 12.5.6.2 in early November with some improvements to Driver Profiles.

That build is likely going to be deprecated as Tesla gets closer to releasing FSD v13, which they showed off at the We, Robot event back in October. The AI4 Model Ys and Cybercabs at We, Robot were running an early V13 build/ 

The updated FSD roadmap provided at the end of October mentioned that V13.3 will be the build that will make its way to customers sometime around Thanksgiving, but so far, no employee vehicles have been spotted with FSD v13.

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Tesla Cybertruck: Puddle Lights, FSD/Powershare, Mars? [Update: FSD Now Available in Canada]

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The Cybertruck is having an eventful November. Just last week, we shared the news that Tesla isn’t offering their in-house wrap service for the Cybertruck anymore; the Foundation Series is now available in inventory in select US locations, Crossbars have arrived, and faster charging is around the corner. Now there’s even more to discuss about the stainless steel beast.

Projection Puddle Lights

Like the recently launched puddle lights for the Model 3 and Model Y, Tesla has introduced a set of add-on Projector Puddle Lights for the Cybertruck. These Cybertruck-specific ones go for $75 USD, or $105 CAD and are available in both the Canadian and US Tesla stores.

However, these don’t have the Tesla wordmark - instead, they feature the iconic Cybertruck symbol and, in our opinion, look even nicer. Here’s to hoping Tesla also introduces a set with the graffiti-style Cybertruck wordmark.

Powershare in Canada

While the Foundation Series Cybertruck has been getting delivered in Canada since November 7th, there was no news on Powershare being supported due to regulatory constraints. On the 20th, Foundation Series owners in Canada began to receive emails to get their Powershare installs started through Tesla’s official installer - Qmerit.

More to follow on pricing and the process as we receive our Canadian quote from Qmerit soon.

FSD in Canada

The Cybertruck Program Manager, Siddhant Awasthi, confirmed that with Powershare now becoming available, FSD for the Cybertruck in Canada will also become available soon. Canadian trucks shipped with a factory software build that didn’t include FSD, but did include TACC and stoplight/traffic control.

Early this morning Tesla began rolling out a new version of FSD 12.5.5.3 for the Cybertruck, which is update 2024.39.5. Will this be the version that rolls out in Canada?

Update: Yesterday, Tesla started rolling out FSD on the Cybertruck in Canada for the first time. The update being rolled out is update 2024.39.5, which not only features the latest FSD available on the Cybertruck, version 12.5.5.3, but it also includes all the features update 2024.38, which includes the huge Sentry Mode improvements that reduce power consumption by about 40%.

First Mars Payload

Following Integrated Flight Test 6 for SpaceX’s Starship, Elon Musk confirmed that uncrewed Starships are likely to begin making their way to Mars in about 2 years. You’re probably going to ask what’s going to be in those Starships - that’s what Brett Winston on X asked as well. Elon confirmed that Cybertrucks and Optimus robots will be among some of the first items landing on Mars.

That’s a ton of awesome news for Cybertruck, and there’s absolutely going to be more around the corner, especially as we await the big Tesla Holiday Update. While you wait, why not take a look at our Holiday Update Wishlists?

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