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Musk $55.8 billion compensation package rescinded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 to Allow Drivers to Display License Plates in Vehicle Visualization

Rendering of what Tesla's license plate feature could look like

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Tesla update 2024.38 has started rolling out to several regions and vehicles. Thanks to Tesla hacker Greentheonly, we have a behind-the-scenes look at some new features coming to Teslas.

License Plate Display

According to Greentheonly, it looks like Tesla may soon let you display your actual license plate in the vehicle’s visualization on the screen. In our article, The Most Request Tesla Features, several readers suggested displaying the vehicle’s license plate in the visualization instead of a blank, white plate.

It looks like Tesla will be doing just that, at least in China. Green found references that appear to conclude that you’ll be able to display your vehicle’s plate on screen. This will likely be user input, so you could have it say anything you’d like, and it doesn’t have to be your actual license plate.

For many owners, who may find it difficult to remember their license plate, this could serve a practical purpose in addition to adding to the visualization's realism.

While Green was only able to say it’ll be available in China, we expect this is due to China’s software development team working on it and that it’ll eventually be released worldwide.

We’ve seen several features originally released in China and later applied to everyone. Some of these include the Air Quality Index display, the trip meter that displays traffic along your route, and even the ability to change your vehicle’s color.

While code for this feature was found in update 2024.38, we may not be turned on in China yet. We suspect this feature may be a strong candidate for Tesla’s upcoming holiday update.

FSD Hardware Version Display

As part of the 2024.38 update, Tesla has now made it easy to determine whether your vehicle includes Hardware 3 or Hardware 4. You can now simply navigate to Controls > Software and tap Additional Vehicle Information. In addition to other hardware information about your vehicle, your Autopilot hardware version will now be listed as well.

You can see whether your vehicle has HW2.5, HW3, or AI4. This in-car display is useful, but if you don’t have access to the vehicle, you can always use our guide on how to determine the hardware version of a Tesla.

New Battery Health Test & Service Mode Improvements

Green found some additional things as well. There’s a new and improved Battery Health Test. The new test will show you how your car scores compared to similar vehicles in the Tesla fleet.

In addition, maintenance records can now be permanently stored “in the car.” It doesn’t appear that this feature is activated yet, but it’s likely in active development with some parts leaking out in the 2024.38 update.

Tesla has included various Service Mode improvements and new visualizations in this update.

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Leaked Images of the Tesla Model Y Juniper Refresh

Mr Li on X

It’s been a while since we saw the last batch of leaked images of the Model Y Juniper refresh. That inspiring photo, alongside other images, set the blood of many concept artists on fire. We saw a ton of awesome concepts of Project Juniper, and now there are even more leaked images.

Mr Li on X came across some covered-up Project Juniper vehicles recently and he managed to get various shots of the vehicle.

Juniper Images

This front image reveals what looks like two rows of lights, possibly confirming the front light bar for the Model Y refresh — similar to the one on the Cybercab.

The rear side has a lot of lights on it!

Mr Li on X

The rear side shows a ton of brake lights, but it’s not clear why. While it looks like the Model Y refresh will also feature a rear light bar similar to the Cybertruck, there isn’t strong evidence of that in this photo.

Mr Li on X

There's an obvious set of lights at the bottom, so it looks like the Model Y refresh will be similar to the new Model 3 where the bottom lights can operate as brake lights when the one-piece tail lights and trunk are up.

Mr Li on X

In the last photo, we see that the overall form factor of the refreshed Model Y will remain unchanged, and Tesla is focusing the changes on the front and rear ends of the vehicle, much like the Model 3 refresh. However, in this one shot, we can also see what appears to be red light leaking out of the rear camera cover opening, possibly due to the rear light bar.

The Model Y is not only Tesla’s best-selling vehicle but also the world’s best-selling car in 2023. This year, it’s expected to be the best-selling vehicle in the United States and again in the world, so this refresh will be huge for Tesla.

We expect most of the interior to remain the same as the Model 3 refresh, which saw substantial improvements in quality, noise reduction, and performance. Check out our wishlist of more things we hope to see in the Model Y refresh.

Dominic’s Concept

Dominic's Concept, in all its glory.

@DominicBRNKMN on X

@DominicBRNKMN made another fantastic set of concepts based on these new images. Given he had the most accurate Model 3 Highland concept before the official launch, we’re pretty sure his latest work be close here as well.

@DominicBRNKMN

We’re super excited to see the eventual reveal of Project Juniper, which is expected in the first half of 2025. However, expect to see a few more leaks before production kicks off at Giga Shanghai.

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