Tesla shares jumped 6 percent on Monday after CEO Elon Musk disclosed that he had bought $1bn worth of the company’s stock. The move reinforces Musk’s push for greater control over Tesla and comes a week after the company’s board offered him a $1 trillion pay package over the next decade.
Musk’s stock purchase – his first open-market buy-up of shares since 2020 – comes at a critical time for Tesla, as it races to transform into an artificial intelligence and robotics firm whilst also grappling with falling sales of electric vehicles (EVs).
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But Musk’s pay packet has come in for intense criticism. Last weekend, Pope Leo decried the widening pay gap between corporate bosses such as Elon Musk – whose estimated wealth now stands at $367bn – and ordinary working people, which he said was a major factor in growing global unrest.
Why is Musk buying up Tesla shares?
On September 12, Musk, 54, purchased 2.57 million shares (which represents less than one percent of Tesla’s market capitalisation), paying between $372 and $397 per share as the price varied through the day, according to regulatory filings. He now owns almost 20 percent of Tesla, which seemingly pleases its investors.
Tesla’s share price rose to around $422 on Monday – still 12 percent lower than its all-time high of $479 (reached in December 2024). Following his recent move, Musk posted on X that the increase in Tesla’s value was “foretold in the prophecy”.
While Musk wasn’t an original founder of Tesla – he invested in the company one year after it was established – he became chairman in 2004. The South African entrepreneur has consistently demanded a bigger stake and more voting power at Tesla, having previously said he would prefer to build AI products and robots outside of Tesla if he cannot control 25 percent voting power in the firm.
Musk sold more than $20bn of Tesla’s stock (or 4.6 percent of its market cap) in 2022 to fund his acquisition of Twitter, now X, for $44bn. He also owns private holdings in SpaceX, Neuralink and The Boring Company.
Is Musk really being paid $1 trillion?
The Tesla CEO will have to meet certain performance-related criteria first. To unlock the full $1 trillion payout, Musk will have to raise the company’s valuation from roughly $1 trillion today to $8.5 trillion over the next 10 years. He will also have to sell one million autonomous taxis and one million robots and increase Tesla’s profits by more than 24 times what it earned last year.
Tesla currently operates a few dozen autonomous taxis in a limited area in the city where it is headquartered, Austin, Texas in the US. Known as “robotaxis“, they are self-driving vehicles but are accompanied by human “safety supervisors”, who can intervene if problems occur.
On the robotics side, the company unveiled its first humanoid robot – Optimus – in 2022. In 2024, Musk claimed that Tesla would deploy robots for “internal use [ie for use inside its own factories]” in 2025, and that it would have produced 5,000 units by then. Neither pledge has been met so far.
Musk also recently said that “80 percent of Tesla’s [future] value will be Optimus”.
How has Musk’s pay at Tesla risen over time?
After Musk joined Tesla in 2004, he took very little cash pay. Instead, he chose to be paid in equity. Then, in 2018, shareholders approved a landmark 10-year pay package for Musk – linked to various operational targets – estimated at $2.6bn.
As Tesla’s market value surged after the start of 2020 (when it was trading at just $29.50 a share), many of those pay objectives were met, and Musk received a large number of additional Tesla shares. Due to broad stock market gains since the COVID-19 pandemic, Musk’s earnings are estimated to have climbed by $40bn-$60bn.
Though Musk’s pay windfall at Tesla has attracted regulatory scrutiny for overcompensation, especially from Delaware’s Court of Chancery, most of the company’s shareholders have repeatedly ratified the CEO’s payment packages.
How do CEOs’ pay packets compare to those of average US workers?
Tesla doesn’t disclose non-executive salaries, so it is hard to say how Musk’s income compares to that of the average worker there.
However, corporate pay in the US has generally rallied in recent decades compared to that of workers. According to the Economic Policy Institute, average pay for CEOs at S&P 500 companies – the 500 biggest listed firms in the US – rose by almost 1,000 percent over the 50-year period leading up to 2024.
By contrast, a typical worker at an S&P 500 company has seen his or her pay packet rise by just 27 percent (adjusted for inflation) over the same period. Stated differently, the CEO-to-worker pay ratio has increased from 30:1 to 350:1 over the past five decades.
In an interview last week with Crux, a Catholic news website, Pope Leo singled out Elon Musk as an example of the kind of wealth he said was corroding “the value of human life, of the family, of the value of society”.
Asked about Tesla’s proposed $1 trillion pay packet, Leo responded: “What does that mean, and what’s that about? If [personal wealth accumulation] is the only thing that has any value any more, then we are in big trouble.”
Is Tesla in trouble?
Despite its recent uptick, so far this year, Tesla’s stock market performance has been among the worst of the “Magnificent 7” group of tech giants – which also includes Alphabet, Amazon, Apple, Meta, Microsoft and Nvidia – having lost around 2 percent of its value this year so far.
Tesla’s most recent quarterly results showed profit losses amid falling demand for electric vehicles and increased import production costs associated with US President Donald Trump’s trade tariffs. Looking ahead, earnings look set to continue falling.
