- Elon Musk’s demands for more control of Tesla in return for keeping AI project in the company amounts to “blackmail,” one long-time investor says.
- Musk said he wasn’t comfortable developing new projects at Tesla unless his stake was raised to at least 25%.
- “Now he seems to be blackmailing the Tesla shareholders, saying he won’t build stuff for us unless he gets another $30 billion.”
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Elon Musk’s comments about increasing his stake in his own electric vehicle company are bizarre and amount to “blackmail” of Tesla’s investors, according to long-time Tesla bull Ross Gerber.
In an interview with CNBC on Tuesday, Gerber pointed to Musk’s post on X, in which the Tesla CEO said he was “uncomfortable” developing projects in robotics and artificial intelligence at Tesla unless his ownership stake was raised to at least 25%. Moving projects like that to another entity or firm would be a big negative for the company’s growth story, analysts argued this week.
But the idea that Musk doesn’t already have control over Tesla is “absurd,” Gerber said, given that Musk already owns 13% of the company, a stake worth around $150 billion. Previously, Musk owned 22%, before selling nearly $40 billion in stock to help fund his purchase of Twitter at the end of 2022.
Musk’s stock options also make his current stake in Tesla closer to 20%, Gerber estimated.
“Now he seems to be blackmailing the Tesla shareholders, saying he won’t build stuff for us unless he gets another $30 billion,” Gerber said. “Where in the world does paying a CEO $30 billion make any logical sense in the modern world, who already has a $150 billion stake in the company?” he later added.
Musk’s control over the company is aided by Tesla’s board, Gerber argues, which consists of “all his friends” and members of his family. Musk’s brother, Kimbal Musk, is one such director on Tesla’s board. James Murdoch and former Tesla CTO JB Straubel are other board members also known to be close associates of Musk’s.
In practice, those contacts make Tesla 100% controlled by Musk, Gerber said.
“The idea that he doesn’t control Tesla when everybody on the board is a friend or family member of his, is the part I’m really pushing back on. He controls Tesla more than anybody controls any company,” Gerber said. “So the idea that he needs more stock to do this, it just seems weird to me.”
Musk launched an artificial intelligence firm last year called xAI, a startup that aims to “advance our secretive understanding of the universe,” according to a statement on its website. The firm wants to raise $1 billion in an equity offering, and has already landed $135 million from investors, according to a recent SEC filing.