Tesla shareholders approved a $1 trillion pay package for Elon Musk last year, but he only collects it by hitting a string of milestones over 10 years, including pushing Tesla's market cap above $8.5 trillion. One growth driver stands out as the most important lever toward that target: robotaxis.
Elon Musk cannot simply wait for Tesla's market cap to cross $8.5 trillion — his pay package requires it as one of six specific targets tied to his compensation. Tesla shares trade around $365.44, up 0.52% on the day. Its current market cap sits at $1.4 trillion.
Six milestones, one decade
Musk secured the package last year, but the shares vest only if he hits every incentive milestone. According to the BBC: "Musk … must drastically raise the electric car firm's market value over 10 years". The targets include selling 20 million Tesla vehicles, selling 1 million robots, reaching 10 million self-driving software subscriptions, launching 1 million robotaxis, generating $400 billion in profit, and pushing the market cap above $8.5 trillion.
Robotaxis tie every target together
If Musk cannot scale Tesla's robotaxi business, the $8.5 trillion valuation looks unlikely. Some experts believe the robotaxi market could reach $8 trillion to $10 trillion globally over the long term, giving Tesla room to grow into the target.
Nearly all of Tesla's vehicle models could join its robotaxi service, and the company is hoping third parties buy large blocks of vehicles to run autonomous-taxi fleets, with Tesla presumably taking a cut of each ride as a service fee. The Cybercab, a vehicle built without a steering wheel or pedals specifically for robotaxi use, should push vehicle sales increasingly toward the robotaxi network. Scaling that network would help Tesla toward its 20-million-vehicle target, and because robotaxis should carry higher margins than manufacturing, they matter for the $400 billion profit goal too. Every robotaxi also runs on Tesla's self-driving software, feeding the 10-million-subscription target at the same time.
A decade, not a couple of years
The Fool's analysis argues Tesla's vertical integration should let it scale robotaxis faster and cheaper than rivals, but expects the bulk of that opportunity to unfold over the next decade rather than the next two years.
Source: Fool
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