Tesla shareholders meeting: no succession plan, a co

Apr 27, 2023

Tesla held its annual shareholder meeting in Austin on Tuesday, an event that Tesla has now taken to calling its Cyber Roundup.

There were five proposals on the agenda, including one that pushed Tesla's board to come up with a public succession plan for CEO Elon Musk and other "key persons" whose behavior and loss could create a risk for the company and shareholders.

While Tesla will publish the official vote tallies later in the week, the board recommended shareholders vote against the key person risk proposal, so it likely won't pass.

"At a time when Tesla's technological leadership should be on display, the investment community largely sees us as adrift, with management focused on all matters not-Tesla, watching as Tesla's brand favorability dropped by 15 points last year, something that costs us margins," said Karen Robertsdottir, a shareholder in Reykjavik, Iceland, during the event.

"When people look at this company…they see the company as a synonym for its CEO, and the discussion turns to everything except for where it should be focused."

Without explicitly saying it, Robertsdottir nodded to concerns many investors have had with Musk's controversial online presence, as well as his potential distraction away from Tesla after purchasing and taking over the social media platform Twitter. Musk has also been criticized for repeatedly selling shares of Tesla to fund the Twitter buyout.

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When Musk officially bought Twitter in late October, Tesla shares closed at $228.52. On Tuesday, they closed at $166.52.

Musk said Tuesday that he has no intention of stepping down as CEO of Tesla.

"I think Tesla's going to play an important role in AI and AGI and I think I need to oversee that to make sure it's good," he said.

AGI refers to "artificial general intelligence," the concept that an AI can learn to accomplish any intellectual task that humans or animals can perform.

Shares of Tesla remained somewhat flat after the meeting, rising only about 1% in after-hours trading. That lackluster reaction from investors might be a response to most of the meeting simply rehashing highlights from the last 12 months, rather than sharing much news.

That said, Musk did provide Cybertruck and Roadster updates, teased two new electric vehicles, said Tesla might shift its advertising strategy and shared his macro-economic expectations for the next year. Tesla also announced JB Straubel as a board member.

Tesla shareholders elected JB Straubel as an independent board of director. Attendees of the shareholder event cheered the return of the former Tesla CTO and co-founder. Straubel is also the founder and CEO of battery recycling startup Redwood Materials.

Shareholders also elected three directors to serve as a three-year term. Tesla nominated Musk, Straubel and current chair Robyn Denholm.

Straubel will take over the spot vacated by Hiromichi Mizuno, the former chief investment officer of Japan's $1.5 trillion pension fund.

The new board member joined Tesla back in 2004 and was CTO for 14 years. Straubel was behind Tesla's battery technology and led the construction and concept of Gigafactory Nevada, as well as the production ramp of the Model 3 sedan. Straubel left Tesla in 2019 and was replaced by Drew Baglino, vice president of technology.

Tesla shareholders elect former CTO, co-founder JB Straubel to board

During the event, Musk teased two new electric vehicles that will join Tesla's lineup. The CEO said Tesla was in the process of building one and designing another, but he wasn't clear if he meant that Tesla was building a prototype or a production vehicle.

Musk said he didn't want to get into specifics of the new vehicles, which would require their own launch events, but Tesla did display a silhouette of one of the vehicles. Based on the size, it's possible that Tesla was teasing the $25,000 hatchback that Musk mentioned back in 2020 during the company's battery day.

Both of the new vehicles that are coming to Tesla's lineup are expected to be affordable vehicles that sell at much higher volumes.

"Elon's guess is that we’ll probably make in excess of 5 million units per year of these two models combined," said Musk.

Elon Musk teases two new EVs, says Tesla is already building one

Musk said Tesla will deliver its first Cybertrucks later this year and should be able to deliver 250,000 to 500,000 per year once production has started.

Tesla first announced the Cybertruck in 2019, but vehicle production has been repeatedly delayed. On Tuesday, Musk apologized for the delays and promised the product would be better than expectations.

In July last year, the CEO said Tesla aims to begin production for the Cybertruck in summer 2023.

Musk noted during the shareholder meeting Tuesday that the Cybertruck will have plenty of attachment points so that third parties can develop attachments to enhance the truck and "turn it into a camper." Last week, during Tesla's groundbreaking ceremony of its lithium refinery plant in Texas, Musk drove a Cybertruck complete with a roof rack accessory. Musk has also said that the vehicle will be "waterproof enough to serve briefly as a boat."

"We expect to complete the engineering and design of the next-gen Tesla Roadster this year and hopefully start production — this is not a commitment — hopefully start production next year," said Musk.

Musk referred to the Roadster as "the cherry on the icing on the cake," meaning he doesn't expect it to be a huge revenue contributor.

"It will be a modest contributor to profitability, but it will be sick," he said.

The second-generation Roadster, an electric sports car that made a surprise debut in November 2017, was meant to come to market in 2020 but has been repeatedly delayed as the high-priced car took a backseat to other Tesla products like the Model 3 and Model Y.

Tesla Roadster production has been pushed back again

Musk speculated that the next year will be a difficult one for the economy due to a variety of factors. Higher interest rates, he said, will have a big effect on the affordability of cars.

"The vast majority of people buy cars based on the monthly payment, so it's like how much is the monthly payment?…Can they afford to pay the payment as the interest rates increase and credit tightens?"

Musk noted that most banks are struggling just to stay alive in the wake of the crisis sparked by the Silicon Valley Bank collapse, which means that "increasing the auto loan portfolio is not the first thing on their minds."

On a macro global economic level, Musk expects the next 12 months to be difficult for everyone, Tesla included. He expects to see a lot of companies go bankrupt, but said that Tesla is in a good position to weather the storm and "emerge stronger than ever."

"It is important to remember that there are good times and there are dark times, but then the good times follow the dark times," said Musk. "So my advice would be, don't look at the markets for the next 12 months. If there's a dip, buy the dip, and I think you will not be sorry."

Tesla, a company that has long eschewed conventional advertising, is going to "try out a little advertising and see how it goes."

Tesla doesn't pay for traditional advertising like other automakers. And it hasn't really needed to. The company has become incredibly popular through other methods of marketing, like emails and referral programs that incentivize existing owners to attract customers, and, of course, Musk's many tweets.

Now, Musk seems willing to shift that line of thinking as the company aims to promote new car features and advertise the affordability of its vehicles.

"There are amazing features and functionality about Teslas that people just don't know about, and although there's obviously a lot of people that follow the Tesla account and my account…it is preaching to the choir, and the choir is already convinced."

We don't yet know what a Tesla advertising campaign would look like, but already many are speculating that Twitter will be home to Tesla's first ads.

Elon Musk says Tesla will ‘try a little advertising’

Nary a Tesla event goes by in which Musk doesn't wax lyrically about the possibilities of the automaker's AI — Musk said Tuesday that it's "by far the most advanced real-world AI."

Today, this AI manifests in Tesla's advanced driver assistance system, confusingly dubbed Full Self-Driving (FSD). The latest version of FSD can handle driving tasks both in urban areas and on highways, but it still requires a human to stay alert and take over control of the vehicle as needed. Roughly 400,000 Tesla owners in North America have purchased the $15,000 beta software.

The other way Tesla's AI will manifest is in the company's humanoid robot, Optimus. Tesla displayed new videos of Optimus development and testing at the shareholder event.

"As full self-driving gets closer and closer to generalized real-world AI, that same software is transferrable to a humanoid robot," said Musk.

"My prediction is that the majority of Tesla's long-term value will be Optimus," the CEO continued, reiterating a point he has made before.

After the shareholder event, Musk joined CNBC's David Faber for an interview that covered a broad range of topics, from Tesla to Twitter, content moderation to free speech, the ethics of AI and Musk's early investment in OpenAI, the startup behind the wildly popular conversational AI model ChatGPT.

"Tesla will have a ChatGPT moment if not this year then no later than next year," said Musk, referring to the technology's swift exponential breakthrough. "Suddenly 3 million cars will be able to drive themselves with no one. And then 5 million and then 10 million."

The 5 biggest takeaways from Tesla's Cyber Roundup