Tesla Shareholders Approve Musk’s $1 Trillion Pay Package as Company Pushes Into AI Chips

In one of the most consequential votes in its history, Tesla’s shareholders have overwhelmingly backed a new compensation plan for Elon Musk worth up to $1 trillion in stock options. The approval cements Musk’s dominance within the company and signals investors’ confidence that his vision - however unconventional - remains critical to Tesla’s evolution.

The new structure is designed to keep Musk at the helm as Tesla $TSLA undergoes a strategic shift from electric vehicles to AI-driven technologies and robotics. Board chair Robyn Denholm called the deal essential to retaining Musk’s focus amid his growing empire of ventures. It’s a gamble that ties Tesla’s future not just to electric cars, but to the race for AI hardware and autonomy.

Shareholders have divided the world

Despite massive investor support, the package was opposed by the likes of Norway's sovereign wealth fund with $1.9 trillion in assets, which owns 1.2% of Tesla. The fund warned that the remuneration was "disproportionately high" and increased the risk of the company's dependence on one man. The same problem has been cited by small shareholders, who say Musk has spread his attention among too many companies in recent years. Yet Tesla's management's argument that the company's success is closely tied to Musk's vision - and that without his direct leadership, Tesla would lose its innovative drive - prevailed.

The approved plan includes 12 tranches of stock optionswhich will be conditional on meeting ambitious targets. A similar system was already part of Musk's 2018 plan, but is now the subject of a lawsuit in Delaware. A court there ruled last year that shareholders did not have enough information about the terms of the package - Tesla is now appealing the decision.

AI and chips as the new growth engine

But part of the shareholder meeting in Austin wasn't just about remuneration. Musk surprised with the announcement that Tesla is likely to build its own gigantic chip factory for its artificial intelligence systems. The company, he said, "can no longer rely on supply from other manufacturers" because demand for computing power is outstripping the capacity of even market leaders such as Nvidia.

Tesla is currently using a fourth generation of its own chips, but Musk confirmed that it is already developing AI5 - a fifth generation designed for autonomous driving and robotics. Small-scale production is expected to begin in 2026, with full production a year later. Even more powerful AI6 chips, due in 2028, will be, according to Musk. twice as fastbut with lower power consumption.

"Even with the most optimistic deliveries from our partners TSMC and Samsung, it won't be enough," Musk said. "We will have to build Tesla terafab - a huge chip factory. It's like a gigafactory, but much bigger."

He said the plant would produce 100,000 wafers a month and the chips would be "more energy efficient and ten times cheaper than current Nvidia Blackwell models". Musk also hinted at a possible collaboration with Intelwhich has the technological backing but lags far behind in the AI segment.

Tesla's next steps

The meeting also approved the re-election of three board members and a proposal to an investment in the startup xAIto be linked to Tesla's autonomous systems. Despite some abstentions, the board decided to consider the proposal further.

Musk also announced that Tesla will build a production line for 1 million Optimus humanoid robots at the Fremont factory and then ten times that capacity at Giga Texas. He said this will be a key step in Tesla's transformation from a car company to a robotics and AI company.

A symbol of both power and risk

Rewards of up to 1 trillion dollars once again makes Musk the highest-paid executive on the planet - and shows that Tesla is a company built on his personality. For some, a world-changing visionary; for others, an over-powerful man with a dangerous ego. But the fact is that shareholders have given Musk's strategy the green light. But investors are making it clear: as long as Elon Musk stays in the game, Tesla has a future that goes far beyond the car industry.