Wedbush analyst and long-time Tesla bull Dan Ives urged on Tuesday the EV maker’s Board of Directors to give the CEO Elon Musk 25% voting control with “oversight on political endeavours” and controlled time allocation to the EV maker.
A few hours later, Musk reacted on X, curtly answering Ives’ post with “shut up, Dan.”
The analyst’s suggestion was a part of a three-step list the analyst compiled in a new research note, and later shared on X.
He later added that the company “is entering a key autonomous and robotics future ahead and the Board needs to act with Musk and create the framework for Tesla to thrive.”
In the new note published on Tuesday, Ives states that the Board should approve a new “incentive-driven pay package for Musk as CEO that increases his ownership of Tesla up to ~25% voting power.”
The pay package discussion goes back to 2018, when Tesla approved a performance-based pay package for Elon Musk, potentially worth up to $50 billion.
Six years later, a Delaware court struck down the package, citing concerns over poor corporate governance and lack of transparency with shareholders.
Although Tesla shareholders voted again in June 2024 to re-approve the package, the vote was merely advisory and the legal case is ongoing.
At the same time, Musk said in early 2024 that he wanted around 25% voting power to feel secure in pursuing AI and robotics projects, otherwise he would “prefer to build products outside of Tesla.”
However, as debate over Musk’s pay package intensified, investors became cautious about giving him one fourth of the voting control, concerned about it potentially leading to poor governance.
In July 2024, Elon Musk published an informal poll on X asking whether Tesla should invest $5 billion in his AI start-up, “assuming the valuation is set by several credible outside investors.”
“Board approval & shareholder vote are needed, so this is just to test the waters,” he added. As of the time of writing, the Board has not yet made any statement on the matter.
Earlier this year, xAI merged with the also Elon Musk-led X Corp, responsible for the social media platform X, which integrated the company’s flagship product, the Grok AI assistant.
The chief executive sees xAI playing a pivotal role in accelerating Tesla‘s Full Self Driving (FSD) development. The 25% voting control would clear the path “for xAI merger,” according to Dan Ives.
For it to work, the Wedbush analyst also suggested that the Board established “clear guidelines for how much time Musk must devote to Tesla operations in order to receive his compensation.”
Dan Ives has been critical of the CEO spending too much time with the Trump Administration earlier this year.
In April, the analyst said the EV maker faced a “code red situation” if Musk didn’t step back from his role as head of the Department of Government Efficiency (DOGE), ahead of the first quarter’s earnings report.
The CEO stated at the latest earnings call said that “the large slug of work necessary to get the DOGE team in place” was “mostly done” and that he would be “allocating far more of [his] time to Tesla.”
In late May, Elon Musk confirmed that his term on the Administration would be concluded on May 30 — the end of the 130-day limit for such appointments starting from January 20.
Ives said that his exit from his U.S. government role was like “music to the ears of Tesla shareholders.“
Now, he is suggesting that the Board should also create “a dedicated oversight committee to monitor Musk’s political activities to determine whether any of them interfere with his duties as CEO.”
Elon Musk announced over the weekend that he plans to launch a new political party in the U.S., which led Donald Trump to denounced the move and accuse Tesla’s chief of fostering “disruption and chaos.“
The public argument between Musk and Trump led the company’s shares to drop 6.8% on Monday, closing at $293.94.
Ives called it a “tipping point in the Tesla story” and said that it “cannot have Musk spending more and more time creating a political party which will require countless time, energy, and political capital.”
Earlier on Tuesday, Morgan Stanley analyst Adam Jonas also said he believes “investors should be prepared for further devotion of resources (financial, time/attention) in the direction of Mr. Musk’s political priorities.”
Wedbush currently has the highest price target for Tesla among analysts, setting it at $500.
In the latest research note, the Tesla bull reaffirmed the value, which implies an upside potential of 70%, based on Monday’s close of nearly $294.
Tesla is currently trading 2.8% higher on Tuesday’s market session, at $302. In the past twelve months, the stock surged 15.1%. However, year to date, it lost over 25%.
