Can tesla's two "big pies" support musk's dream of an over 8 trillion market value?

As the growth of electric vehicles slows down, Tesla is betting its future on artificial intelligence and robotics, and has proposed a trillion-dollar compensation plan to incentivize Musk.

Two ambitious "pie-in-the-sky" plans: can they truly support the dream of a market value exceeding $8 trillion?

Tesla's Two Major Visions

On September 2nd, Tesla officially released a strategic plan referred to as the "Secret Master Plan Part 4" via the social media platform X, announcing that the core of its future development will fully shift towards artificial intelligence and robotics technology, with the goal of promoting a "sustainable abundance" in society.

Despite the grand vision, Tesla also acknowledges that there are many challenges in execution. However, the company is confident that artificial intelligence will fundamentally transform transportation, energy, and labor structures, accelerating the world's transition to a sustainable future.

At the same time, during the release process, Musk particularly emphasized the central role of the robotics business in Tesla's future plans. He stated that the large-scale application of Full Self-Driving (FSD) and Optimus robots will be the most important matters for the company in the next stage, and predicted that in the future, about 80% of Tesla's value might come from the Optimus business.

As early as a year ago, Musk had publicly hinted that this plan would be "absolutely epic," demonstrating his high expectations for this direction.

However, compared to previous grand plans, Chapter Four did not receive the expected positive response in the capital market. On the day the plan was released, Tesla's stock price closed at $329, down 1.35%.

Market analysis indicates that the current strategic statement is relatively abstract, lacking clear phased goals and implementation paths, and relies more on Musk's personal charisma and vision for promotion. Coupled with his previous instances of failing to deliver on promises on time, some investors and industry observers are skeptical about the practical execution capability of this transformation, considering it to have "more marketing flair than substantive content." Therefore, in the absence of specific supporting details, the market reaction tends to be cautious.

Image source: Tesla

Three days after the grand plan was announced, Tesla's board of directors unveiled another major piece of news: a compensation package worth up to $1 trillion was officially submitted for investor approval.

The plan proposes to grant Musk more than 423 million shares of Tesla stock, accounting for about 12% of the company's total equity. If fully exercised within the next decade, Musk's voting power in the company could exceed 25%, further consolidating his control over Tesla. Foreign media commented that this might be one of the largest compensation proposals in U.S. corporate history.

Musk will not receive a salary or cash bonuses in the next decade; all his earnings will be closely tied to the company's market value growth and operational metrics.

The plan specifically sets 12 milestone targets, including increasing Tesla's market capitalization from the current approximately $1.09 trillion to $8.5 trillion, delivering a cumulative total of 20 million electric vehicles, achieving commercial operation of 1 million Robotaxis, delivering 1 million Optimus humanoid robots, and increasing the company's adjusted earnings to $400 billion.

For each milestone achieved, Musk will receive a stock reward equivalent to 1% of Tesla's total market value. If all targets are achieved, he is likely to become the first "trillionaire" in human history, while Tesla will also become one of the most valuable companies in the world.

The main motivation behind the board's introduction of the above plan is to ensure that Musk can remain focused on the management of Tesla in the long term. Currently, he leads multiple companies, including SpaceX, xAI, Neuralink, and Boring Company, and is increasingly involved in public affairs, which has raised concerns among some investors about his attention being diverted.

The Chair of the Board, Robyn Denholm, stated clearly in a letter to shareholders: "Incentivizing and retaining Musk is crucial to Tesla achieving these grand goals and becoming the most valuable company in history." This plan is therefore seen as a strategic move to deeply align the interests of management with the long-term value of shareholders.

In stark contrast to the tepid market response when the grand plan was released, Tesla's stock price surged by 3.64% following the announcement of the compensation plan, at one point reaching a new high since June 2025.

This contrast reflects that investors place more value on concrete incentive structures and clear goal setting rather than relying solely on vision-driven development directions. The varied reactions from the capital market also indicate that, despite Musk's strong charisma and innovative image, Tesla still needs to provide more convincing answers in terms of actual business advancement and performance delivery.

Promises and Discrepancies

Coincidentally, the practice of betting on long-term market value with massive compensation is not the first between Tesla and Musk. In 2018, Tesla's board designed an ambitious compensation plan for Musk, requiring him to increase the company's market value from approximately $60 billion to $650 billion within ten years. Surprisingly, Musk achieved this goal several years ahead of schedule.

However, the more than $50 billion compensation that should have belonged to him was rejected by a federal judge in Delaware, USA, in early 2024, and Tesla subsequently filed an appeal.

The Wall Street Journal pointed out that with the adjustments to the state's corporate-related laws in recent years, the board believes the new compensation plan will be more feasible at the legal level. According to foreign media reports, if both the new and old incentive plans are fully realized after tax and other adjustments, Musk's stake in Tesla could be close to 25%, which aligns with his control expectations publicly expressed in January 2024.

In addition to motivating the management team with exorbitant salaries, Tesla has long been adept at conveying its long-term vision to the market by releasing chapters of its "Secret Master Plan," thereby maintaining investor confidence.

Since it was first proposed in 2006, this strategic narrative method has become a key way for Tesla to communicate its development direction to investors.

However, there is a significant gap between promises and implementation. Several core objectives outlined in the "Master Plan, Part Deux" announced in 2016—such as full self-driving, solar integration, and a shared mobility network—have yet to be fully realized. Although Musk has repeatedly promised "it will be achieved next year," the frequent recurrence of such statements has gradually eroded market patience.

In 2023, the proposed "Chapter Three of the Grand Plan" clearly emphasized strategic focus on "scale expansion," but in reality, Tesla's electric vehicle sales have shown a lackluster growth trend since the plan's release. 2023 became a peak for sales, and growth has significantly slowed down since then. The continuous unmet promises not only affect the company's credibility but also further exacerbate external doubts about its execution capabilities.

Apart from learning from history, Tesla's current situation is also concerning. The company is facing multiple challenges, including slowing growth, shrinking profits, and damage to its brand image. Among them, Elon Musk's controversial remarks on social media and in other public forums have also brought additional public pressure to Tesla.

Image source: Tesla

Achieving the market capitalization target is more challenging. If Tesla is to grow to $8.5 trillion, it would be more than twice the current market value of the world's highest-valued company, NVIDIA. Some analytical institutions remain optimistic about Tesla in the long term, but their forecasts still appear conservative. One institution predicts that by 2027, Tesla's stock price could reach $2,000, corresponding to a market value of slightly over $5 trillion; a more optimistic model estimates that by 2029, the market value could reach $8.2 trillion.

In terms of operations, Tesla's financial report for the second quarter of 2025 shows that the company's revenue was $22.5 billion, a year-on-year decrease of 12%, marking the largest decline in more than a decade. Net profit decreased by 16% year-on-year to $1.172 billion. The global delivery volume for the quarter was 384,000 vehicles, a year-on-year decline of 13.5%, reflecting the dual pressures of slowing demand and intensified competition faced by the company.

However, competitors from the Chinese market, namely BYD, have shaken Tesla's leading position. In the first half of 2025, BYD surpassed Tesla with global new energy vehicle sales of approximately 2.146 million units, with pure electric vehicle sales exceeding 1.02 million units, up 41% year-on-year. During the same period, Tesla's cumulative sales were only 720,000 units, a year-on-year decline of 13%.

Faced with ongoing sales pressure, Tesla has set a goal of achieving annual deliveries of 20 million vehicles in the future—equivalent to 64% of China's total automobile sales in 2024—which means it would need to increase its current delivery scale by about 13 times. This figure far exceeds the annual sales level of the global sales champion Toyota, which sells 10.8 million vehicles.

Despite the fact that Master Plan 4.0 attempts to reshape the growth logic with artificial intelligence, amidst the fluctuations in the electric vehicle market and the multi-dimensional encirclement by competitors, whether Tesla can once again deliver on the "future" promised by Musk remains to be seen.

How to overcome multiple challenges?

Tesla places significant emphasis on its future high valuation on areas such as the Optimus humanoid robot, artificial intelligence, and full self-driving (FSD). However, these directions still face multiple systemic challenges. These challenges stem not only from the limitations in the maturity of the technology itself but also involve market competition dynamics, a crisis of capital trust, and deep-seated contradictions in strategic resource allocation.

In terms of technology, the Optimus humanoid robot, considered the core source of 80% of Tesla's future market value, is currently still in the early stages of factory testing. The current prototype can only perform highly structured tasks such as battery sorting. The third version is planned to be released by the end of 2025, with a production target set for 2026, but this timeline faces significant challenges.

The high cost of a single unit, inadequate generalization ability in dynamic environments, and safety and reliability issues in complex scenarios all pose substantial obstacles to its commercial deployment.

Image Source: Tesla

At the same time, Chinese companies have made rapid breakthroughs in this field. Automakers like XPeng and specialized robotics companies such as Unitree and UBTECH have launched humanoid robots that have demonstrated certain advantages in motion control precision and environmental interaction capabilities. This competitive pressure forces Tesla to achieve significant technological leaps in a relatively short time, otherwise its grand vision may be difficult to realize.

The situation in the autonomous driving field is also not optimistic. Although Musk publicly stated that the FSD V14 version will be safer than human driving, and the V15 version may even exceed human capabilities by ten times, the reality is that FSD is currently still at the L2+ assisted driving stage.

Currently, Tesla has modified its marketing strategy, no longer emphasizing "no driver supervision needed," and has repositioned the system as a driver assistance feature that requires human supervision throughout. This effectively acknowledges that all models produced between 2016 and 2023 lack the hardware foundation to achieve full autonomous driving, and the high fees early users paid for "full self-driving" have yet to be realized.

The technical bottlenecks are mainly reflected in three aspects: the system's ability to handle unexpected scenarios in complex urban traffic conditions has not yet undergone large-scale validation; the training data overly relies on a global fleet, lacking localization adaptation for high-density traffic environments such as in China; more critically, competitors like XPeng and Huawei have achieved large-scale deployment in urban navigation assisted driving (NOA), with their technology iteration speed even surpassing Tesla. As competitors' technical solutions gradually become industry standards, Tesla's first-mover advantage is being rapidly eroded.

Tesla also faces controversy regarding leadership in artificial intelligence technology. Although it claims to be the "leader in real-world AI," it has yet to launch an industry-influential foundational model in critical areas such as generative AI and multimodal large models.

The global AI competition has already shown a multipolar pattern: OpenAI and DeepMind continue to push the frontier of algorithms, while companies like Baidu and DeepSeek are rapidly advancing in the development of general large models. Tesla's AI capability currently heavily relies on data accumulation in the vertical field of autonomous driving. This single-domain advantage is insufficient to support its positioning as a leader in cross-domain technology. Amidst competitors investing hundreds of billions of dollars to build AI ecosystems, Tesla's relatively closed technological approach may cause it to miss critical strategic opportunities.

Resource allocation conflicts have further exacerbated transformation risks. Shifting the strategic focus entirely towards AI and robotics means that Tesla must engage in dual-line investments while maintaining its core electric vehicle business. Mass production of humanoid robots requires a restructuring of the supply chain system, which might encroach on the production capacity resources of new models such as the Cybertruck. The global rollout of FSD faces policy barriers such as EU data compliance reviews and restrictions on high-precision maps in China. Meanwhile, the traditional electric vehicle business still has to contend with slowing demand, the aging Model series products, and the price war with Chinese brands. This multi-front operation presents the company with unprecedented challenges in terms of cash flow and organizational execution capability.

Strategic focus and resource allocation also face challenges. Tesla had been developing both the Dojo training chip and the AI5/AI6 inference chips simultaneously, but recently announced the disbandment of the Dojo team, instead fully committing to the AI5/AI6 chips. This move aims to unify architecture and reduce engineering complexity. Although this "all-in" strategy contraction demonstrates the company's determination, it also carries significant risks, particularly regarding the actual performance of the AI6 chip and whether Samsung's production capacity can meet the demand in a timely manner, which remains to be seen.

Summary:

Tesla is at a critical crossroads. It needs to address the harsh realities of slowing growth in its electric vehicle business and intensified competition, while balancing the tension between substantial R&D investments and short-term financial performance. At the same time, it must prove to the market that its strategy of transitioning into an AI and robotics company is not an unattainable dream.

This trillion-dollar compensation plan is both the ultimate incentive for Musk personally and a big gamble by Tesla on the future. Its eventual success or failure will depend on whether the grand vision can be realized as planned.