Tesla Experiences Setbacks, Resulting in Elon Musk Securing a Substantial Financial Reward
In a bid to keep CEO Elon Musk focused on Tesla's electric vehicle (EV) business, the company's board granted him 96 million shares, worth approximately $29 billion, earlier this year. This decision, made by Tesla's board of directors, was a result of Musk's extensive business ventures and potential demands on his time.
However, Tesla has been facing a series of setbacks recently. The sales decline in China, following an eight-month losing streak, has been a major concern. In July 2025, Tesla's sales of China-made electric vehicles dropped 8.4% compared to the prior year, reversing a small gain posted in June. Similarly, the decline in Tesla's European sales continues a spiral that began in the first half of 2025. Registrations in Europe decreased by 41.6% in July 2025 compared to the previous year, despite a surge in electric vehicle sales across the continent.
Consumer displeasure with Tesla has been observed, and some buyers are switching to new brands due to Musk's political allegiances. This shift has had a negative impact on Tesla's once-spotless brand image, according to data from S&P Global Mobility.
The new pay package for Musk was approved by a special committee due to his unique position in the company. However, a court ruling in 2024 voided Musk's 2018 compensation package, which was valued at over $50 billion, due to a flawed and unfair approval process.
Long-term investors should prepare for a bumpy few quarters as Tesla works through its upcoming identity crisis, the slow ramp-up of the robotaxi, and an aging lineup. The company's future, however, may be more aligned with artificial intelligence, robotics, and robotaxi services.
Tesla and its investors are at a crossroads, with the company's future potentially more aligned with these emerging technologies. As Tesla navigates through these challenges, it remains to be seen how the company will emerge and what role Elon Musk will play in this transformation.
