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Tesla is moving to Texas · Elon Musk Podcast

• 0:01
  Hey everybody. Welcome back to the Elon Musk
• 0:04
  Podcast. This is a show where we discuss
• 0:07
  the critical crossroads, the Shape, SpaceX, Tesla X, The
• 0:11
  Boring Company, and Neuralink. I'm your host, Will Walden.
• 0:16
  Tesla has embarked on a legal fight to reinstate Elon Musk's
• 0:20
  pay package valued at about $56 billion.
• 0:24
  This is despite the company's shareholders reapproving the
• 0:27
  package for a second time. There's a stark divide between
• 0:31
  the visionary leadership that Musk embodies and the practical
• 0:34
  realities of running a car manufacturing business now.
• 0:38
  The repercussions of this decision may significantly
• 0:40
  impact Tesla's future, given Musk's business strategies in
• 0:44
  the past. Now, Tesla has long juggled 2
• 0:48
  competing identities. On one hand, it operates as a
• 0:51
  car manufacturer facing the tough realities of producing and
• 0:55
  selling complex EVs, and on the other, it function as a dream
• 0:59
  factory driven by Musk's grandiose visions and market
• 1:04
  magic. This dual nature has
• 1:06
  historically worked to Tesla's advantage, with Musk's charisma
• 1:10
  and storytelling often over shattering operational
• 1:13
  challenges. So this landscape is shifting
• 1:16
  though. Tesla score business is
• 1:19
  struggling right now, and Musk's hype is pushing the boundaries
• 1:22
  of fantasy, leading to reputational damage and also
• 1:26
  legal entanglements. Despite these issues, Tesla
• 1:29
  shareholders have thrown their support behind Musk's visionary
• 1:33
  identity, choosing to risk the company's future on his
• 1:36
  ambitious dreamweaving. Starting in 2013, Musk crafted a
• 1:41
  new kind of social financial phenomenon blending high tech
• 1:46
  hype with online virality. His ability to inspire
• 1:50
  confidence in Tesla's future dominance and ambitious
• 1:53
  technical goals has been his primary value to the company.
• 1:57
  Other than his technical abilities now more than his
• 2:00
  managerial or engineering skills as well.
• 2:04
  What began is exaggerations of achievable goals like solar
• 2:08
  powered superchargers has escalating to taking pre
• 2:11
  payments for self driving capabilities that remain
• 2:15
  unfulfilled. Now, I want you to know I am a
• 2:19
  big supporter of Tesla, but you can't overlook these things.
• 2:23
  Musk's grand visions, including robotaxis and humanoid robots,
• 2:27
  have distance Tesla from reality for a lot of people.
• 2:33
  These ideas are now central to Tesla's new values.
• 2:36
  Despite being under a federal fraud investigation and numerous
• 2:40
  civil lawsuits, this hype began to diverge from Musk from
• 2:45
  reality around the same time his power over Tesla's governance
• 2:49
  solidified. A pivotal moment was in 2018
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  when Musk demanded Tesla's board to vouch for his indiacrity
• 2:57
  following SC CS fraud charges over his quote funding secured
• 3:01
  tweet. Now, that year, the board
• 3:03
  approved his $56 billion compensation package focused
• 3:07
  more on market capitalization than operational performance,
• 3:11
  studying the stage for ongoing fantastical narratives.
• 3:15
  For much of the past five years, Tesla's operational challenges
• 3:18
  were mitigated by favorable market conditions.
• 3:21
  The model wise release coincided with peak EV hype and supply
• 3:25
  chain constraints, allowing Tesla to charge premium prices.
• 3:28
  However, as supply constraints eased and competition increased,
• 3:33
  Tesla's sales and profits have began to weigh and waver.
• 3:38
  With Tesla Score business no longer showing endless growth,
• 3:41
  Musk's leadership style faces increasing criticism.
• 3:45
  His purchase of Twitter and subsequent involvement in
• 3:47
  culture wars has further distracted him from Tesla,
• 3:50
  according to some people. And it's also damaging its
• 3:54
  inclusive brand and market appeal, according to those
• 3:58
  people. I want to reiterate, I don't
• 4:00
  feel this way now. Instead of expanding Tesla's
• 4:02
  market with affordable vehicles, Musk invested in the divisive
• 4:06
  cyber truck. The vehicle, designed more as
• 4:10
  kind of a meme than a serious contender in the truck market,
• 4:13
  reflects Musk's penchant for creating viral yet impractical
• 4:17
  products. Heading to Tesla's woes, Musk
• 4:20
  and SpaceX both face lawsuits from former employees alleging a
• 4:23
  toxic workplace culture and Musk's inappropriate behavior.
• 4:28
  These issues, coupled with his publicized romantic
• 4:31
  entanglements, paint a troubling picture of leadership.
• 4:35
  Tesla's recent reincorporation in Texas, which was approved by
• 4:39
  shareholders, is about more than saving $255,000 annually in
• 4:43
  state fees. It's Musk's attempt to distance
• 4:47
  Tesla from Delaware's stringent shareholder protections after
• 4:50
  losing a case over his pay package.
• 4:52
  According to people that don't like Elon Musk, this move is
• 4:56
  seen by some as a gamble on Musk's critical role in the
• 4:59
  company. Now, Texas, which has been
• 5:02
  attracting businesses with lower taxes and a new business court
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  system, offers a potentially more favorable legal environment
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  for Tesla. However, the uncertainty of new
• 5:11
  courts and potentially influential judges raises
• 5:16
  concerns about predictability in legal outcomes.
• 5:19
  Tesla's not the first company to move away from Delaware, though.
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  Companies like Microsoft and TripAdvisor have also set more
• 5:25
  favorable legal environments. This trend reflects broader
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  concerns about Delaware's stringent corporate governance
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  standards. And while the legal differences
• 5:34
  between Delaware and Texas are kind of minor, they can impact
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  corporate decisions. For instance, mergers may
• 5:40
  require higher shareholder approval in Texas, and it's
• 5:43
  harder for shareholders to inspect company books there.
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  These nuances can influence corporate strategies and also
• 5:50
  governance. Now, Delaware's extensive legal
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  precedents provide A level of predictability that Texas lacks.
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  This predictability is valuable for corporate boards and
• 6:02
  attorneys in assessing legal risks and outcomes, something
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  Texas courts will need time to develop.
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  And Tesla justifies its move to Texas by highlighting its
• 6:12
  innovative spirit in the minor financial benefits.
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  The company argues that embracing new approaches aligns
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  with its culture and history of taking bold steps now, despite
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  this relocation, legal battles over Musk's pay package are
• 6:26
  likely to continue in Delaware courts.
• 6:28
  This ongoing litigation underscores the complexities and
• 6:31
  risks of corporate governance under Elon Musk's leadership.
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  And as Tesla navigates these challenges, the future hinges on
• 6:39
  Musk's ability to balance his very ambitious, visionary ways
• 6:45
  with practical business realities.
• 6:48
  The company's success will depend on addressing operational
• 6:51
  hurdles while maintaining the innovative edge that is defined
• 6:55
  as brand now. Tesla's journey under Musk's
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  leadership remains a high stakes balance act between visionary
• 7:01
  innovation and operational execution.
• 7:04
  The legal battles and corporate decisions unfolding now will
• 7:06
  shape the company's trajectory in the years to come.
• 7:16
  Hey, thank you so much for listening today.
• 7:18
  I really do appreciate your support.
• 7:20
  If you could take a second and hit the subscribe or the follow
• 7:23
  button on whatever podcast platform that you're listening
• 7:25
  on right now, I greatly appreciate it.
• 7:27
  It helps out the show tremendously and you'll never
• 7:30
  miss an episode. And each episode is about 10
• 7:33
  minutes or less to get you caught up quickly.
• 7:36
  And please, if you want to support the show even more, go
• 7:39
  to patreon.com/stage Zero. And please take care of
• 7:44
  yourselves and each other, and I'll see you tomorrow.