IDEAS home Printed from https://ideas.repec.org/p/thk/wpaper/inetwp225.html
   My bibliography  Save this paper

Tesla as a Global Competitor: Strategic Control in the EV Transition

Author

Listed:
  • Matt Hopkins

    (Academic-Industry Research Network)

  • William Lazonick

    (Academic-Industry Research Network)

Abstract

In this paper, we assess the implications of Elon Musk's strategic control over Tesla, the pioneering company that has become central to the electric-vehicle transition. We document how, as Tesla's CEO for 16 years, Musk has exercised strategic control to direct the transformation of the company from an uncertain startup to a global leader. Now that Tesla is profitable corporate predators (aka hedge-fund activists) may challenge Musk's strategic control - a possibility of which the CEO is well aware. To retain his control over Tesla as a publicly listed company, Musk depends on holding a sufficient proportion of Tesla's shares outstanding to possess the voting power to fend off predatory value extractors. In addition to accumulating Tesla shares by investing $291.2 million at early stages of the company's evolution, Musk has relied upon massive stock-option grants from the Tesla board, under the guise of "compensation", in 2009, 2012, and 2018, to boost his shareholding and, with it, his voting power. Hence the Delaware Court of Chancery's decision in January 2024 to rescind Musk's 2018 stock-option package - by far the largest ever granted to a corporate executive - poses a threat to Musk's strategic control at Tesla. As the "Technoking" of Tesla strategizes to maintain his control over the company's decision-making, anyone concerned with the role that Tesla will play in the evolving EV transition should be asking how CEO Musk might use, or abuse, his powerful position.

Suggested Citation

  • Matt Hopkins & William Lazonick, 2024. "Tesla as a Global Competitor: Strategic Control in the EV Transition," Working Papers Series inetwp225, Institute for New Economic Thinking.
    • Handle: RePEc:thk:wpaper:inetwp225
    DOI: 10.36687/inetwp225
    as

    Download full text from publisher

    File URL: https://doi.org/10.36687/inetwp225
    File Function: First version, 2024
    Download Restriction: no
    File URL: https://libkey.io/10.36687/inetwp225?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    More about this item

    Keywords

    Elon Musk; Tesla; electric vehicles; strategic control; stock options; voting power; resource allocation; corporate governance;
    All these keywords.

    JEL classification:

    • D2 - Microeconomics - - Production and Organizations
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • G3 - Financial Economics - - Corporate Finance and Governance
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
    • L53 - Industrial Organization - - Regulation and Industrial Policy - - - Enterprise Policy
    • L62 - Industrial Organization - - Industry Studies: Manufacturing - - - Automobiles; Other Transportation Equipment; Related Parts and Equipment
    • M1 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration
    • N8 - Economic History - - Micro-Business History
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:thk:wpaper:inetwp225. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Pia Malaney (email available below). General contact details of provider: https://edirc.repec.org/data/inetnus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.