Remember Elon Musk's $56 billion payday? I know what you're thinking: not this news again. But, yes, this news again—Musk's multi-billion-dollar pay package is once again a topic of debate. More than five months after it fell off the news cycle, things aren't looking great for ol' Elon despite the value of his would-be pay package nearly doubling since Summer. Too bad he can't touch it.
Welcome back to Critical Materials, your daily roundup for all things electric and automotive tech. Today, we're chatting about Musk's newly-rejected $56 billion pay package (yes, again), Stellantis gets a $7.5 billion EV loan, and General Motors cashes out of a nearly-completed battery plant. Let's jump in.
30%: Judge Tosses Musk's Now-$101.4 Billion Pay Package (Again)
On Monday, the Delaware judge presiding over perhaps the largest single display of corporate opulence in history decided that Tesla CEO Elon Musk is not entitled to a pay package now valued at $101.4 billion after post-election share price jumps, the New York Times reports. For the record, that's up rom $56 billion previously. This might seem like something you've heard before, but the Monday ruling of Chancellor Kathaleen McCormick is upholding the court's previous verdict denouncing the pay package despite majority shareholder backing in June.
First, the backstory. McCormick's initial rejection of Musk's pay package stems back to 2018 when the compensation package was drafted. According to McCormick, Musk improperly controlled the process used to negotiate the pay package. Furthermore, the judge noted governance irregularities, including that the board was populated with members who were "beholden" to the CEO which created a vast conflict of interest.
The board argued that Musk deserved the compensation package given that he managed to hit all of the seemingly insurmountable targets, and thus created immense profits for the company (and investors).
McCormick asked the board to go back to the drawing board and renegotiate the package before properly presenting it to shareholders. Instead, Tesla used a Delaware corporate loophole to call a shareholder vote to ratify the pay package. Things got even more serious when the board created a website and even paid for ads on the CEO's privately-owned social media platform, X, urging shareholders to vote in favor of the package. Shareholders voted and the compensation package passed.
However, Monday's decision by McCormick ratified a formal rejection of the plea to reinstate Musk's pay package.
“Were the court to condone the practice of allowing defeated parties to create new facts for the purpose of revising judgments, lawsuits would become interminable,” said McCormick in her 101-page ruling.
Now, look, it's easy to see why this is such a hotly debated topic. Musk isn't the most popular guy right now, and $100 billion (let alone the initial $56 billion) is a lot of money, even for the world's richest person. Hell, it's almost the entirety of Bill Gates's net worth.
But it's hard to ignore why, from a financial perspective, this is such a big story. It's the single largest executive pay package in history. To put it into perspective, it's 33 times larger than the next-largest executive compensation plan.
As of Monday, Forbes' billionaire list puts Musk's net worth at $336.8 billion, roughly $110.9 billion ahead of the world's next-richest person, Jeff Bezos.
So what's next? It's unclear, but it's extremely likely that the rejection will be challenged by Tesla, Musk, and a team of lawyers. Musk called the decision "absolute corruption" and "totally crazy," followed by a slurry of reposts on X showing his displeasure with the judge's ruling.
It's possible that an appeal could be filed with the Delaware Supreme Court, though that could push this final outcome out a year or more.
60%: Stellantis, Samsung SDI Joint Battery Venture To Get $7.5 Billion Government Loan
Stellantis, abruptly left without a CEO at the helm over the weekend, may soon join the ranks of Rivian with a multi-billion-dollar loan from the U.S. Department of Energy aimed at furthering the domestic production of EVs.
Uncle Sam is opening up his checkbook and is ready to sign a whopping $7.54 billion payment to a joint venture between Stellantis and Samsung SDI called StarPlus Energy. The large cash infusion is part of the outgoing Biden administration's plan to domesticate EV production all the way down to the battery level. StarPlus' loan will be used to supercharge its battery cell output by bankrolling the venture's planned production sites in Indiana.
Call it the next gold rush, or maybe the EV equivalent of drill, baby, drill—whatever it may be, know that battery production is so hot right now. StarPlus knows this, which is why it's setting up shop at not one, but two planned plants in Indiana where it intends to manufacture enough batteries to power 670,000 vehicles annually.
The first plant, which is already under construction, is slated to open in 2025 while the second is slated for 2027. Separately, Stellantis intends to build another battery factory in Canada with the help of LG Energy Solution.
More and more automakers have been domesticating EV production all the way down to the component level. This Biden-era shift has been influenced by the EV tax credit, which requires production and battery materials to be sourced more domestically. Likely, this protectionist-influenced shift will be aided by the CHIPS act, as well as the Inflation Reduction Act (which brought the EV tax credits) and with DoE-issued loans such as what Stellantis and other automakers are conditionally receiving.
We also know that the Biden administration is shoveling out this money as fast as it can before the government changes in January, so expect more news along these lines, potentially.
EV automaker Rivian was recently awarded a $6.6 billion conditional loan by the same office. Musk, who was tasked with heading the ironically-named Department of Government Efficiency under the incoming Trump administration, criticized the DoE's decision to issue Rivian a loan despite Tesla also receiving funds from the DoE in 2010. Musk has not yet commented on the DoE's decision to loan the StarPlus venture roughly 15% more.
90%: GM Backs Out Of Nearly-Completed Michigan Battery Plant
While Stellantis is preparing to gear up battery production, GM has worked out that it needs to downsize. The automotive giant has decided that it will unload its stake in the nearly-completed $2.6 billion Lansing, Michigan battery production plant to its production partner, LG Energy Solution (LGES).
GM's pull-out represents a larger cooling for the EV industry which overshot its expectations globally on how rapidly electric car sales would take off. CEO Mary Barra told the world earlier this year that the parent company expected to miss its goal of one million GM-powered EVs hitting the road in 2025 because of the "market not developing" as expected. Now GM will offload its stake in the plant just before it is expected to go online.
To put into perspective just how close this plant is to being finished, GM said earlier this year that production was expected to start in early 2025—three years after the plans were revealed to the world. The plant was expected to employ around 1,700 people, though it's not clear if this will change under LGES' control.
GM says that it has around $1 billion tied up in the plant but expects to recoup its investment when the two companies close the deal in March.
The move also comes just after GM says that it plans to ditch its hard-pushed Ultium branding amid a larger shift in electrification strategy. The brand says that the name will be sunset and won't refer to any of its future battery products, only those involved with its LGES joint venture, which, obviously no longer includes its Lansing plant.
Furthermore, GM is convinced that a "one type fits all" battery is no longer the path forward. It will instead tailor solutions to fit its vehicles, meaning using a combination of high-nickel, mild-nickel, and Lithium Ion Phosphate (LFP) chemistry across its packs, which could be existing pouch cells or easier-to-assemble prismatic cells. It sounds exhausting, working all of this new tech into a rapidly changing industry. But GM seems to know what it's doing here, so let's trust the process and see where it takes the brand.
100%: What's GM Up To?
GM is up to something. With the automaker slicing Ultium out of its lineup and pulling the plug on one of the most anticipated battery plants that have yet-to-open, it's clear that the brand has had a revelation on the electrification front.
The moves came just months after GM's new battery chief, Kurt Kelty, joined staff as the Vice President of Batteries (fun title). And if that name sounds familiar, it's because Kelty was one of Tesla's longtime battery executives. His task? According to a GM spokesperson speaking with InsideEVs in February, solve more future-facing problems rather than focus on immediate Ultium issues. Think: cost reductions, end-to-end battery development, and more.
It seems like GM is at a pivotal point in its EV timeline and the brand has already made a decision on how it needs to navigate a changing political and unsettled economic climate. But what exactly is GM's secret sauce? And, more importantly, what would you like to see GM do with its all-but-blank battery slate for future vehicles? Let me know in the comments.
