Tesla’s shareholder vote next week may just determine whether CEO Elon Musk continues to be inextricably linked to the company, or if he takes his AI ambitions to some other venture. It’s a conundrum mere mortals like us may not completely understand; does the world’s richest man, worth $210 billion as of today need another $56 billion to stay motivated to do his job? According to Tesla board chair Robyn Denholm, the answer is a resounding yes.
This kicks off the Friday edition of Critical Materials, your daily round-up of news and events shaping up the world of electric cars. Also in today’s edition: Republican lawmakers want to ban Chinese battery behemoths CATL and Gotion from shipping to the U.S., and we look at how the threat of cheap Chinese EVs entering the U.S. via Mexico is far from over.
30%: No 'Shortage Of Other Places' For Musk To Go
Given that he sleeps on the factory floor, runs six technology companies, and still finds a few minutes flaming culture wars on his social media platform X, I never assumed that Musk had “unlimited time.” But Tesla chair Robyn Denholm seemed dead serious in her assertive letter she wrote to shareholders this week, implying that if Musk’s demands weren’t met, he could very well walk away from Tesla.
In the letter, Denholm urged stockholders to vote in favor of two key issues: ratifying Musk's giant paycheck and moving Tesla's legal home to Texas. Her argument is in sync with the prevailing sentiment, that Musk has brought immense value to shareholders and has contributed to Tesla’s astronomical growth.
And the word “fair” appears exactly four times in that short letter, emphasizing how meritorious Musk is of a huge payday, despite his distractions and Tesla’s disappointing sales in Q1 2024.
Here’s an excerpt from Denholm’s letter:
This is obviously not about the money. We all know Elon is one of the wealthiest people on the planet, and he would remain so even if Tesla were to renege on the commitment we made in 2018. Elon is not a typical executive, and Tesla is not a typical company. So, the typical way in which companies compensate key executives is not going to drive results for Tesla.
Motivating someone like Elon requires something different. This is one of the key reasons the Award also requires Elon to hold any shares he receives upon exercise of stock options for five years after he exercises the options — which can only serve to incentivize him to continue delivering value to Tesla and our stockholders.
What we recognized in 2018 and continue to recognize today is that one thing Elon most certainly does not have is unlimited time. Nor does he face any shortage of ideas and other places he can make an incredible difference in the world.
We want those ideas, that energy and that time to be at Tesla, for the benefit of you, our owners. But that requires reciprocal respect.
It’s worth noting that Denholm has sold $50 million worth of Tesla stock so far this year, according to SEC filings. She joins several current and former high-level Tesla executives to have filed for mass sell-off of Tesla shares, including former engineering head Drew Baglino who sold some $181 million worth of shares after shortly announcing his resignation in April. In other words, if Musk leaves and Tesla's value somehow tanks, a lot of these people are going to be... fine.
But as the shareholder vote culminates next week, the challenges of leading Tesla are far from over. One big task the board and the stakeholders face is ensuring Musk remains "motivated" enough to drive growth and innovation for Tesla while also finding ways to mitigate the impact of his activities outside the company.
We’ll have a close eye on the June 13 vote outcome, so keep watching this space.
60%: Republican Lawmakers Seek To Blacklist Chinese Battery Suppliers
Without the expertise of Chinese battery giants, the broader electrification puzzle would likely remain unsolved, experts have told InsideEVs. Republican lawmakers want to ensure it remains that way.
A group of GOP lawmakers submitted two letters to the Biden Administration this week, urging it to ban goods from two of the leading Chinese battery manufacturers.
The first letter urges the administration to place Shanghai-based Gotion High Tech on the Uyghur Forced Labor Prevention Act (UFLPA) Entity List. The second letter does the same for Ningde-based Contemporary Amperex Technology Limited, commonly known as CATL.
Here are some excerpts from the two letters:
Multiple companies in Gotion’s direct supply chain manufacture or process materials in the Xinjiang Uyghur Autonomous Region (XUAR), engage in state-sponsored Uyghur labor transfer programs, conduct “poverty alleviation” in the XUAR, or are otherwise closely linked to forced labor.
In addition, these facts illustrate a broader pattern through which entities like Gotion that sell into and otherwise seek access to the U.S. market and their suppliers' obscure supply chain links to those entities implicated in forced labor and that work in the XUAR.
CATL is affiliated with Xinjiang Production and Construction Corps—a paramilitary and state-owned system and the only entity expressly named in the UFLPA statute due to its egregious forced labor practices. This affiliation is present in a tier-one supplier relationship, which is highly concerning.
This letter describes in detail CATL’s ties to forced labor and to Xinjiang. As the U.S. Departments of State, Treasury, and Commerce have jointly stated, “[B]usinesses and individuals that do not exit supply chains, ventures, and/or investments connected to Xinjiang could run a high risk of violating U.S. law.”
The letters also seem to provide evidence, including satellite imagery, on how China’s battery supply chain is intertwined with involuntary labor and violation of land and usage rights.
Outright banning these entities, however, would inflict damage here on U.S. soil. CATL is licensing battery technology to Ford and is part of a $2.2 billion LFP battery plant in Michigan.
Meanwhile, Gotion, partially owned by Volkswagen’s China unit, will build a $2.5 billion plant near Grand Rapids, Michigan, after overcoming pushback from the local Mecosta County where the factory will be located.
90%: Tariffs Are Inadequate To Fend Off Chinese EVs
The diplomatic and regulatory saber-rattling that resulted in the Biden Administration increasing tariffs on Chinese EVs from 27.5% to over 100% may not be enough to keep them away from the U.S. in the long term, experts have said.
The United States-Mexico-Canada Agreement (USMCA) requires 75% of a car’s components to be sourced from North America to be eligible for free trade across the borders. Mexico itself has free trade agreements with over 50 countries, including Chile and Australia, which are battery raw material hotspots.
Moreover, several Chinese companies, including BYD, plan to establish local factories in Mexico.
Read an explainer from Automotive News this morning:
Passenger vehicles produced in Mexico but made with Chinese components would not be eligible for the free trade provision but are instead subject to a 2.5 percent penalty. That's substantially lower than the 100 percent duty placed on EVs coming directly from China.
"Basically, you're talking about importing duty-free," as essentially 2.5 percent "rounds to zero," said Michael Dunne, CEO of Dunne Insights, an advisory firm specializing in global EV markets and battery supply chains. "It would not be any barrier at all whatsoever."
Mexico is also an attractive place for any automaker to build a supply chain, said Diana Páez, energy and mobility director at William Davidson Institute at the University of Michigan. Mexico has free trade agreements with more than 50 countries, many of which are emerging markets for EVs, she said.
"There's that contagion effect. As China becomes more and more invested in Mexico, it will be difficult for U.S. automakers and the United States to limit the overall influence of China on the EV supply chain," said Reed Blakemore, director of research at Atlantic Council's Global Energy Center.
In April this year, Mexican officials pledged to align with the U.S. to fend off cheap Chinese EVs from entering the U.S. Mexico had reportedly halted talks with Chinese automakers, including BYD, and scaled back incentives.
Since then the country has undergone a presidential election and has a new leader, Claudia Sheinbaum, the first female president in the country’s history.
Sheinbaum happens to be a renowned climate scientist and has pledged to attract foreign investment into clean and renewable energy sectors.
Whether she sides with the U.S. on protecting North America’s homegrown car industry by getting tough on China or welcomes Chinese carmakers with open arms is something we’ll find out in 2026 when the USMCA trade deal is due for a review.
100%: What’s Tesla Without Musk?
The current moment raises an important question: What would the company’s trajectory be without Musk? Under a new CEO, could Tesla continue focusing on its core strength—producing the world’s best electric cars and building out North America's most robust charging network? I know that’s not where investor confidence lies, but there's little doubt that Tesla remains fundamentally a car company. Leave your thoughts in the comments.
Contact the author: suvrat.kothari@insideevs.com
