While Tesla CEO Elon Musk made headlines for his $1 trillion pay package, a previous record-breaking compensation package might lead to billions in lost profits for his electric vehicle company.
What's happening?
According to Reuters, the Delaware Supreme Court will decide whether to reverse a ruling that invalidated Musk's 2018 pay package. A judge previously decided that Musk's pay negotiations were compromised due to personal ties between Tesla board members and the CEO.
If the ruling is reversed, Reuters said Musk could keep stock options in the 2018 package with no further accounting expenses. If the original ruling is upheld, Musk's $26 billion replacement package would give him fewer shares and reduce profit by $3.25 billion each quarter over two years.
Tesla said in a filing that upholding the court's initial ruling would have a negative impact on business and earnings. However, shareholders will have less power if more shares go to the CEO.
"Without question, you are hurting the shareholders," Schuyler Moore, an attorney, told Reuters.
Why is the court ruling important?
A court ruling that results in a profit loss of billions would be the latest setback for Tesla in 2025. Despite reporting record revenue for the third quarter, Tesla's profits dropped by about 37% for the same period, according to the BBC.
The automaker introduced more affordable versions of the Model Y and the Model 3 in an effort to increase sales, per CNN. However, Reuters reported that Tesla sales took a tumble in several European markets in October. New car registrations were down by 89% in Sweden and 86% in Denmark.
The automaker has stiff competition in Europe. EV Magazine reported that BYD surpassed Tesla as the top-selling EV brand in Europe back in July with more than 13,500 new vehicles registered. That's a 225% increase from the year before.
What's being done about EV sales?
While Tesla has struggled to recover, the EV industry as a whole is performing well. Experts anticipated that more than one in four cars sold worldwide in 2025 would be electric, per the International Energy Agency.
The widespread adoption of EVs would bring significant environmental benefits. EVs have no tailpipe emissions, according to the U.S. Environmental Protection Agency. More EVs on the road means less heat-trapping pollution released into the air.
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Even with the electricity generated to charge EVs, the planet-friendly vehicles are much more efficient than gas-powered cars. There's also the financial bonus that comes with EV ownership. Making your next car an EV will save you hundreds of dollars a year on gas and maintenance.
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