Analyst: Elon Musk’s $1 Trillion Tesla Pay Deal Looks Modest Compared with Robot Market Potential

Morgan Stanley analyst Adam Jonas called Tesla’s newly proposed...

Morgan Stanley analyst Adam Jonas called Tesla’s newly proposed, performance-based pay plan for CEO Elon Musk “a good deal” for shareholders, arguing that the plan looks far less extreme when set against the long-term potential of the humanoid-robot market. The compensation package, which would grant Musk up to roughly 12% of Tesla’s stock and could be worth about $1.0–$1.1 trillion if the company hits the board’s top market-value target, is tied to a slate of product and profitability milestones that effectively place Optimus and autonomous services at the centre of Tesla’s growth story.

Morgan Stanley's Adam Jonas on Tesla's new proposed $1 trillion performance based pay package for Elon Musk:

"In our view, it is a good deal for @Tesla shareholders. While the proof is in the execution, at face value, the proposed compensation package aligns Tesla minority… pic.twitter.com/i6tY2Stpyh

— Sawyer Merritt (@SawyerMerritt) September 8, 2025

What the package actually requires

Tesla’s board structured the award around a dozen performance tranches that combine market-cap hurdles with operational targets. To reach the highest payoff tiers the company would need to drive its market value from roughly $1.1 trillion today to about $8.5–$8.6 trillion over the next decade — a rise of nearly eightfold — and meet aggressive profit and product milestones such as a top-end EBITDA goal that Reuters reports as $400 billion annually. The plan also ties compensation to huge product outcomes: mass production rollouts that include robotaxis and large volumes of Optimus humanoid robots, along with vehicle delivery and Full Self-Driving subscription targets specified in the proxy. The award is subject to shareholder approval in November.

Looks like Tesla is doing some Robotaxi validation testing in Tempe, Arizona in preparation for future service introduction. https://t.co/sx18eD6gja

— Sawyer Merritt (@SawyerMerritt) September 10, 2025

Why Jonas calls it “reasonable”

Jonas argues the headline dollar figure is misleading unless investors account for how large the addressable robot market might be. Morgan Stanley research projects that the humanoid-robot market could expand dramatically over coming decades — in some Morgan Stanley scenarios, reaching trillions of dollars by mid-century — which, Jonas says, makes a large, long-dated equity incentive more understandable as a way to align Musk’s incentives with shareholder upside if Tesla succeeds in robotics and AI.

The math behind the dream (and why it’s staggering)

Reporting and analyst models sketch out the scale required to justify the top targets. Reuters notes that hitting the top EBITDA milestone would, in some calculations, require selling on the order of tens of millions of Optimus units annually (Reuters’ illustrative math suggests figures as high as ~100 million robots a year under extreme scenarios), assuming an Optimus price in the neighborhood of $25,000 and meaningful profit margins — numbers that put the plan into the realm of near-unimaginable scale relative to today’s results. Likewise, ARK Invest and other bull cases model robotaxi networks and self-driving services that could add hundreds of billions in annual revenue if Tesla captures large shares of future ride-hailing markets.

Market-risk analysis: why the upside is conditional

Even supporters say the package is a high-risk, high-reward wager. Key downside risks include:

- Regulatory and safety hurdles. Widespread deployment of autonomous robotaxis and commercial humanoid robots faces uneven regulatory regimes and intensive safety scrutiny; approvals and large-scale rollouts could stall.
- Technology and scaling risk. Achieving full, reliable autonomy and mass-market humanoid robotics remains unproven at scale; delays or performance shortfalls would push target timelines out and shrink the achievable upside.
- Capital intensity and margin pressure. Building fleets, manufacturing humanoid robots at volume, and training/operating massive AI systems will require enormous investment; margin assumptions in the highest payoff tranches depend on both scale and sustained profitability.
- Competition and market share. Legacy manufacturers, deep-pocketed tech firms and startups are all chasing autonomy and robotics; first-mover advantages can erode quickly if competitors find cheaper or faster paths to commercialization.
- Investor expectations and governance concerns. The sheer size of the award and the governance implications of increasing Musk’s potential economic and voting power have already prompted public debate; if milestones are missed, backlash could be swift. Market moves since the proxy filing show investor attention is highly sensitive to execution and optics.

How investors are reacting

Markets and analysts are parsing the package as a simultaneous bet on product success and investor imagination. Some investors welcomed the clear focus on new, potentially transformative product lines; others warned the targets are extremely ambitious and introduce fresh governance questions because a fully earned award would substantially increase Musk’s economic stake. Stock moves since the proxy filing have reflected a mix of cautious optimism and skepticism as investors weigh feasibility against the potential prize.

Bottom line

Seen purely as compensation math, the Trump-card number in Tesla’s proxy is eye-watering. Seen through the lens Jonas and others use — a multi-decade, multi-trillion potential market for humanoid robots and autonomous services — the board’s package can be framed as a high-stakes alignment of incentives for a CEO who has repeatedly reshaped markets. Ultimately, the plan is a bet that Tesla can pivot from an EV maker to a foundational AI-and-robotics company; whether that bet pays off will depend on technical execution, regulatory developments, capital discipline, and how investors value an AI-driven future.