Omead Afshar with Elon Musk at Tesla Cyber Rodeo

Elon Musk's recent request for a 25% voting control over Tesla, coupled with a warning that he might divert AI projects away from the automaker to his startup xAI, has led to a notable drop in Tesla's stock, declining by as much as 10%.

Musk expressed concerns about potential takeovers that could influence Tesla's AI projects, and he suggested that without the desired level of control, he would "prefer to build products outside of Tesla." This raised eyebrows among shareholders, particularly since Musk owns xAI, creating a potential conflict of interest.

During Tesla's earnings conference call, Musk attempted to explain his position in response to concerns raised by shareholders. However, the details of his explanation were not provided in the information you shared.

The situation highlights the complex relationship between Musk's various ventures and raises questions about potential conflicts of interest. It remains to be seen how Tesla shareholders will respond to Musk's request and the implications it may have for the company's direction and focus on AI projects.

Musk tried to explain his position:

Let me explain why. What my concern is here, which is that, you know, I see a path to creating an artificial intelligence and robotics juggernaut of truly immense capability and power. And my concern would be I don’t want to control it, but if I have so little influence over the company at that stage that I could sort of be voted out by some sort of random shareholder advisory firm.

The CEO added:

You know, we’ve had a lot of challenges with Institutional Shareholder Services, ISS. I call them ISIS and Glass Lewis, you know, which there’s a lot of activists that basically infiltrate those organizations and have, you know, strange ideas about what should be done. So, you know. I want to have enough to be influential – like, if we could do a dual class stock, that would be ideal. I’m not looking for additional economics; I just want to be an effective steward of very powerful technology. And the reason I just sort of roughly picked approximately 25% was that -that’s not so much that I can control the company even if I go bonkers. And if I’m, like, mad, they can throw me out, but it’s enough that I have a strong influence. That’s what I’m aiming for – a strong influence but not control. There’s some way to achieve that, that would be great.

To get 25% voting control, Musk would need to obtain a stock package worth around $60 billion. He claims to desire voting control rather than more money, but dual-class voting shares are difficult to arrange post-IPO.

More shares look to be Musk's only chance to gain more influence over Tesla after selling billions to purchase Twitter.

Tesla's shares dropped as much as 10% this morning following the company's reports.