Elon Musk Accused Of Tesla 'Power Grab' In AI Push

Legendary shortseller Jim Chanos has criticised Elon Musk's attempt to gain more control of Tesla and called out the billionaire for threatening the automotive company's progress unless his voting rights are doubled.

Last year, Chanos, who is one of Wall Street's best-known bears, made headlines when he told his backers that has decided to close his main short-focused hedge funds after more than three decades. Chanos is also known for exposing the Enron scandal in 2001 and for betting against Wirecard. Moreover, he has a reputation for spotting fraud.

Investors were taken aback when Musk demanded that the Tesla board give him a bigger stake in the (electric vehicle) EV manufacturing company. Musk wants shares worth more than $80 billion (about £63.07 billion), which he plans to use to further develop AI-powered products, according to a New York Times report.

To those unaware, Tesla has been working on a humanoid robot called Optimus. Moreover, the company uses AI to develop self-driving technology. NYT points out that Musk could simply walk away with these businesses, which belong to Tesla.

Musk went on to say that he would prefer building AI and robotics products outside Tesla unless his voting power is raised from 13 per cent to around 25 per cent. In other words, he is threatening to leave Tesla.

This doesn't come as a surprise given that he has previously admitted that he likes focusing more on product development and technology than being a corporate leader.

Musk believes having more authority in decision-making would ensure he is safe from interlopers. He also noted that Fidelity and other providers of index funds and mutual funds own similar stakes as him but do not show up for work like he does.

However, he added that the "Tesla board is great". Musk said there's no new compensation plan because they are still waiting for a decision in his Delaware compensation case. Although the trial for the case was held in 2022, a verdict hasn't been made yet.

Earlier this month, Musk also indicated Tesla is gearing up to launch "other products" in response to an X (formerly Twitter) post about the products and services developed by Tesla.

Elon Musk gets called out for his impractical demand

While it is still unclear what's brewing in the Tesla garage, veteran short seller Jim Chanos has accused Musk of being unreasonable and obtuse for suggesting his equity stake isn't enough to motivate him in an X post.

"Let me get this straight...Elon wants another 450M new shares ($100B) or conversion of existing shares into super-voting status, or he will 'prefer to build products outside of Tesla?!'" Chanos posted on X. He even described this demand as "outrageous".

Aside from suggesting Musk is holding Tesla hostage by delaying the development of new products, Chanos said: "Does he really not understand how index/mutual funds work...?!"

The renowned shortseller believes "when it comes to Tesla, he's (Musk) the narrative". He described Tesla as the "it girl" of this market cycle with a stock built on "hopes and dreams".