Musk's massive pay package is back in the news. After being shot down by courts, voted for by shareholders, and shot back into the sun, there has been no resolve for Tesla's CEO since 2018. Not that the world's richest person is likely hurting for money, but Tesla still wants to make sure that Musk gets paid and doesn't just dip out from the automaker with no warning.
Welcome back to Critical Materials, your daily roundup for all things electric and tech in the automotive space. Today, Tesla has scrapped Musk's multi-billion-dollar payday, Subaru is rethinking how it does electrification thanks to tariffs, and Xiaomi is going through growing pains. Let's jump in.
30%: Tesla's Board Is Scrambling To Redo Musk's Multi-Billion Dollar Payday
Elon Musk's multi-billion-dollar pay package has been a thing of debate since it was first awarded in 2018. Shareholders argued that the CEO's funding was pushed through the board without proper consideration, breaching the necessary fiduciary duties that the board is bound to uphold for its shareholders. The courts agreed, nuking the pay package before Tesla attempted to restore it via a shareholder vote... backed by an obscure corporate law. The vote passed, but the judge stayed the original rejection.
Now the package is back in the spotlight as a two-person "special committee"—comprised of Tesla board chair Robyn Denholm (who has sold off nearly $200 million in Tesla stock in the last six months, or a whopping $538 million since she joined Tesla in 2014) and board member Kathleen Wilson-Thompson—has been tasked with figuring out how to award Musk for his past performance. Or maybe they're quietly looking for a way to keep him from leaving Tesla completely.
That last part isn't a joke. Musk has publicly warned that he could walk if he didn't get at least 25% ownership of Tesla. Amid disappearing into the depths of Washington for months to cosplay as a political influencer, rumors swirled that Tesla's board even began the process of seeking his replacement before he committed to spending more time at the company.
Both Musk and Tesla denied the rumors.
The current state of the pay proposal is up in the air, but the Financial Times has some insight on what's been going on behind the curtain:
After the existence of the special committee was disclosed with a single sentence in a filing last month, major investors have reached out to the board and have been sounded out about their views on Musk’s pay and his continued leadership of the company
[...]
The Texas-based automaker also said in another filing that its proxy statement would be submitted late, indicating that its annual meeting could be delayed. This would allow the committee time to formulate new pay proposals on which shareholders could vote, the people added. Tesla usually holds the event in May or June.
The committee is still in the early stages of deliberation and neither a new package nor any decision on how Musk’s new pay would be structured is guaranteed, the people said. Any stock options would be contingent on Tesla hitting financial, operational and share price targets.
The committee is searching for a way to move forward. Musk's massive pay package really garnered attention when it was worth around $56 billion. And at the height of Tesla's stock price last year in December, it ballooned to more than $100 billion. It's worth somewhere in the middle of that right now.
One of the biggest problems is Musk's reputation, which was pretty good back in 2018. Today, it's a bit more complicated. Musk seemingly traded his progressive cred for wealth as he became the world's richest person, quickly learning that political involvement can crash a company when you're at the wheel. Tesla even warned that "changing political sentiment" could cause a shift in demand for its products, which dropped off a cliff in recent months.
Only that special committee can answer the question of Musk's Tesla compensation while also considering the last few months of his performance.
60%: Subaru Is Rethinking Its Electrification Plans
Subaru's electric future is still happening, but getting there will be an off-road ride. The good news? Off-road is something Subaru is already good at. The bad news is the tariff-induced financial hit that has caused the brand to take its new path.
This week, CEO Atsushi Osaki said that the automaker is "re-evaluating [...] the timing of investments." The announcement broke as Subaru was announcing its year-end fiscal results, right around the same time when Osaki revealed that Subaru was bracing for a massive $2.5 billion impact thanks to tariffs.
Osaki is making it very clear that the brand isn't straying from its original direction. The automaker still wants to electrify all of its vehicles in some way by the first half of 2030. That could be full BEVs, or some sort of hybrid powertrain configurations. However, Osaki's phrasing on the current outlook of the company's near-term future reads more like a "maybe not right now" when it comes to full-on battery-electric cars. Meaning that Subaru is just trying to keep its head above water (especially since it relies on importing about half of all vehicles it sells in the U.S. from Japan).
Here's what Osaki said, according to Automotive News:
The trajectory for battery electric vehicle growth is getting fuzzy, Osaki said.
“We are currently making various preparations for a BEV-dedicated plant, but I feel that we may have to review what type of vehicles to produce at that plant, such as mixed production with gasoline products, depending on the situation,” he said.
Now, sure, the Subaru Trailseeker just dropped. And that's a Pleiades-branded BEV stuffed with tons of EV tech that customers have actually been asking for. But Subaru has another trick up its sleeve: lots and lots of hybrids. A hybrid version of the Subaru Forester is here for 2025, for example, and that's expected to be just the start.
We've talked about this before. Jay Keras, chairman of Subaru's National Retailers Advisory Council, previously said that the brand hopes to unlock a plethora of new buyers on the U.S. West Coast with its hybrids. And that's especially important if EV sales will soon begin to slip as many expect will happen, should the $7,500 EV tax credit be abolished.
Subaru is at a crossroads. It knows the future is all about electrification, and much like Toyota, Subaru understands that there's not just a single path to get there. Hybrids are great, but depending on who you ask, they're also just a stop-gap between gas-powered cars and fully electric vehicles. And depending on how the future of EVs shapes out in America, it could influence Subaru's timeline to pack its fleet with BEVs.
90%: America's Favorite Chinese EV Is Having Big Trouble At Home
When the Xiaomi SU7 hit the scene, it did so like a shooting star. It quickly captured the hearts (and wallets) of consumers who were interested in picking up the hottest new EV in town. Hell, even Ford's CEO couldn't stop driving China's Apple Car himself.
Unfortunately, the honeymoon phase is over and things aren't great at home for Xiaomi right now. Between quality problems and regulatory concerns, the SU7 is hitting a rash of consumer complaints and has nosedived right into a sales slump—its first one ever. Let's talk about what's going on.
First and foremost is quality. The China Automobile Quality Network recently published its quality rankings for Q1 2025. Unsurprisingly, the Xiaomi SU7 made the list, just not where you might think. The car placed dead last on the rankings, indicating a massive problem with consumer complaints and post-sale issues that are undoubtedly part of the reasoning Xiaomi is moving fewer cars these days.
Here's the rundown from Car News China:
China automobile quality ranking is prepared by the China Automobile Quality Network, a state-run complaints platform created by the China Market Supervision Administration. It accumulates reports and complaints from Chinese car owners about vehicle faults, risks, and defects. These reports are converted into penalty points. The more points, the lower the quality.
According to the China Automobile Quality Network, the Xiaomi SU7 finished dead last in the segment of large BEV sedans with 239 penalty points. It is 56 points more than the average performance of the segment. The source mentioned that this result indicates a high risk of potential defects and a high complaint-to-sales ratio.
Xiaomi is also having a few issues with customer trust right now.
The brand recently issued a public apology after consumers found out that the brand's $5,800 carbon fiber hood with dual cooling ducts actually did nothing to improve cooling. That comes just after Xiaomi was under fire for taking away 600 horsepower from the SU7 Ultra via a software update. Ultimately, it reinstated the ponies back to the car, but not before consumers had to take to the internet to complain.
And then there's a recent fatal accident where the SU7's smart driving features were called into question. That accident caused China's government to crack down on potentially misleading claims of vehicle autonomy. Even Tesla rebranded its Full Self-Driving feature in the country.
Reuters explains the effect these issues have had on sales:
Xiaomi is now facing a wave of consumer angst that began last month following a fatal accident involving an SU7.
The accident, which is still under investigation, prompted widespread public discussion over the safety of the kinds of smart driving features offered by Xiaomi. Chinese regulators have since further tightened regulatory oversight on the marketing and promotion of such features.
New orders for the SU7 fell 55% in April from March and the trend continued in May, with a 13,500 orders placed in the first two weeks of the month, Deutsche Bank analysts said in a note on Wednesday.
That compared to 23,000 orders in the second week of March alone, a weekly all-time high.
Xiaomi is now facing a credibility crisis. That's definitely something no company wants to deal with, but it's something arguably worse for a company that's just getting into building cars. And it's honestly a shame, because the Xiaomi SU7 was smashing records left and right.
The bigger question is: are these teething just pains, or something worse? Xiaomi needs to do something to bring its reputation back on track if it wants to continue to make waves in the auto industry. China is saturated with automakers, after all, so consumers do have choices in what to buy. At minimum, Xiaomi's roller coaster ride is definitely a lesson to brands across the world: it's one thing to build a smart phone, but it's a whole different thing to build a smart car.
100%: Would You Accept A Hybrid-Only World?
Gas, electric, mild hybrid, plug-in hybrid, fuel cell EV. It's nice to have choices. There's a reason that automakers like Toyota are saying that the path to the future takes multiple routes.
However, hybrids are definitely a happy medium. Not only do you get a ton of fuel savings, but you still get to keep that thing under the hood that makes all of the cool noises—if you consider that a plus, I suppose (as a car guy, it's definitely not the end of the world for me). Some argue that hybrids are a "road to hell" as far as auto production goes, namely because of the delay it causes for BEV development.
Let's say some magical CEO snapped their fingers tomorrow and all legacy automakers shifted their plans to mild hybrids and PHEVs. How would you feel about that? Let me know in the comments.
