It appears Elon Musk is planning to move Tesla's legal domicile from Delaware to Texas, a decision fueled by a recent legal judgment. Musk took to his social media platform X to poll readers regarding Tesla's state of incorporation. There were over 1 million votes; 87% supported a move to Texas. Musk responded: The public vote is unequivocally in favor of Texas! Tesla will move immediately to hold a shareholder vote to transfer state of incorporation to Texas.
The public vote is unequivocally in favor of Texas!
Tesla will move immediately to hold a shareholder vote to transfer state of incorporation to Texas. https://t.co/ParwqQvS3d
This could be a huge knee-jerk reaction. The Delaware Court of Chancery, presided over by Judge Kathleen McCormick, delivered a ruling that nullified Musk's significant $55.8 billion compensation package, awarded by Tesla in 2018. This package, linked to performance milestones, was a cornerstone in Musk's path to becoming the wealthiest individual globally, with a net worth estimated between $198 billion and $220 billion as of November 2023. The package was also approved by shareholders.
The Delaware Dilemma, the Texas Advantage
Delaware, a haven for corporations due to its favorable tax regime and flexible corporate laws, houses numerous major companies. However, the state has come under scrutiny from Musk, who criticized it for handling corporate matters, particularly after the court's decision.
Texas presents a compelling alternative, offering more lenient regulations on executive compensation and potentially allowing for more generous CEO remuneration without the strict fiduciary constraints found in Delaware. This flexibility could significantly impact Tesla's governance and Musk's compensation strategy moving forward. However, shareholders must also consider Musk’s motivation for moving to Texas. Recently, Musk said he’d want at least a 25% stake in Tesla to continue developing AI at the company.
Shareholder Response and Corporate Governance
The decision to consider Texas as the new legal home for Tesla is not without its complexities. Now faced with a pivotal vote, shareholders must weigh the implications of such a move. The change raises questions about Tesla's corporate governance and Musk's motivations, suggesting a potential shift towards a governance model that favors executive freedom over traditional fiduciary constraints.
The transition from Delaware to Texas could have far-reaching legal and regulatory implications for Tesla. Introducing a business court in Texas, mirroring Delaware's Chancery Court, signifies Texas's ambition to become a new center for corporate litigation and governance.
Tesla's Texas Ties Deepen
The potential relocation is not Tesla's first venture into Texas. The company moved its headquarters to Austin in 2021, drawn by the state's favorable tax policies and regulatory environment. This move aligns with Musk's broader strategy of expanding Tesla's operational footprint in Texas, where it has already established a significant presence with its gigafactory. That is the Cybertruck's home and the next-gen platform's future home.
Musk's proposal to shift Tesla's legal domicile to Texas is more than a mere change of address; it represents a strategic maneuver to reshape the company's future. This move, contingent upon shareholder approval, could redefine Tesla's corporate governance, compensation practices, and legal standing, setting a precedent for other corporations contemplating similar transitions.
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Tesla recently showed off a demo of Optimus, its humanoid robot, walking around in moderately challenging terrain—not on a flat surface but on dirt and slopes. These things can be difficult for a humanoid robot, especially during the training cycle.
Most interestingly, Milan Kovac, VP of Engineering for Optimus, clarified what it takes to get Optimus to this stage. Let’s break down what he said.
Optimus is Blind
Optimus is getting seriously good at walking now - it can keep its balance over uneven ground - even while walking blind. Tesla is currently using just the sensors, all powered by a neural net running on the embedded computer.
Essentially, Tesla is building Optimus from the ground up, relying on as much additional data as possible while it trains vision. This is similar to how they train FSD on vehicles, using LiDAR rigs to validate the vision system’s accuracy. While Optimus doesn’t have LiDAR, it relies on all those other sensors on board, many of which will likely become simplified as vision takes over as the primary sensor.
Today, Optimus is walking blind, but it’s able to react almost instantly to changes in the terrain underneath it, even if it falls or slips.
What’s Next?
Next up, Tesla AI will be adding vision to Optimus - helping complete the neural net. Remember, Optimus runs on the same overall AI stack as FSD - in fact, Optimus uses an FSD computer and an offshoot of the FSD stack for vision-based tasks.
Milan mentions they’re planning on adding vision to help the robot plan ahead and improve its walking gait. While the zombie shuffle is iconic and a little bit amusing, getting humanoid robots to walk like humans is actually difficult.
There’s plenty more, too - including better responsiveness to velocity and direction commands and learning to fall and stand back up. Falling while protecting yourself to minimize damage is something natural to humans - but not exactly natural to something like a robot. Training it to do so is essential in keeping the robot, the environment around it, and the people it is interacting with safe.
We’re excited to see what’s coming with Optimus next because it is already getting started in some fashion in Tesla’s factories.
In a relatively surprising move, GM announced that it is realigning its autonomy strategy and prioritizing advanced driver assistance systems (ADAS) over fully autonomous vehicles.
GM is effectively closing Cruise (autonomous) and focusing on its Super Cruise (ADAS) feature. The engineering teams at Cruise will join the GM teams working on Super Cruise, effectively shuttering the fully autonomous vehicle business.
End of Cruise
GM cites that “an increasingly competitive robotaxi market” and “considerable time and resources” are required for scaling the business to a profitable level. Essentially - they’re unable to keep up with competitors at current funding and research levels, putting them further and further behind.
Cruise has been offering driverless rides in several cities, using HD mapping of cities alongside vehicles equipped with a dazzling array of over 40 sensors. That means that each cruise vehicle is essentially a massive investment and does not turn a profit while collecting data to work towards Autonomy.
Cruise has definitely been on the back burner for a while, and a quick glance at their website - since it's still up for now - shows the last time they officially released any sort of major news packet was back in 2019.
Competition is Killer
Their current direct competitor - Waymo, is funded by Google, which maintains a direct interest in ensuring they have a play in the AI and autonomy space.
Interestingly, this news comes just a month after Tesla’s We, Robot event, where they showed off the Cybercab and the Robotaxi network, as well as plans to begin deployment of the network and Unsupervised FSD sometime in 2025. Tesla is already in talks with some cities in California and Texas to launch Robotaxi in 2025.
GM Admits Tesla Has the Right Strategy
As part of the business call following the announcement, GM admitted that Tesla’s end-to-end and Vision-based approach towards autonomy is the right strategy. While they say Cruise started down that path, they’re putting aside their goals towards fully autonomous vehicles for now and focusing on introducing that tech in Super Cruise instead.
NEWS: GM just admitted that @Tesla’s end-to-end approach to autonomy is the right strategy.
“That’s where the industry is pivoting. Cruise had already started making headway down that path. We are moving to a foundation model and end-to-end approach going forward.” pic.twitter.com/ACs5SFKUc3
With GM now focusing on Super Cruise, they’ll put aside autonomy and instead focus solely on ADAS features to relieve driver stress and improve safety. While those are positive goals that will benefit all road users, full autonomy is really the key to removing the massive impact that vehicle accidents have on society today.
In addition, Super Cruise is extremely limited, cannot brake for traffic controls, and doesn’t work in adverse conditions - even rain. It can only function when lane markings are clear, there are no construction zones, and there is a functional web connection.
The final key to the picture is that the vehicle has to be on an HD-mapped and compatible highway - essentially locking Super Cruise to wherever GM has time to spend mapping, rather than being functional anywhere in a general sense, like FSD or Autopilot.
Others Impressed - Licensing FSD
Interestingly, some other manufacturers have also weighed into the demise of Cruise. BMW, in a now-deleted post, said that a demo of Tesla’s FSD is “very impressive.” There’s a distinct chance that BMW and other manufacturers are looking to see what Tesla does next.
BMW chimes in on a now-deleted post. The Internet is forever, BMW!
Not a Tesla App
It seems that FSD has caught their eyes after We, Robot - and that the demonstrations of FSD V13.2 online seem to be the pivot point. At the 2024 Shareholder Meeting earlier in the year, Elon shared the fact that several manufacturers had reached out, looking to understand what was required to license FSD from Tesla.
There is a good chance 2025 will be the year we’ll see announcements of the adoption of FSD by legacy manufacturers - similar to how we saw the surprise announcements of the adoption of the NACS charging standard.
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