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 has begun to reach out to customers in the United States and is offering demo drives of the Cybertruck on an invite-only basis. @brandonhd on X shared the first invite image, and it looks like it's going out quite quickly to multiple locations that have Cybertrucks on display.
Up until now, display vehicles have been for just that – looking, but no touching. Some Tesla delivery centers and showrooms have also allowed viewers to take a seat inside and open it up, but most are still locked away behind the velvet rope.
It’s exciting to see that Tesla has begun to demo them – and it can only be so long until demo drives open up to everyone.
Advisor-led Demo
This Demo Drive is led by a Tesla Advisor – while you’re driving, the advisor will be in the passenger seat, walking you through the experience. They’ll explain steer-by-wire, off-road controls, and will introduce new-to-Tesla buyers to all the features that are currently available.
The list of locations so far for demo drives appears to be fairly limited, but we will hopefully see demo drives roll out throughout the United States, and eventually Canada too. Here is the current list of city/state locations that have seen demo drive invites.
Actually Smart Summon, the successor to Tesla’s Smart Summon feature, has been confirmed to be coming as soon as next month as per Elon Musk. Colloquially known as “ASS”, Actually Smart Summon is supposed to improve on the regular Smart Summon capabilities, which have historically used ultrasonic sensors (USS) to navigate parking lots.
We’re looking forward to Actually Smart Summon, and we’re quite excited about what other features will be unlocked once it finally shows up at our doorstep.
Vision-based Improvements
ASS is supposed to bring Smart Summon to vehicles that don’t have USS – using Tesla Vision. Most recently, Tesla has brought Autopark to vehicles without USS, and Vision-based Autopark has been a huge success. It is faster, more reliable, and smoother than the older USS-based solution. It can also park and maneuver in tighter locations.
Today, Smart Summon is sometimes useful at best, usually a party trick, or downright dangerous at worst. It’s excellent and best used in straight lines, where you have a clear line of sight of the vehicle, and can stop it if doesn’t see an obstacle.
I used Smart Summon today, just before writing this article – my 2022 Model Y (with USS) – did manage to show up just fine – in a straight-line location from where I was parked, after exiting the parking spot fairly cleanly. However, I’ve previously used Smart Summon and have had the vehicle turn towards obstacles, such as cart returns or curbs. Overall, it’s a sometimes-useful feature that has a lot of drawbacks right now.
Smart Summon is also restricted to a certain distance – and it's pretty small. The max distance is shorter than most parking lots, being only about 215 ft (65m). If you’re lucky enough to park close, it's very useful to bring your car right to you.
Actually Smart Summon
ASS will bring FSD V12-like capabilities to Smart Summon – the vehicle will primarily use Vision to drive toward you (or the location you’ve indicated). ASS has been supposed to be coming since about September 2022 and has seen many delays – we’re almost at the 2-year point today.
We’re looking forward to Actually Smart Summon being able to bring the vehicle – safely – right to you. ASS is also one of the key steps towards bringing some other cool features that Elon Musk has previously mentioned – Park Seek and Banish Autopark.
We’re also hopeful that Actually Smart Summon will increase the maximum range a vehicle can be summoned, because the current range is fairly small. Alongside Park Seek and Banish Autopark, we’re closing in on a Robotaxi-based future.
Park Seek and Banish Autopark
When the FSD v12.4 showed up, Elon also mentioned that going forward, vehicles would automatically park themselves when arriving in a parking lot – Park Seek – and that if you got out of the car at the entrance to a business, you could get it to automatically park itself in the parking lot – Banish Autopark. These are two features that are needed for Robotaxi to work – which itself is delayed to October 10th of this year. We’re looking quite forward to them – as in combination with Actually Smart Summon, Tesla has reached the cusp of vehicle autonomy.
A vehicle that arrives, driverless, at the location you’re at, then drives somewhere, parks itself there, and waits for you – is the definition of a Robotaxi.
While we’re likely to have to wait for Banish Autopark and Park Seek just a bit longer, Actually Smart Summon being around the corner is exciting! Gone will be the days of having to run out to your car when you forgot your umbrella – your car will just come right to you instead.
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