Tesla has spent about $200,000 on advertising through February on Elon Musk’s social media platform, X, after the CEO bowed to shareholder pressure last year and said his company would “try some advertising.”
Since then, Tesla ads have appeared in places like Google search results and on YouTube. But it was also increasingly apparent that Elon’s car company was paying Elon’s social media company to advertise as well. Now we know how much the Tesla X paid thanks to details released Wednesday at its annual proxy statement, which includes a section on “related party transactions” that the company has entered into. (Tesla has not disclosed how much it has spent on advertising in total.)
Tesla also paid X about $50,000 in 2023 and $30,000 through February 2024 for “commercial, consulting and support agreements.” Similarly, X paid Tesla $1 million in 2023 and about $20,000 through February 2024 for the same unspecified work. Tesla isn’t saying exactly what those deals entail, but the companies have reportedly shared or loaned employees following Musk’s acquisition of X and his increased focus on building AI products into each business.
Virtually all of Musk’s companies have been involved in deals like these over the years, and 2023 was no different. The proxy filing shows that SpaceX paid Tesla $2.1 million in 2023 and about $800,000 through February 2024 for “certain commercial, licensing and support agreements with Tesla.” Tesla, meanwhile, paid SpaceX $700,000 in 2023 and $100,000 through February 2024 for the use of a corporate jet owned by Musk’s space company. Tesla paid Musk’s tunneling effort, The Boring Company, $200,000 in 2023 and $1 million through February 2024.
Curiously, Tesla says that in December 2023, it hired a security firm owned by Elon Musk to provide him with security services, “including his duties and work for Tesla.” The company says it already cost $2.4 million in 2023 and about $500,000 through February 2024. It adds that this is only “a portion of the total cost of security services related to Elon Musk.”
Finally, Tesla also says it was paid $11.5 million in 2023 and about $6 million through February 2024 for scrap metal from EV battery recycling company Redwood Materials, which is run by Tesla board member (and former CTO) JB Straubel.
Reincorporation of Texas
All of this financial uplift comes as Musk is still trying to appeal a recent ruling by the Delaware Court of Chancery that struck down his massive stock compensation plan for 2018. The judge made that decision in part because she believed that Tesla “ inaccurately described the principal directors [of Tesla’s board] as independent and misleadingly omitted key details about the process’ of assembling the package.
Musk was furious with the decision and posted on X shortly after that Tesla “will move immediately to conduct a shareholder vote to move incorporation status to Texas,” where Tesla has already moved its physical headquarters.
The attorney reveals that Tesla’s board began a process shortly after to evaluate the idea — they also say they had previously considered moving the company’s incorporation status, but never decided — because “a review is a board decision, not a decision by a chief executive officer.” A special committee was formed, headed by board member Kathleen Wilson-Thompson. It hired two attorneys from Sidley Austin to represent the committee and hired a special counsel from Delaware, a Chicago law professor , and Houlihan Lokey as a financial advisor to help with the process.They also began determining what to do about re-voting on Musk’s compensation package.
Over the course of eight weeks, the Wilson-Thompson panel met 16 times for more than 26 hours, and Tesla says it personally spent “more than 200 hours” working on the issue. Sidley’s attorneys spent “more than 600 hours each” on the matter and were supported by “more than 40 other Sidley attorneys.” Through this process, seven directors of the board and five members of Tesla’s management were interviewed.
Tesla details how several states were considered before settling on Texas, as companies tend to incorporate in either Delaware or their home state. And finally the decision was made to put the move and “revalidation” of Musk’s stock plan to a shareholder vote at the company’s annual meeting, which will now take place on June 13. While it’s hard to imagine either of these votes failing, they’re likely to spark even more legal debate after this vote takes place. Musk and his brother Kimball, who sits on the board, are recused from voting on the move “because [Musk’s] previous posts on X about reintegration.”
“The Commission and its counsel are aware of the media narrative regarding Musk, Tesla and its board of directors,” the commission wrote to the attorney. “And the Commission’s proceedings were conducted against a backdrop of continued public interest in whether Tesla would be reintegrated into Musk’s compensation as well. Far from being influenced by these factors, this external narrative and attention strengthened the commitment of the Commission and its counsel to conduct a steadfastly independent process.”
This story originally misstated who was being paid in the deal between Redwood Materials and Tesla. Redwood Materials has paid the money to Tesla.
