Last year, Elon Musk secured a $1 trillion pay package for being CEO of Tesla (NASDAQ: TSLA). That pay package, however, won't be paid out all at once. Instead, Musk will have to hit certain incentive milestones to unlock his payday.
"Musk ... must drastically raise the electric car firm's market value over 10 years," notes the BBC. "If he does this and meets various targets, he will be rewarded with hundreds of millions of new shares." These new shares would be Musk's only compensation -- apart from the appreciation of his current ownership stake -- as he has elected to not take a salary.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »
What, exactly, are the targets Musk needs to meet? The list includes:
The sale of 20 million Tesla vehicles
Reaching 10 million subscriptions to Tesla's self-driving software
Generating $400 billion in profit
Pushing Tesla's market cap above $8.5 trillion
These targets are ambitious. But there's one key driver that, while likely not sufficient on its own to get Tesla's market cap to $8.5 trillion, should prove most valuable in the journey to reach that figure.
If Musk is unable to scale Tesla's robotaxi division, it seems very unlikely that an $8.5 trillion valuation will ever be attainable. It's not hard to see why that's the case, given how interrelated robotaxis are to the rest of Tesla's business.
First off, the robotaxi market is expected to be large in the long term. Some experts believe an $8 trillion to $10 trillion market could eventually form globally. That gives Tesla plenty of potential growth runway for its robotaxi division.
Nearly all of Tesla's vehicle models should be capable of participating in Tesla's robotaxi service. Tesla is hoping third parties will buy large blocks of vehicles to operate fleets of autonomous taxis. Tesla would presumedly take a cut of every ride as a service fee. Especially following the launch of its Cybercab -- a vehicle with no steering wheel or pedals, designed specifically to operate as a robotaxi -- Tesla's vehicle sales will increasingly be dominated by purchases intended to supply its robotaxi network.
Scaling robotaxis would therefore help Tesla not only hit its target of selling 1 million robotaxis but also meaningfully contribute to its broader target of reaching 20 million vehicle sales in total. Robotaxis should also have a higher margin than vehicle manufacturing, making the service critical for reaching Tesla's $400 billion profit target. And because all of these robotaxis will be subscribed to Tesla's self-driving software platform, they will also contribute meaningfully to the company's target of reaching 10 million self-driving subscriptions.
In all, the importance of robotaxis to Tesla's long-term growth cannot be overstated. Robotaxis, therefore, will also be critical for Musk to reach the incentives of his massive pay package.
I am very bullish on Tesla's ability to compete in the robotaxi market, though I do believe this market will mature later than many investors hope. Tesla's vertical integration should prove invaluable in scaling its service faster than the competition and at a lower cost. But expect most of this opportunity to spread itself over the next decade, not just the next couple of years, as Musk would like investors to believe.
In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. If you'd invested $5,000 then, you'd be sitting on $2,837,545 today.*
Now, for the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. It's a key player in the $1.8 trillion space race, and with the stock recently sitting 20% off its highs, the window to get in early is closing fast.
*Stock Advisor returns as of August 3, 2026
Ryan Vanzo has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.
Elon Musk Needs Tesla to Reach a $8.5 Trillion Market Cap to Cash In. Here's How Tesla Can Reach That Valuation. was originally published by The Motley Fool