Trillion-dollar compensation finalized: Why did Elon Musk's core team "defect en masse"?

On August 23, in Alameda, California, an Optimus robot stands in front of a Cybertruck. Photo source: Anadolu via Getty Images

Just a few days after shareholders voted in favor of Elon Musk's $1 trillion compensation package, Tesla announced another high - level executive departure. Since the beginning of this year, Tesla has lost key executives in sales, batteries, robotics, and chips.

Tesla shareholders overwhelmingly approved CEO Elon Musk's unprecedented compensation package. If a series of financial and strategic goals are met, he will receive $1 trillion worth of stocks over the next decade. However, the engineers in charge of the company's core models (the popular Model Y, Model 3, and the controversial Cybertruck) are reluctant to stay and witness the subsequent development.

Emmanuel Lamacchia, a senior employee who had worked at Tesla for eight years and was the head of the Model Y project, announced on LinkedIn on Sunday evening that he would leave the Austin - based company.

Just a few hours before his post, Siddhant Awasthi, another senior employee who had also worked for eight years and was previously in charge of the Model 3 and Cybertruck projects, issued a similar resignation statement. Neither of them explained the reasons for their departure, only mentioning that they would start a new chapter in their careers without revealing specific details.

01

Musk is trying to reshape Tesla's business landscape, shifting the focus to the currently non - revenue - generating artificial intelligence business, namely autonomous taxis (robotaxis) and humanoid robots, rather than continuing to expand the profitable electric vehicle, battery, and charging service businesses.

Against this backdrop, several senior engineering staff at Tesla have left one after another, and the two mentioned above are just the latest examples.

Earlier this year, Musk fired the heads of manufacturing and sales in North America and Europe. In August, the head of Tesla's battery team, the former head of the "Dojo" supercomputer project, and the vice - president of North American sales and service left the company one after another. Even the head of the Optimus robot project, which Musk had previously hyped up (the billionaire said last week that it might become Tesla's biggest new business), left in June.

A former Tesla executive who wished to remain anonymous said that in addition to the Cybertruck, which has poor sales, is widely criticized, and is considered one of the biggest failures in the automotive industry, Musk's emphasis on non - electric vehicle businesses has also led to a continuous decline in Tesla's attractiveness to automotive engineers.

"Imagine if you are a professional in the automotive industry or a student in an engineering college. After joining Tesla, you can't see any plans for new models in the company's future, but only focus on cost - cutting. That's not attractive at all. They can't attract top talents in the automotive industry this way," the former executive said.

The recent departures of these two executives have not affected shareholders' confidence. Last Monday, Tesla's stock price rose 3.7% on the Nasdaq, closing at $445.23.

02

Although Tesla's third - quarter deliveries surged as US consumers rushed to buy cars before the federal tax credit policy phased out on September 30, its electric vehicle sales have still declined by about 6% this year. Despite the company's launch of low - cost versions of the globally popular Model Y and Model 3, the lack of new products and the slowdown in the growth of the electric vehicle market in Europe and the United States indicate that Tesla's vehicle sales may continue to decline in the next few quarters.

Last week, Musk said that Tesla's two - door Cybercab is expected to be launched in the second quarter of 2026. This vehicle eliminates the steering wheel and standard control devices and operates entirely in autonomous driving mode. This is undoubtedly a bold bet, as Tesla has yet to prove that its autonomous driving technology can compete with Waymo, a subsidiary of Alphabet.

Ross Gerber, an investor in Tesla and a critic of Musk's strategic shift, believes that Tesla should simply launch the Cybercab as the so - called "Model 2." "It would be good to launch it as an ordinary electric vehicle priced at about $30,000," he said in an interview with Forbes.

"The rule in the automotive industry is that consumers want new models and new features. They hope the vehicle design is not too different from the original but also has some innovations," said Gerber, the CEO of investment firm Gerber Kawasaki, which manages about $4 billion in assets, including $80 million in Tesla stocks. "Tesla's approach is not like that of an automotive company at all. They just make some modifications to the Model Y and claim, 'We've upgraded the models and made the Model Y and Model 3 better.' But this is not a real new model, and that's the problem."

Austin residents held a protest against Tesla's proposed $1 trillion compensation package for CEO Elon Musk. Photo source: The Austin American - Statesman via Getty Images

03

Musk once claimed that the annual sales of the Cybertruck would reach hundreds of thousands of units. However, sales began to decline in the second full year after its launch. In the first three quarters of this year, its sales were only 16,097 units, a 38% year - on - year decrease. In addition to the polarized reviews of its appearance design, this vehicle has also undergone multiple recalls, with the most recent one announced last month.

According to Musk, Tesla will finally start selling electric semi - trucks in 2026. However, considering that the market size of Class 8 semi - trucks is much smaller than that of passenger cars, this model may only increase the company's sales by tens of thousands of units.

Tesla said that the combined annual production capacity of its factories in California, Texas, China, and Germany is at least 2 million vehicles. This year, Tesla's annual sales are expected to be between 1.5 million and 1.6 million vehicles, so this production capacity far exceeds the current demand. At last week's shareholders' meeting, at least 75% of the investors voted in favor of Musk's compensation package. If a series of financial and strategic goals are met, he will receive $1 trillion worth of stocks over ten years. The billionaire hinted at the meeting that Tesla might use part of the excess production capacity to produce robots.

Musk said that the company is building a "production line with an annual output of 1 million Optimus robots" at the Fremont factory. In the future, Tesla will also add a "production line with an annual output of 10 million robots" at the Austin factory in Texas (currently responsible for producing the Cybertruck and Model Y). However, similar to Musk's autonomous taxi and Cybercab plans, whether Tesla can mass - produce and sell millions of Optimus robots depends on whether it can make the relevant technology both practical and economical, which has not been achieved yet.

04

The departures of Lamacchia and Awasthi also highlight a long - standing problem that Tesla's board of directors seems reluctant to solve: the lack of a strong executive team and the failure to establish a clear succession plan for the post - Musk era.

Except for the chief financial officer, Tesla's executive team currently does not have positions such as president, chief operating officer, or executive vice - president, and there are no managers with positions higher than senior vice - president.

At present, Tesla's board of directors' strong push for the passage of Musk's compensation package is equivalent to betting everything on him.

"I can't imagine that Tesla's valuation won't collapse once Elon Musk leaves," said Gautam Mukunda, a professor at Yale School of Management. "We need to invent a new term for Tesla's dependence on Musk because the conventional 'key person risk' is completely insufficient to describe it. Moreover, since the man himself admits that his actions carry extremely high risks, the conventional concept is even less able to describe the severity of Tesla's situation."

This article is translated from: https://www.forbes.com/sites/alanohnsman/2025/11/10/teslas-engineering-exodus-comes-amid-shift-from-core-ev-mission/

Original title: "Tesla's Engineering Talent Drain Amid Strategic Shift in Core Electric Vehicle Business"

This article is from the WeChat official account “Forbes” (ID: forbes_china). Author: Alan Ohnsman; Translator: Lemin. Republished by 36Kr with permission.