Elon Musk, the chief executive of electric car maker Tesla, on Monday said he was uncomfortable growing the company to be a leader in artificial intelligence and robotics without having about 25 per cent voting control.
That level of control would be “enough to be influential, but not so much that I can’t be overturned”, Mr Musk said in a post o social media platform X.
“Unless that is the case, I would prefer to build products outside of Tesla.”
Tesla, the world’s largest car company in terms of market capitalisation, started production of the Dojo supercomputer last year to train AI models for self-driving cars.
Last year, Mr Musk launched an AI start-up called xAI, which has developed Grok, a chatbot rivalling OpenAI's ChatGPT.
Mr Musk, who is leading the new company that is a separate entity from his X Corp, waded into the AI field in 2015 when he cofounded OpenAI.
In a separate post, he said he would be fine with a dual-class share structure to achieve 25 per cent voting control but was told it was “impossible” after Tesla's initial public offering.
A company or stock with a dual-class equity structure features multiple classes of shares that come with varying voting rights.
Normally, insiders receive shares from a class that grants them increased control and voting privileges, while the general public is offered a class of shares carrying minimal or no voting rights.
“If I have 25 per cent, it means I am influential, but can be overridden if twice as many shareholders vote against me vs for me,” Mr Musk said.
“At 15 per cent or lower, the for/against ratio to override me makes a takeover by dubious interests too easy.”
Mr Musk, the world's richest person, owns about 13 per cent of Tesla stock after selling billions of dollars of the company’s shares in 2022 to help finance his $44 billion acquisition of Twitter.
Tesla recently lost its crown as the world’s largest EV seller to China's BYD, despite reporting record quarterly sales in the fourth quarter of 2023.
The Texas-based company sold 484,507 vehicles in the October-December period, an annual increase of about 20 per cent. Despite better-than-expected deliveries, it was fewer than the 526,409 EVs sold by BYD in the same period.
Electric vehicles will make up about half of the new car sales worldwide by 2035 as the push for net-zero carbon emissions accelerates, according to Goldman Sachs Research.
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
