Elon Musk is about to find out if ultimatums really work

Almost to the weekend! If you're having a tough week, at least you're not Boeing. As if things weren't bad enough, US Secretary of State Antony Blinken was stranded in Switzerland after his Boeing jet was deemed unsafe to fly.

In today's big story, we're looking at the ultimatum Elon Musk gave Tesla's board amid a critical time for the company.

What's on deck:

But first, take it or leave it.

If this was forwarded to you, sign up here.

The big story

Elon's ultimatum

Elon Musk winking
REUTERS/Steve Nesius

Ultimatums rarely work in relationships, but what about between CEOs and the massive companies they run?

Elon Musk is about to find out.

The world's richest man posted on X that he wants 25% voting control in Tesla to grow it "to be a leader in AI & robotics." Musk, who has roughly a 13% stake in the EV maker, said if his request isn't met, he'll "prefer to build products outside of Tesla."

Musk's comments didn't go unnoticed. Wedbush's Dan Ives, one of the top tech analysts, said Musk's ask created a "firestorm," as Wall Street views Tesla's future AI projects as a key part of its upside.

Meanwhile, Ross Gerber, a longtime Tesla bull, said it's "absurd" to think Musk doesn't already have control over Tesla and described his request as "blackmailing the Tesla shareholders."

chart titled "Tesla's 2024 is off to a rough start"
Dow Jones, George Glover/Business Insider

Musk's power grab comes at a critical time for Tesla.

The company had a volatile 2023, including cutting the average price of its models by about 25%, making the first deliveries for its much-anticipated Cybertruck, and losing its spot as the world's top EV seller to China's BYD.

And even though Tesla closed out the year with a record-breaking fourth quarter in terms of vehicle production and deliveries, a wider slowdown in the EV market has Tesla investors on edge.

That's translated into a rough start to the year for Tesla's share price, which is down roughly 13% in 2024. That's a marked difference from its fellow "Magnificent Seven" mega-cap stocks — Apple, Microsoft, Alphabet, Amazon, Nvidia, and Meta — that are all up or flat on the year, except for Apple, which is down about 1.6%.

So, as outrageous as Musk's request might seem, it comes at the perfect time. Tesla investors need a win. Hopping on the AI bandwagon is the easiest way to get there.

Love him or hate him — these days, people typically fall into one of those two camps — Musk has proven to be an innovative thought leader. The risk of not meeting his demands and seeing his next great idea land at another company (making those shareholders rich) might be too much for Tesla investors.

But simultaneously, cowering to Musk's demands gives him incredible power. And what's to stop him from doing it again?

3 things in markets

Gold bull emerging through newspaper
Caspar Benson/Getty Images
  1. Some stocks with the potential for big returns. Top analysts gave these seven mid-cap stocks "strong buy" ratings, according to financial-data firm TipRanks. The picks have an upside as high as 288%, including Intellia Therapeutics and Shoals Technologies.

  2. The economy's not okay (Jamie Dimon promises). The JPMorgan CEO says it's wrong to think everything is "hunky-dory" because of the stock market's year-end rally. Geopolitical conflicts and the aftereffects of the Fed's monetary policy could spell trouble for the next few years, he added.

  3. Whether Trump or Biden wins, the market loses, according to Ray Dalio. The founder of Bridgewater Associates said the leading US presidential candidates both pose a threat to the markets. A win for Trump or Biden could further ignite political tensions, he said, which is a risk that hasn't been priced into the market.

3 things in tech

Dave Limp, Amazon's former devices chief
Picture Alliance / Getty Images
  1. Amazon faces hurdles while creating its new "Remarkable Alexa" voice assistant. Internal politics and technical issues are plaguing the process. Plus, the company isn't satisfied with the new Alexa's performance.

  2. Snap CEO Evan Spiegel's weekly routine. Helicopter rides. Turmeric facial scrubs. French lessons. That's how one of the world's youngest billionaires spends his weeks.

  3. Why a Supreme Court decision means Apple's App Store is as powerful — and profitable — as ever. At first glance, the decision seemed like bad news for the iPhone maker. But that's not true at all. Apple's control of its incredibly lucrative App Store is fully intact.

3 things in business

illustration of people building their own town
Hokyoung Kim for BI
  1. Inside an off-grid community of families preparing for the downfall of America. The residents of Riverbed Ranch are building their own small town from scratch. They've embraced a radical turn toward self-reliance and small-scale sustainability.

  2. Seven ways the labor market looks like it's in recession mode. Although unemployment has remained low, other labor market indicators are similar to those seen in prior recessions. The seven signs include quits, hires, and job-seeker sentiments.

  3. The secret of OnlyFans: It's much more than porn. Men are turning to creators for emotional connection amid a loneliness epidemic. "They can go to Pornhub and get naked people and sexual videos," one content creator said. "They don't come to OnlyFans for that. They come to OnlyFans to make a connection with the creator."

In other news

What's happening today

  • The Sundance Film Festival kicks off today. Kristen Stewart, Christopher Nolan, Maite Alberdi, and Celine Song will receive awards during the opening night gala.

  • Happy birthday, Eugene Lee Yang! Dave Bautista, Kevin Costner, Estelle, AA Milne, and Jay Chou were also born on this day.

  • Earnings today: KeyCorp, Northern Trust, and other companies.

For your bookmarks

Sweater showdown

Cream sweater
Jennifer Ortakales Dawkins/Business Insider

Why women's sweaters are more expensive than men's sweaters. Experts said that costs like tariffs and discounts factor into the retail price.

The Insider Today team: Dan DeFrancesco, deputy editor and anchor, in New York City. Diamond Naga Siu, senior reporter, in San Diego. Hallam Bullock, editor, in London. Jordan Parker Erb, editor, in New York. Hayley Hudson, director, in Edinburgh. Lisa Ryan, executive editor, in New York.

Read the original article on Business Insider