Tesla fervently invested $200K in advertising on Elon Musk’s X thus far.

Tesla’s Advertising Expenditure on Elon Musk’s Social Media Platform, X

Tesla has allocated approximately $200,000 towards advertising on Elon Musk’s social media platform, X, up to February, following the CEO’s decision to yield to shareholder pressure and explore advertising avenues for the company. This expenditure has seen Tesla’s ads appearing in various online spaces such as Google search results and YouTube.

However, it has become increasingly evident that Tesla, Elon Musk’s car company, is essentially paying his social media company, X, for advertising services. Details regarding this financial transaction were unveiled in Tesla’s annual proxy statement released on Wednesday, specifically under the section detailing “related person transactions” the company has engaged in.

While Tesla hasn’t disclosed its overall advertising expenditure, it has disclosed payments made to X for commercial, consulting, and support agreements, amounting to around $50,000 in 2023 and $30,000 up to February 2024.

Intercompany Transactions and Payments

In return, X has also paid Tesla for similar unspecified services, totaling $1 million in 2023 and approximately $20,000 through February 2024. Although the specifics of these agreements remain undisclosed, reports suggest that both companies have exchanged or loaned employees following Musk’s acquisition of X and his increased focus on AI development across both businesses.

This pattern of transactions between Musk’s companies continues in 2023, as evident from SpaceX’s payment of $2.1 million to Tesla and Tesla’s payment of $700,000 to SpaceX, primarily for commercial, licensing, and support agreements, along with the use of SpaceX’s corporate jet by Tesla for $100,000 up to February 2024. Additionally, Tesla has paid Musk’s tunneling venture, The Boring Company, $200,000 in 2023 and $1 million up to February 2024. Notably, Tesla divulges that it engaged a security firm owned by Elon Musk in December 2023 to provide security services for him, costing the company $2.4 million in 2023 and approximately $500,000 through February 2024, although this is only a fraction of the total security services cost related to Musk.

Lastly, Tesla has received payments totaling $11.5 million in 2023 and approximately $6 million through February 2024 for scrap materials from Redwood Materials, an EV battery recycling company headed by Tesla board member and former CTO, JB Straubel.

Texas reincorporation

The financial maneuvers occur amidst Elon Musk’s ongoing efforts to challenge a recent ruling by the Delaware Chancery Court, which invalidated his substantial 2018 stock compensation scheme. The court’s decision was partially based on Tesla’s alleged misrepresentation of key directors’ independence and omission of critical details regarding the plan’s formulation.

Expressing discontent with the ruling, Musk declared on X shortly afterward that Tesla would swiftly initiate a shareholder vote to relocate its state of incorporation to Texas, where the company has already shifted its physical headquarters. Following Musk’s announcement, Tesla’s board commenced an evaluation process, led by board member Kathleen Wilson-Thompson. A special committee was established, supported by legal experts and financial advisers, to oversee the potential reincorporation and address the stock compensation package’s re-voting.

Over a rigorous eight-week period, the committee convened numerous times and conducted extensive interviews with board directors and Tesla’s management. After considering multiple states for reincorporation, the committee narrowed down to Texas, recognizing the common incorporation practices of businesses in either Delaware or their home state. The decision to proceed with the move and the “re-ratification” of Musk’s stock plan will be subject to a shareholder vote at Tesla’s upcoming annual meeting on June 13.

Although the success of these votes seems probable, they are likely to provoke further legal discussions afterward. Musk and his brother Kimbal, a board member, have recused themselves from voting on the relocation due to Elon Musk’s prior statements on X regarding reincorporation.

Despite external scrutiny and media attention surrounding Musk, Tesla, and its board, the committee emphasizes its unwavering commitment to conducting an independent evaluation process. The intense public interest only bolstered the committee’s determination to ensure impartial decision-making.

The paragraph at the end provides a correction regarding the financial arrangement between Redwood Materials and Tesla.