Elon Musk(photo) is battling on two fronts, in court and business. Following a defeat in a Tesla stock option lawsuit worth $56 billion, retired executives from X (formerly Twitter) have filed a lawsuit demanding $128 million in severance pay. An investigation into violations of securities laws by the U.S. Securities and Exchange Commission (SEC) is also underway with the acquisition of X. Amid ongoing litigation, Tesla, Musk’s main business, is causing him distress as its stock price plummets due to a decrease in shipments.
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On the 4th (local time), Bloomberg and Reuters reported that four former executives, including former X CEO Parag Agrawal, have filed a lawsuit demanding more than $128 million in severance pay from Musk. The size of the severance pay was calculated to include a year’s salary and stock options.
They were fired just minutes after Musk acquired X. The former executives claim that Musk deliberately failed to fulfill promises to provide stock compensation along with the acquisition. The basis of the lawsuit mentions content from Walter Isaacson’s biography of Musk published last year. The biography includes content that Musk finished the deal a day ahead of schedule to prevent X executives from exercising their stock options. At the time, Musk is said to have mentioned, “If we finish the deal tonight, we can save $200 million.”
After acquiring X, Musk faced numerous severance pay lawsuits for laying off 75% of the employees. He was also sued for not paying costs to PR agencies, consultants, and landlords. Regarding the acquisition of X, he is also under investigation by the SEC for violations of securities laws and disclosure obligations. Musk had refused the SEC’s subpoena investigation but recently became obligated to respond to the subpoena due to a court ruling.
Business is not going as planned either. The main problem is his flagship company, Tesla. On the same day, Bloomberg cited a survey by the China Passenger Car Association (CPCA), reporting that Tesla’s shipments in China in February decreased by 19% to 6,365 units compared to the same period last year. This is a 16% decrease compared to January, and the lowest since December 2022. The CPCA estimated that sales of electric and plug-in hybrid vehicles in China in February decreased by 9%, but Tesla’s decrease in shipments was even steeper.
Upon this news, Tesla’s stock price closed down 7.16% from the previous trading day. Bloomberg pointed out, “Even considering the typically sluggish car sales in the month of the Spring Festival (Lunar New Year) holiday in China, the growth of the Chinese electric vehicle market is slowing down. Pressure from local competitors in China, such as BYD, is also intensifying.”
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