What happens if Musk does not reach a 25% voting share of Tesla?

Morgan Stanley raised its concerns about the future of Tesla (NASDAQ: TSLA)'s in-house AI development if Elon Musk fails to secure a 25% voting stake in the company.

In a research note Wednesday, the investment bank cites Musk's comments during the Q4 2023 earnings call, where he expressed discomfort with expanding AI without more control.

"I'm not looking for additional economics. I just want to be an effective steward of very powerful technology," Musk stated, according to Morgan Stanley.

The bank says that this suggests that without a larger voting stake, Tesla might significantly slow down or even curtail direct investment in cutting-edge AI projects.

While Tesla could still benefit from broader AI advancements indirectly, Morgan Stanley believes the focus of such efforts would likely shift to entities outside of Tesla where Musk holds greater control.

The note concludes with a glimmer of hope for Musk's ambitions. Morgan Stanley acknowledges the uncertainty surrounding the upcoming June 13th shareholder vote, but suggests there might be "any number of potential paths" for Musk to eventually reach the 25% voting share threshold, even without including his 2018 compensation package.

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