Elon Musk, founder of tech companies such as Tesla Motors, SpaceX, and The Boring Company, is a self-made billionaire known for pushing society forward with innovative, disruptive ideas. While it’s easy to watch and appreciate what he’s doing in the public eye, how he achieved his net worth of more than $20 billion is a little more mysterious. In this article, we take a look at the many ways Elon Musk has made, currently makes, and will make money.
Musk’s Initial Rise to Success
Musk first gained success and wealth when he co-founded the start-up Zip2, a web-based city guide, in 1995, with his brother Kimbal. Zip2 later sold to Compaq for $340 million in cash, $15 million in stock options, and a hefty $22 million salary for Elon. By 1999, he invested the money from his Zip2 success into X.com, an online banking and payments-based company. X.com would later become one of the biggest players of the tech world with PayPal, for which Musk served as the founding chairman and was granted stock options worth millions. Musk made close to $22 million on the sale of PayPal to eBay a few years later. By 2002, all three of Musk’s companies were sold and he had a net worth of more than $200 million.
Tesla Motors, SpaceX, and the Boring Company
Fast forward a few years to today and the majority of Musk’s money comes from his stock options in the three companies he founded: Tesla Motors, SpaceX, and the Boring Company. His ownership of Tesla is around 20 percent, or roughly $12.7 billion. His ownership of SpaceX is estimated to be around $4-5 billion. The remaining stake comes from the Boring Company, which estimates his share to be worth $1 billion.
As part of his role with Tesla, SpaceX, and the Boring Company, Musk receives a salary of only $37,000. This is intentionally low as he believes that when compensation is too high, the shareholders and stakeholders suffer.
Musk’s Other Investments
In addition to his direct income from the companies he’s created, he has made multiple investments throughout the years. During the first part of his tech career, Musk used his money to invest in companies such as DeepMind Technologies, which was later acquired by Google, Everdream Corporation, a Northern California-based provider of on-demand desktop services, and Xiaomi, the Chinese electronics company. More recently, Musk made an undisclosed personal investment in artificial intelligence firm Vicarious Inc.
Philanthropic Contributions
Musk has used his vast wealth to make various philanthropic contributions. He has donated $7 million to the Future of Life Institute, which is aimed at researching and protecting our species from the potential risks of artificial intelligence. Additionally, he pledged $1 billion to develop green energy technology as part of his “Spaceship Earth” project. As for his charitable donation since 2002, he’s given away more than $100 million which mostly goes “towards scientific, technical and environmental research focused on renewable energy and sustainability,” including studies by California Institute of Technology.
Musk’s Tax Breaks
In spite of his philanthropic endeavors, it’s important to note that Elon Musk pays very little in taxes due to a variety of tax breaks — something that has been subject to debate, as some believe these tax breaks are insufficiently regulated. Musks’ companies are able to avail of various credits such as a research and experimentation tax credit, a renewable energy production tax credit, and a solar investment tax credit. Additionally, in the US, Tesla was able to benefit from a very generous government incentives for electric vehicles. All of this helps keep his total taxes paid very low.
Tesla’s Stock Price Explodes
In 2020, Tesla’s stock has skyrocketed as the nearly 15-year-old company has made its name as the leading player in the electric car industry. This rise in share price has been incredibly beneficial to Musk’s wealth. At one point in August 2020, Musk overtook Amazon’s Jeff Bezos to become the world’s wealthiest person – with net worth of simply over $206 billion.
Musk’s wealth was most recently estimated to exceed $20 billion, with the majority of his money coming from his stock ownership and options in Tesla, SpaceX, and the Boring Company. The remaining wealth comes from his investments portfolio and tax breaks he receives on his companies.
Musk’s Compensation Package
In 2018, Elon Musk entered into a 10-year compensation plan with Tesla with the aim of taking the company to unprecedented heights. The core of the plan is that Musk won’t be paid a salary, or bonuses, or have any other personal financial incentives from the company. Instead, the only money he’ll receive from Tesla will be in the form of long-term incentives. In this way, Musk’s money from Tesla is directly correlated to the company’s long-term success. Thus, as long as Tesla shares thrive, Musk will keep earning lots of money.
Looking to the Future
Looking to the future, Elon Musk’s net worth will likely continue to grow as his companies grow and develop. He’s been extremely forward-thinking with how he builds companies, and it’s clear that he’s motivated more by creating something meaningful than by the money it will generate. Nevertheless, Musk is an exemplary example of the success that comes from solving problems, pushing the envelope, and having the courage to venture into uncharted territory.
Finding New Opportunities
Musk is an innovator, and he’s not afraid to think outside the box and seize new opportunities. He saw an opportunity when Tesla nearly failed in 2008, investing his own money and vowing to stay in control. He capitalized on the growing demand for electric vehicles and the potential of technology advancements to create a sustainable car company. And he kept exploring new opportunities – from launching reusable rockets with SpaceX to launching a tunneling company with the Boring Company.
Exploring The Benefits of Automation
Musk isn’t just interested in putting resources into the projects he builds; he’s also looking to the future and exploring methods for leveraging automation in order to streamline processes and increase efficiency. Musk’s robotics initiatives and automated production technologies are key components of his success. Automation has helped his companies become more efficient and profitable, and he believes that it’s the key to our future survival as a species.
Putting the Pieces Together
The incredible combination of entrepreneurship, resources, and boldness are what have enabled Elon Musk to become one of the wealthiest people on the planet. He took risks to get where he is today and was rewarded for it, but he also poured his heart, soul, and sweat into his creations. By combining a wide range of skills and knowledge, he was able to create successful businesses that would shape the future.
