Elon Musk Invests $1 Billion in Tesla Shares, Boosting Investor Confidence in 2025

Tesla’s CEO Elon Musk has acquired roughly $1 billion worth of Tesla shares. Photo by Chip Somodevilla/AFP/Getty Images.

Elon Musk made a substantial bet: he spent $1 billion of his own capital to acquire additional Tesla shares. The move immediately lifted investors’ mood and supported expectations for a slow but steady return of the company in 2025, despite a challenging year for the industry.

The purchase took place on Friday and was disclosed in a filing the following Monday. This decision by Musk to use his own funds to buy shares without options reveals a new approach to managing his assets, signaling trust in Tesla’s future without using instruments under the previous agreement.

At the start of trading, Tesla jumped about 7%, but intraday gains did not rise as quickly and closed around 4% in the green. The very fact of the purchase allowed offsetting part of the annual losses that could total around 42% by the end of 2024.

“This is a huge sign of confidence from Musk, and bullish investors are cheering,” said Dan Ives, a technical analyst at Wedbush Securities and one of Tesla’s biggest fans on Wall Street. “This sends a positive signal after a very turbulent year for Musk and Tesla’s shareholders.”

The very fact of the $1 billion purchase underscores Musk’s wealth: the rise in the stock’s price added about $5.8 billion to his net worth, underscoring the investment’s more than symbolic nature.

Following the events, Tesla’s shares nearly doubled amid expectations about Musk’s close ties with future U.S. administrations and his involvement in autonomous vehicle and robotaxi projects. At the same time, the company faced intensified competition in the global electric-vehicle market, particularly from Chinese manufacturers such as BYD, which are increasingly challenging Tesla for leadership in the industry.

The company also expects the $7,500 EV purchase tax credit in the United States to end by the end of the month. While these incentives may support sales in the third quarter, the year could end with a decline due to the competitive environment and regulatory constraints.

Along with economic issues, Musk has clashed with Trump after returning to run Tesla. However, supporters of the entrepreneur point out that the company’s future value depends more on the development of self-driving technology and potential plans for robotaxi.

In August, the company proposed a new compensation package for Musk that could include additional options and substantial future payouts for achieving certain sales targets and price milestones. Nevertheless, Musk will not receive additional shares until the market capitalization exceeds $2 trillion; Tesla’s current estimated value stands at about $1.3 trillion. Last week, Tesla’s shares rose 13% after the package was announced.

The board of directors at Tesla, in a proxy statement, highlighted the importance of Musk’s focus on the company’s development. In addition, Musk heads SpaceX and xAI, and is the owner of the social network X, purchased for $44 billion in 2022. He expressed an intention to form a third political party, but details remain unclear.

Highlighting the impact of wealth on policy and business decisions, Pope Leo XIV, in his first major interview after taking the helm as the first American pope, voiced thoughts on CEO pay and a potential compensation package as an example of unequal income distribution that could deepen social polarization.

“What does this mean and what is this all about? If this is the only thing of value right now, then we are in for big problems,”

The updated package of Musk’s Tesla shares increased his holdings by 2.6 million shares in the portfolio as of Monday. However, this hardly changed the percentage distribution of his stake: his total share rose to approximately 12.8% of the company’s shares.

Previously, Musk often used options as a means to expand his influence within the company. Currently, his total number of shares stands at about 413 million, giving him roughly 12.8% of the equity. He has also expressed an intention to focus on retaining at least 25% of voting control and is considering moving some AI efforts to the new xAI unit, without diminishing his influence over company decisions.

“I feel uncomfortable growing Tesla as a leader in AI and robotics without roughly 25% voting control. That’s enough to have influence, but not so much that I could be overridden,” Musk wrote in a post on X in January 2024. “If that’s not the case, I would prefer to develop products outside of Tesla.”

This story has been updated with new material and context to reflect the current state of Musk’s and Tesla’s fortunes amid the ongoing growth of the electric-vehicle market and innovations in fields that help sustain investor interest.