Stichting Pensioenfonds ABP Reductions Tesla Controversy Surrounds Ties

Europe's largest pension fund divests its USD 585 million investment in Tesla, citing apprehensions regarding Elon Musk's compensation and substandard working conditions.

Stichting Pensioenfonds ABP Divests Tesla Shares

Stichting Pensioenfonds ABP, Europe’s largest pension fund, divested its entire EUR 571 million (roughly USD 585 million) investment in Tesla Inc during the third quarter, mainly due to dissent on Elon Musk’s compensation plan. The piece, initially reported by the Dutch publication Het Financieele Dagblad, indicated that substandard working conditions at the company were among ABP's motivations for divesting its interest in Tesla. A representative for Stichting Pensioenfonds ABP stated to Bloomberg on Sunday, “We had a problem,” in reference to Musk’s USD 56 billion compensation package agreed by shareholders in June 2024. ABP opposed the remuneration plan, deeming it "contentious and exceedingly high." The fund also evaluated costs, returns, and responsible investment criteria in its decision to divest its holdings.

Loss or Profit?

The outcome indicates that Stichting Pensioenfonds ABP will forfeit potential future gains and the record highs achieved following the 2024 election. The stock options package was originally valued at USD 2.6 billion and surged to USD 56 billion when the judge annulled it. Tesla currently has a valuation of over USD 1.27 trillion, with its shares increasing by roughly 74 percent over the past year. Business Insider reports that Tesla's Model Y was the top-selling vehicle in the Netherlands in 2024, although the manufacturer's sales in Europe have been decreasing. New Tesla car registrations from January to November 2024 decreased by more than 15 percent relative to the corresponding time in 2023, as reported by the European Automobile Manufacturers Association.

Escalating Competition

BYD Han

The emergence of Chinese automakers such as BYD and NIO presents a direct challenge to Tesla's market dominance in Asia. These brands provide comparable technology at more competitive pricing and, in several instances, surpass Tesla in range and features. In the 2000s, China recognized electric vehicles as a strategic sector and has since implemented numerous policy measures, including over USD 230 billion in subsidies and significant foreign investments, to secure a competitive advantage in low-cost EV manufacturing and to penetrate markets historically dominated by Western and Japanese brands. China's backing of domestic electric vehicle manufacturers through subsidies and infrastructural investment places Tesla at a competitive disadvantage. In the long term, Tesla may encounter increased difficulty in competing with local industry leaders in the region.

In a statement to the NL Times, Stichting Pensioenfonds ABP asserted, “We cannot and do not need to invest in everything,” emphasizing that the divestment was not politically driven. Musk has been a notable advocate for President-elect Donald Trump and is co-chairing a panel titled the Department of Government Efficiency. According to Yahoo Finance, Tesla's stock saw substantial rise after the election, attaining unprecedented heights in 2024 and elevating Elon Musk's net worth to USD 400 billion. On July 1, Tesla's stock commenced at USD 201.02 and concluded at USD 261.63 by September 30. During the quarter, the stock varied from a minimum of USD 182.00 to a maximum of USD 265.60.

Engagement in Political Activities

Aside from Tesla stocks, tensions are escalating within the right-wing movement regarding Elon Musk’s influence, as certain conservative individuals express disillusionment with his engagement in Republican politics. The Times of India reports that Musk, a significant force in technology and government via Tesla and SpaceX, advocates for H-1B visas, opposing individuals such as Steve Bannon, who perceive them as detrimental to American laborers. Bannon critiques Musk's involvement in U.S. politics, referencing his South African origins and implying he should "return to South Africa." The conflict underscores more extensive ideological rifts within Trump's political faction.