How Elon Musk Spends His Billions
In the mind of the Tesla cofounder, who is worth $292 billion, who’s company Tesla recently joined the trillion-dollar club on Monday after Hertz announced that it will order 100K+ cars to build out an electric fleet (half of which will be available to Uber drivers!). This drove the company’s market cap over $1 trillion for the first time, making it more valuable than Facebook.
How did Elon Musk make his billions?
Elon Musk got his first pay check when he was 12 by creating a selling a video game for $500. Eventually Musk moved to Canada where he spent a lot of time working hard labor — cutting logs, shoveling grains, cleaning the boiler room etc — before he landed a summer internship at the Bank of Nova Scotia.
He founded Zip2 along with his brother, using the $28,000 seed money that their father had agreed to invest. Four years later they managed to sell the company for a whopping $307 million making Musk, who walked away with $22 million.
After helping found Paypal, he earned $180 million from the deal.
Over the years he founded several more companies: Tesla, SolarCity, SpaceX, The Boring Company and Neuralink eventually launching him to the richest man on earth in 2021.
How does Elon Musk spend his billions?
Elon doesn’t blow his cash on super-expensive vacations. Barring the annual camping trip he takes with his kids Elon Musk rarely ever takes extended breaks opting to spend his time in his offices or factories and sometimes returning to one of his four mansions in Los Angeles.
In October 2018, he explained on Twitter why he wants money:
“The reason is not what you think. Very little time for recreation. Don’t have vacation homes or yachts or anything like that. About half my money is intended to help problems on Earth & half to help establish a self-sustaining city on Mars to ensure continuation of life (of all species) in case Earth gets hit by a meteor like the dinosaurs or WW3 happens & we destroy ourselves.”
The comments highlight what is perhaps Musk’s most expensive project: a self-sustaining city on Mars of one million people by 2050
In October 2019, Musk broke down the cost of the ambitious project:
- Sending one ton of material to Mars could cost $100,000.
- A self-sustaining city would require one million tons to the nearest order of magnitude.
- The city would therefore cost between $100 billion and $10 trillion.
Even if Musk spends around half his wealth on a self-sustaining city, it still falls far short of the required capital necessary.
Real Estate is where Elon Musk spends a lot of his money. Estimates show he owns residential property worth $70 million in LA’s tony Bel-Air neighborhood.
Musk also loves cars (big surprise, I know). While he prefers driving around in a Tesla, he also owns a couple of petrol cars: a Ford Model T and a Jaguar E-Type Series 1 Roadster. In 2013, he even splurged nearly a million dollars on the Lotus Esprit submarine car that featured in the 1977 Bond film The Spy Who Loved Me.
In 2012, soon after he became a billionaire, Elon Musk signed the Giving Pledge, through which he’s promised to donate majority of the wealth he’s earned during his lifetime. He also occasionally pledges his money to different causes but by some accounts he’s not donated more than $25 million through his foundation. Of this, he’s given $10 million to the Future of Life Institute alone to regulate artificial intelligence, an area that some believe would serve his business interests.
Musk has said in the past that he typically only invests money in his own companies. In 2018, Musk himself contributed roughly 90% of the $112.5 million raised that year by The Boring Company.
In 2015, Musk and other entrepreneurs also contributed to a $1 billion pledge to fund the artificial intelligence research lab OpenAI.
Musk also has roughly $660 million in estimated “proceeds from previous salaries, bonuses, investments, dividends and stock transactions.”
Musk famously does not accept a salary as Tesla’s CEO. However, in May, Musk earned the first portion of his massively incentivized pay package which gave Musk an additional 1.7 million Tesla shares (worth more than $700 million at the time, but which are now valued at more than $3.5 billion), and the package could ultimately pay Musk more than $55 billion in overall bonuses.
Bloomberg last week estimated Musk’s total 2020 compensation to be $6.7 billion, the highest of any US chief executive.