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Two key developments have emerged for Tesla (TSLA): the resumption of shipping components from China for Cybercab and Semi truck production, and Tesla's board exploring a new compensation package for CEO Elon Musk. These moves, as reported by Reuters and the Financial Times respectively, come amid deepening financial challenges for TSLA, but are positively impacting the stock today.

According to Reuters, starting at the end of the month, TSLA plans to resume shipping these components, following a tariff truce between the two countries. This reverses a suspension reported last month, triggered by President Trump's tariff hike to 145% on Chinese goods, which had disrupted TSLA's plans. The tariff truce involves rolling back most tariffs, easing the cost burden on TSLA as it plans to launch the Cybercab for under $30,000.

• The resumption of component shipments from China should benefit TSLA's financials, particularly in key metrics such as automotive revenue, profits, and automotive gross margin. Lower component costs from China would improve gross margins, especially for these new models, which are critical for future growth. The de-escalation also mitigates supply chain risks, enhancing TSLA's ability to meet production targets and potentially reverse the revenue decline seen in 1Q25 (-9.2%), aligning with Musk's focus on autonomy and robotics as growth drivers.
• TSLA is already contending with several strong headwinds, including intensified competition from rivals like BYD (BYDDY), particularly in China, high interest rates that have dampened demand for EVs, and Musk's proximity to Trump, which has hurt TSLA's popularity. The impact of these factors was evident in TSLA's downside 1Q25 results, as illustrated by the 9% revenue decline and the automotive gross margin contraction to 16.2% from 18.5% in the year-earlier period.
• The trade war, with tariffs at 145%, had also disrupted supply chains, as highlighted in the Q1 earnings call, where CFO Taneja noted challenges in bringing equipment from China for domestic production lines. For the time being, this headwind had dissipated, but the trade situation remains fluid and unpredictable.
• The board's consideration of a new pay package for Musk is directly tied to TSLA's financial struggles and leadership stability. The 2018 pay package, comprising 304 mln stock options worth $56 bln at the 2024 ruling, was struck down by Chancellor Kathaleen McCormick, citing excessive compensation and board conflicts, and remains under appeal despite shareholder reapproval in June 2024. If reinstated, Musk's ownership would increase from under 13% to over 20%, a critical threshold for maintaining control.
• Given TSLA's recent downturn, with shares down 32% from its December peak and financials under pressure, the board's move to explore a new package, potentially contingent on financial, operational, and share price targets, aims to incentivize Musk. This is particularly important as TSLA pivots to new models like Cybercab and Semi, and invests in autonomy and robotics, areas Musk has emphasized as future growth drivers.

TSLA's decision to resume shipping components from China, following the tariff truce, is a strategic move to reduce costs and support new model production, potentially improving financial metrics like gross margins. The board's consideration of a new pay package for Elon Musk addresses leadership stability during a challenging period, crucial for TSLA's long-term vision.