Tesla on Tuesday reached a market value of $100 billion, the first step in triggering a massive pay package for CEO Elon Musk.

Musk doesn't receive a salary at Tesla, but will receive a gigantic payout if the electric automaker hits certain benchmarks.

The first target will be achieved if Tesla's worth as a public company remains above $100 billion, on average, for both a one-month and six-month period.

Elon Musk is one step closer to receiving a massive pay package after Tesla's worth as a public company topped $100 billion on Tuesday. The electric car company CEO, who has never accepted his annual salary of about $56,000, stands to earn about $346 million in stock if the automaker's market value remains above $100 billion for a sustained period.

The payout is part of a 2018 compensation package that will award stock options to Musk if Tesla meets specific performance milestones for profitability, revenue and stock market value, also known as market capitalization. In all, Musk could receive options to buy about 20.3 million shares of Tesla.

Shares of Tesla rose $19.71, or 3.6%, to $566.91 in early trading on Wednesday, giving the company a market value of more than $102 billion. On paper, that makes Tesla considerably more valuable than General Motors, with a market capitalization of roughly $50 billion, and Ford (market cap: $37 billion) put together. It also makes Tesla the most valuable U.S. car company of all time (Japan's Toyota remains the world's biggest automaker, with a market cap of $201 billion.

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The pay package works like this: Tesla has sliced up those 20.3 million options into 12 awards, with each one triggered by different milestones, according to a regulatory filing. The first award is based on Tesla hitting an average market value of $100 billion over six months, including its most recent 30-day period.

If that happens, Musk will receive 1.7 million stock options (one-twelfth of the overall stock package) with an exercise price of $350.02 per share. Based on Tuesday's stock price, that values the award at about $340 million.

While that's a huge sum, it would represent only about 1% of Musk's total net worth of $32 billion. His fortune stems from his holdings in Tesla and SpaceX, while he first built his riches by co-founding PayPal.

Tesla, which will report fourth-quarter earnings on January 29, has been buoyed by growing demand for its vehicles in Europe and China, according to Wedbush analyst Dan Ives, who this week boosted his price target on the company's shares from $370 to $550. Sales to Chinese consumers could provide "the key fuel in the growth engine" for the automaker, he said in a research note.

"In our opinion, the new long term bull case scenario on the stock is $900 with Tesla's ability to ramp production and demand in the key China region during the course of 2020/2021 a major swing factor on the stock," Ives said.

By other measures, Tesla is considerably less valuable. The company lost an estimated $128 million last year, although that's much less than its previous losses, including nearly $1.7 billion over the previous two years.