WEBVTT - BI Weekend: Disney Earnings, EV Latest 0:00:02.080 --> 0:00:05.880 This is Bloomberg Intelligence with Alex Steel and Paul Sweeney. 0:00:06.000 --> 0:00:09.240 The real app performance has been the US corporate high yield. 0:00:09.360 --> 0:00:11.720 Are the companies lean enough? Have they trimmed all the fats? 0:00:11.800 --> 0:00:15.680 The semiconductor business is a really cyclical business. 0:00:15.120 --> 0:00:18.680 Breaking market headlines and corporate news from across the globe. 0:00:18.760 --> 0:00:21.360 Do investors like the M and A that we've seen? 0:00:21.600 --> 0:00:24.640 These are two big time blue chip companies. 0:00:24.720 --> 0:00:28.440 The window between the peak and cut changing super fast. 0:00:28.600 --> 0:00:32.159 Bloomberg Intelligence with Alex Steel and Paul Sweeney. 0:00:31.960 --> 0:00:36.479 On Bloomberg Radio. I'm Paul Sweeney and I'm John Tucker 0:00:36.479 --> 0:00:37.600 filling in for Alex Steele. 0:00:37.840 --> 0:00:39.360 On Today's Bloomberg Intelligence Show. 0:00:39.360 --> 0:00:42.200 We dig inside the big business stories impacting Wall Street 0:00:42.200 --> 0:00:43.120 and the global markets. 0:00:43.200 --> 0:00:45.599 Each and every week we provide in depth research and 0:00:45.720 --> 0:00:48.240 data on some two thousand companies of one hundred and 0:00:48.240 --> 0:00:50.879 thirty industries our analysts cover worldwide. 0:00:51.040 --> 0:00:53.760 Today, we'll look at how a future Donald Trump presidency 0:00:53.800 --> 0:00:55.280 will impact electric vehicles. 0:00:55.360 --> 0:00:57.880 Plus we're going to discuss why shares of Tyson Food 0:00:58.000 --> 0:00:59.920 surge the most in more than two years. 0:01:00.240 --> 0:01:02.440 But first we dive into corporate earnings from the media 0:01:02.480 --> 0:01:03.960 and entertainment giant Walt Disney. 0:01:04.240 --> 0:01:07.160 Walt Disney reported fourth quarter sales and profit that beat 0:01:07.200 --> 0:01:10.920 Wall Street expectations and forecast earnings growth for the next 0:01:10.959 --> 0:01:11.720 three years. 0:01:12.000 --> 0:01:14.040 For more, John and I were joined by Githa Raganathan, 0:01:14.040 --> 0:01:16.640 Bloomberg Intelligence analysts on US media. 0:01:16.720 --> 0:01:19.640 First, we asked Keitha for her take on Disney's most 0:01:19.760 --> 0:01:20.480 recent quarter. 0:01:21.040 --> 0:01:23.640 What we saw was a lot of guidance, and we've 0:01:23.720 --> 0:01:26.920 never seen guidance laid out like this for us ever before. 0:01:26.959 --> 0:01:29.640 I mean, this was line by line item guidance for 0:01:29.800 --> 0:01:32.600 each of the different subdivisions at Disney, whether you know 0:01:32.680 --> 0:01:35.080 it was the theme park business or the streaming or 0:01:35.160 --> 0:01:38.560 movie studios. They kind of gave us, you know, segment 0:01:38.600 --> 0:01:41.759 by segment numbers and exactly what to expect. And really 0:01:41.800 --> 0:01:45.280 the biggest thing for Disney over the past few quarters 0:01:45.280 --> 0:01:47.920 has just been this lack of visibility and so much 0:01:47.920 --> 0:01:51.960 of investor uncertainty, and they just cleared it all up 0:01:52.000 --> 0:01:55.480 in this one, you know, fell swoop with this earnings report. 0:01:55.560 --> 0:01:57.320 They never did that for me, getha, I always had 0:01:57.360 --> 0:01:59.120 to guess and all that stuff. But for you, they 0:01:59.160 --> 0:02:01.920 just started up on silk platter. What got your attention 0:02:02.200 --> 0:02:03.600 the most from some of this guidance, What do you 0:02:03.600 --> 0:02:04.560 think the street really likes? 0:02:04.960 --> 0:02:07.200 I think what the street really likes is you have 0:02:07.480 --> 0:02:11.560 high single digit EPs growth. Remember the street was projecting 0:02:11.600 --> 0:02:15.320 about four to five percent, So that's a nice uptick 0:02:15.360 --> 0:02:17.799 there for twenty twenty five, and then going into twenty 0:02:17.840 --> 0:02:20.520 twenty six and twenty twenty seven, they're looking at double 0:02:20.600 --> 0:02:24.400 digit earnings growth. And the other bright spots were, you know, 0:02:24.480 --> 0:02:26.359 the theme park business. Now, we do know that there 0:02:26.440 --> 0:02:28.679 is a moderation when it comes to the domestic theme 0:02:28.720 --> 0:02:30.880 park business, but it looks like things might not be 0:02:31.080 --> 0:02:34.200 actually as bad as we had feared. So domestic parks 0:02:34.240 --> 0:02:37.520 actually performed a little bit better than we expected. And 0:02:37.560 --> 0:02:40.800 then they talked about some weakness going into the fiscal 0:02:40.840 --> 0:02:43.799 first quarter. Remember we did have those two big hurricanes 0:02:43.840 --> 0:02:46.800 in Florida. They do have a lot of cruise ships 0:02:46.800 --> 0:02:48.400 that they're launching, and so there's going to be some 0:02:48.480 --> 0:02:51.000 launch costs weighing on profit. But then you get into 0:02:51.040 --> 0:02:53.079 the second half of fiscal twenty twenty five and they're 0:02:53.120 --> 0:02:55.280 expecting those cruise ships to contribute in a big way 0:02:55.680 --> 0:02:57.919 and kind of the theme parks to also come back. 0:02:57.960 --> 0:03:01.360 So I think that's again some source of you know, 0:03:01.440 --> 0:03:03.440 investor optimism and confidence. 0:03:04.360 --> 0:03:06.840 I get this streaming part. I'm not sure that I 0:03:06.919 --> 0:03:10.560 understand that linear TV part and why that's still part 0:03:10.560 --> 0:03:11.320 of the empire. 0:03:12.880 --> 0:03:15.600 Yeah, nobody understands it, john And that was actually a 0:03:15.720 --> 0:03:19.160 question for Hugh Johnston and Bob Eygert at the earnings call. 0:03:19.240 --> 0:03:22.080 They're like, you know, why should you be holding onto 0:03:22.120 --> 0:03:25.680 this business? You know, Comcast just recently said that they're 0:03:25.680 --> 0:03:28.519 going to be kind of considering spinning off their cable 0:03:28.560 --> 0:03:31.360 TV network business. And remember, the big thing that's really 0:03:31.400 --> 0:03:35.040 coming up for Disney in twenty twenty five is that 0:03:35.080 --> 0:03:39.240 they are launching this standalone ESPN product. And if they 0:03:39.240 --> 0:03:43.120 had any reservations in the past about jettisoning, you know, 0:03:43.160 --> 0:03:45.240 the TV network's business because they were tied to the 0:03:45.280 --> 0:03:49.080 bundle through ESPN, you know, this kind of definitely opens 0:03:49.160 --> 0:03:51.480 up the field for them and it no longer ties 0:03:51.520 --> 0:03:53.560 them down to the bundle. So they were asked the question, 0:03:53.920 --> 0:03:56.200 they said that they're not looking into it. They like 0:03:56.240 --> 0:03:58.760 their portfolio just the way it is. But we really 0:03:58.800 --> 0:04:02.160 think that once they get that ESPN standalone of streaming 0:04:02.200 --> 0:04:05.440 service up and running, they surely will kind of look 0:04:05.480 --> 0:04:08.520 into doing something more dramatic, I think with the TV networks, 0:04:08.640 --> 0:04:13.280 especially given you know, a regulatory change. 0:04:11.960 --> 0:04:15.000 To talk to us about the streaming business. They've finally 0:04:15.360 --> 0:04:18.200 turned profitable on that business. Give us the delta that 0:04:18.279 --> 0:04:20.919 you think that streaming business go through from losses to 0:04:21.040 --> 0:04:21.880 potential profits. 0:04:21.880 --> 0:04:24.680 Here, big big turnaround, Paul, And I mean this was 0:04:24.720 --> 0:04:26.960 really the big story for twenty twenty four. To go 0:04:27.040 --> 0:04:30.120 from four billion in losses in twenty twenty two, two 0:04:30.200 --> 0:04:32.520 and a half billion in losses in twenty twenty three, 0:04:32.800 --> 0:04:36.719 to finally squeaking out a profit here in twenty twenty four. 0:04:36.760 --> 0:04:39.080 And remember they've just barely broken even, so about one 0:04:39.120 --> 0:04:41.560 hundred and fifty million dollars in profit. But the whole 0:04:41.600 --> 0:04:43.960 story is how they kind of build on that one 0:04:44.040 --> 0:04:46.919 hundred and fifty million dollars. So you know, Netflix this 0:04:47.000 --> 0:04:50.359 year is going to report about ten billion dollars in profit, 0:04:50.640 --> 0:04:52.719 and I think there's some encouraging commentary, so they already 0:04:52.760 --> 0:04:55.880 kind of guided. They gave us actually hard numbers for 0:04:56.040 --> 0:05:00.480 the streaming profit for both fiscal twenty twenty five and six. 0:05:00.600 --> 0:05:03.520 Twenty twenty five, they said over a billion dollars in profit, 0:05:04.120 --> 0:05:05.880 and in twenty twenty six they actually gave us a 0:05:05.960 --> 0:05:09.279 margin number, double digit margins. And remember this is the 0:05:09.279 --> 0:05:13.440 big story. Everybody is chasing those twenty five percent operating 0:05:13.480 --> 0:05:16.359 margins that Netflix has already achieved, and so Disney is. 0:05:16.440 --> 0:05:18.160 It looks like, I mean, they obviously have a lot 0:05:18.160 --> 0:05:20.599 of catching up to do, but they're closing in. 0:05:20.680 --> 0:05:24.080 Our Thanks to Githa Raganath in Bloomberg Intelligence analyst on 0:05:24.320 --> 0:05:25.400 US media, this. 0:05:25.400 --> 0:05:28.279 Week, we focused on a Bloomberg Big Take story entitled 0:05:28.360 --> 0:05:32.160 Trump's win puts Musk in the White House's new C suite. 0:05:32.400 --> 0:05:34.640 You can find it on Bloomberg dot com and on 0:05:34.720 --> 0:05:37.760 the terminal. The story looks at how Tesla CEO Elon 0:05:37.839 --> 0:05:40.200 Musk spent at least one hundred and thirty two million 0:05:40.240 --> 0:05:43.080 dollars to help Donald Trump's re election as US president 0:05:43.400 --> 0:05:46.280 and now Musk we'll have a role in Trump's new administration. 0:05:46.800 --> 0:05:48.720 For more, guest host Jess Meant and I were joined 0:05:48.720 --> 0:05:52.039 by one of the story's authors, Max Chafkin, Bloomberg BusinessWeek 0:05:52.160 --> 0:05:55.239 Senior reporter. We first asked Max what we know about 0:05:55.240 --> 0:05:56.679 Elon Muck's new role. 0:05:56.760 --> 0:05:58.039 And we learned a little bit more. 0:05:58.120 --> 0:06:01.240 Just after this story was published, Donald Trump made something 0:06:01.240 --> 0:06:04.120 official that he had teased and that Elon Musk can 0:06:04.160 --> 0:06:07.440 tease repeatedly on the campaign trail, Elon Musk will be 0:06:07.600 --> 0:06:12.720 the person charged with providing advice on the streamlining of government. Now, 0:06:12.720 --> 0:06:15.520 that could mean any number of things. It could mean, 0:06:15.680 --> 0:06:19.039 I think very little. It could also mean that, as 0:06:19.160 --> 0:06:23.200 Donald Trump prepares to enact his you know, very ambitious agenda, 0:06:23.920 --> 0:06:26.159 that Elon Musk will be at his side, and that'll 0:06:26.160 --> 0:06:29.000 be my bad. I mean, I think the job thing 0:06:29.720 --> 0:06:32.920 is probably a distraction. You know, the most important question 0:06:33.240 --> 0:06:35.520 in the Trump White House is who has Trump's ear, 0:06:35.920 --> 0:06:39.000 and right now that's Elon Musk. And I think as 0:06:39.040 --> 0:06:41.000 we put together the story and as I've been thinking 0:06:41.040 --> 0:06:44.240 about this, you know, Elon Musk throws him into these companies, 0:06:44.240 --> 0:06:47.679 and famously he has six different companies, you know, Tesla 0:06:47.760 --> 0:06:50.479 and SpaceX, his car company, and rocket Company being. 0:06:50.279 --> 0:06:50.839 The big ones. 0:06:51.080 --> 0:06:53.719 I think we need to start thinking about politics, and 0:06:53.760 --> 0:06:57.000 in particular Elon Musk's role in right wing politics, whether 0:06:57.040 --> 0:07:00.000 it's the Trump the next Trump administration, or even beyond 0:07:00.080 --> 0:07:03.520 on that as his other big company, as something that 0:07:03.560 --> 0:07:05.480 he is going to be devoting a lot of time 0:07:05.560 --> 0:07:09.200 to and trying to use it frankly to benefit his 0:07:09.440 --> 0:07:10.160 other interests. 0:07:10.520 --> 0:07:14.120 Leading a commission specifically outside of government, Elon Musk doesn't 0:07:14.120 --> 0:07:17.240 have to divest his personal and financial holdings when making 0:07:17.240 --> 0:07:20.080 recommendations to the White House on federal spending and regulations 0:07:20.360 --> 0:07:21.840 that he wants to cut. I mean, what sort of 0:07:21.880 --> 0:07:24.240 precedents do we have for something that's created sort of 0:07:24.280 --> 0:07:27.760 that's supposed to be specifically outside government, And what power 0:07:27.800 --> 0:07:30.080 can he yield and not yield? Do we have any indications? 0:07:30.160 --> 0:07:33.960 Sure have been lots of presidential commissions. You know, this 0:07:34.480 --> 0:07:37.559 kind of thing is not necessarily anything new. It's really 0:07:37.640 --> 0:07:41.640 just a question of how closely is Donald Trump listening 0:07:41.680 --> 0:07:44.640 to it? And when Elon Musk, He's suggested all kinds 0:07:44.680 --> 0:07:47.120 of very radical things, things that are likely to be 0:07:47.480 --> 0:07:51.600 either difficult to achieve, like practically working within the confines 0:07:51.640 --> 0:07:55.640 of government, or wildly unpopular or both. So you know, 0:07:55.720 --> 0:07:58.120 he's said he suggested, for instance, that he's going to 0:07:58.200 --> 0:08:02.000 twitter the US governmentsuggessing, you know, massive layoffs. Remember he 0:08:02.080 --> 0:08:05.040 laid off eighty percent of the Twitter staff. He is 0:08:05.080 --> 0:08:07.440 not going to lay off eighty percent of the US government. 0:08:07.440 --> 0:08:10.360 I think that would be a very very very surprising 0:08:10.400 --> 0:08:12.880 thing if it were to happen that said, you know, 0:08:13.080 --> 0:08:17.320 Trump has has is going to try to defund aspects 0:08:17.360 --> 0:08:20.000 of the government, and it really seems like Elon Musk 0:08:20.120 --> 0:08:23.520 is going to play a role in deciding what gets defunded, 0:08:23.680 --> 0:08:26.240 which is of course, is going to raise all sorts 0:08:26.240 --> 0:08:30.360 of ethical concerns and questions. And because because there are 0:08:30.480 --> 0:08:34.280 ways that President Trump, president elect Trump is going to 0:08:34.280 --> 0:08:38.280 be in a position to say, squash investigations into Elon 0:08:38.360 --> 0:08:42.040 Musk companies, or direct funds to Elon musk companies, or 0:08:42.080 --> 0:08:46.600 slow down some of Elon Musk's competitors, and and so 0:08:46.760 --> 0:08:48.839 you know, it's it's it's going to keep journalists busy. 0:08:48.840 --> 0:08:51.920 It's gonna I'm sure that the left is going to 0:08:52.800 --> 0:08:54.839 be very focused on this over the next couple of 0:08:54.920 --> 0:08:58.240 years because Elon Musk, who's a polarizing guy, is going 0:08:58.320 --> 0:08:59.920 to be tied to this administration very closely. 0:09:00.200 --> 0:09:03.120 I mean, Elon Musk, you cite it in your article, 0:09:03.120 --> 0:09:07.040 and you just mentioned here all the companies he runs, Tesla, SpaceX, 0:09:07.200 --> 0:09:09.679 orally on and on and on. How many hours in 0:09:09.679 --> 0:09:10.520 a day does this guy have? 0:09:10.960 --> 0:09:13.320 I mean, I mean, I mean, you know you have. 0:09:13.640 --> 0:09:17.040 Mentioned when you think about how many companies to plays 0:09:17.040 --> 0:09:17.440 a lot. 0:09:17.280 --> 0:09:20.160 Of video games, which you know is one of the 0:09:20.559 --> 0:09:23.720 many head scratchers with this extraordinary man. 0:09:24.160 --> 0:09:26.719 Uh. I think we've seen. 0:09:26.640 --> 0:09:30.160 Investors in some of these other companies get concerned. And 0:09:30.520 --> 0:09:32.920 you know, right now we're in the middle of this 0:09:33.000 --> 0:09:36.160 kind of honeymoon phase. You know, there's a mania to 0:09:36.240 --> 0:09:38.959 the way Elon Musk is talking about this stuff. Is 0:09:39.000 --> 0:09:41.600 in mar A Lago, he's in Washington. You know, Trump 0:09:41.640 --> 0:09:44.240 family members are referring to him as uncle Elon. 0:09:44.600 --> 0:09:46.000 You got to think that. 0:09:45.920 --> 0:09:48.720 This is not going to last, and if it were 0:09:48.760 --> 0:09:50.520 to last, that there would be a bit of a 0:09:50.559 --> 0:09:54.440 coutdown because because as you say, Tesla is a big, 0:09:54.640 --> 0:09:58.199 complicated company with lots of challenges, and right now we're 0:09:58.200 --> 0:10:00.480 seeing a lot of investors bid up the stop, but 0:10:00.559 --> 0:10:03.120 there isn't a ton of It's not like there's a 0:10:03.120 --> 0:10:06.800 clear rationale for why Tesla is suddenly worth like forty 0:10:06.800 --> 0:10:10.200 percent more than it was before the election, except that, hey, 0:10:10.240 --> 0:10:12.840 maybe Trump's gonna make things better. But but you know, 0:10:12.880 --> 0:10:15.920 they're gonna be challenges and distraction is going to be 0:10:15.920 --> 0:10:17.839 something that we're gonna be looking at. 0:10:18.040 --> 0:10:20.520 And what about ev policies because it seemed like they 0:10:20.520 --> 0:10:24.160 were more beneficial toward Tesla maybe under the Biden administration 0:10:24.280 --> 0:10:26.920 rather than the prior Trump administration. So how does this 0:10:26.960 --> 0:10:29.200 sort of shift? And you have kind of the Trump 0:10:29.240 --> 0:10:29.800 two point. 0:10:29.679 --> 0:10:30.160 Zero coming up. 0:10:30.200 --> 0:10:32.080 And this is one of the things that's so strange 0:10:32.120 --> 0:10:36.959 because Elon Musk became much more conservative during the Biden years, 0:10:37.200 --> 0:10:40.160 but the Bid years were incredibly good to Tesla. 0:10:40.240 --> 0:10:43.160 Tesla's value, you know, shot way up. 0:10:43.400 --> 0:10:45.760 It went from being kind of a niche player to 0:10:45.920 --> 0:10:50.240 one of the large American car companies. And you know, Trump, 0:10:50.280 --> 0:10:53.880 as you kind of hint, was very critical about electric 0:10:54.000 --> 0:10:56.320 vehicles on the campaign trail. Now, now there are two 0:10:56.360 --> 0:10:58.840 things here that are probably worth bringing up. One is 0:10:59.160 --> 0:11:01.440 where Tesla is now is very different than it was 0:11:01.679 --> 0:11:03.880 four or five years ago. And you could make an 0:11:03.960 --> 0:11:06.960 argument that these electric vehicle subsidies actually do more for 0:11:07.040 --> 0:11:09.600 Tesla's competitors than they do for Tesla itself. 0:11:09.760 --> 0:11:11.680 So like, if you were to remove all. 0:11:11.559 --> 0:11:15.480 These subsidies, yes, it might cost Tesla investors money, but 0:11:15.679 --> 0:11:18.480 it would also sort of help Tesla lock in its 0:11:18.720 --> 0:11:21.800 very very dominant position in the market. And the second thing, 0:11:21.840 --> 0:11:24.400 probably the more important thing, is that Elon Musk is 0:11:24.440 --> 0:11:27.640 desperately trying to move beyond the auto business. He wants 0:11:27.760 --> 0:11:31.079 Tesla to be an AI company. He wants to have robotaxis. 0:11:31.400 --> 0:11:33.960 There is no regulatory regime there, and I think what 0:11:34.080 --> 0:11:36.640 investors are hoping, and again I don't know that they 0:11:36.640 --> 0:11:39.360 have much sort of clear factual basis for this hope. 0:11:39.400 --> 0:11:42.880 But this is the rationale that Trump will basically legalize 0:11:42.880 --> 0:11:44.880 this business, that he will take a. 0:11:44.920 --> 0:11:47.360 Very dicey regulatory situation. 0:11:47.040 --> 0:11:49.560 And make it less dicey, and that will be worth 0:11:49.600 --> 0:11:52.359 a lot of money to Tesla and ultimately to as shareholders. 0:11:52.480 --> 0:11:54.000 Thirty seconds left, Max. 0:11:54.360 --> 0:11:56.720 How much time do we think Elon Musk is going 0:11:56.800 --> 0:11:59.319 to allocate to the government stuff? 0:11:59.480 --> 0:12:02.080 Well, right now it seems like he's he's it's a 0:12:02.080 --> 0:12:04.160 full time job, right I mean, he seems to be 0:12:04.200 --> 0:12:07.880 there quite a lot. I think this is going to 0:12:07.960 --> 0:12:11.120 be something that he's very very focused on, you know, 0:12:11.240 --> 0:12:14.840 probably as long as it lasts, which which maybe that's 0:12:14.880 --> 0:12:16.840 only going to be a couple of months. 0:12:17.480 --> 0:12:18.760 Maybe it's going to be longer. 0:12:18.880 --> 0:12:19.120 You know. 0:12:19.160 --> 0:12:21.760 He did he has signaled that he wants to play 0:12:21.880 --> 0:12:25.720 in politics beyond this, beyond twenty twenty four. He's talking 0:12:25.720 --> 0:12:28.280 about the midterms already so interesting, you'll see, all right. 0:12:28.320 --> 0:12:32.160 Thanks to Max Chafkin, Bloomberg BusinessWeek senior reporter, coming up 0:12:32.160 --> 0:12:35.120 wi a breakdown how oil producers will be impacted by 0:12:35.120 --> 0:12:36.520 a Donald Trump presidency. 0:12:36.760 --> 0:12:40.040 You're listening to Bloomberg Intelligence on Bloomberg Radio, providing inpth 0:12:40.080 --> 0:12:42.280 research and data on two thousand companies and one hundred 0:12:42.280 --> 0:12:45.360 and thirty industries. You can access Bloomberg Intelligence via b 0:12:45.520 --> 0:12:47.839 I go on the terminal. I'm Paul Sweeney. 0:12:47.480 --> 0:12:49.800 And I'm John Tucker. This is Bloomberg. 0:12:54.120 --> 0:12:57.960 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:12:58.080 --> 0:13:01.400 weekdays at ten am Eastern car playing then broud Otto 0:13:01.480 --> 0:13:04.400 with the Bloomberg Business app. Listen on demand wherever you 0:13:04.480 --> 0:13:08.160 get your podcasts, or watch us live on YouTube. 0:13:09.040 --> 0:13:11.280 I'm Paul Sweeney and I'm John Tucker filling in for 0:13:11.320 --> 0:13:14.600 Alex Steele. Last week, Donald Trump was elected the forty 0:13:14.640 --> 0:13:18.199 seventh President of the United States, reclaiming the White House 0:13:18.200 --> 0:13:21.480 and pulling off a stunning political comeback. And how many 0:13:21.520 --> 0:13:24.880 industries are wondering how they'll be impacted In twenty twenty five. 0:13:25.440 --> 0:13:27.560 For more against hoos, Matt Miller and I were joined 0:13:27.559 --> 0:13:31.880 by Steve Man, Bloomberg Intelligence Global Autos and Industrials Research Manager. 0:13:32.280 --> 0:13:34.200 We first asked Steve for his take on how the 0:13:34.360 --> 0:13:37.480 EV industry will be affected by Donald Trump. 0:13:37.640 --> 0:13:41.079 Yeah, if Trump decides to kind of remove or cut 0:13:41.080 --> 0:13:43.960 the seventy five hundred tax credit or EV tax credit, 0:13:44.559 --> 0:13:49.079 I think most people believe that the EV penetration will stall. 0:13:49.520 --> 0:13:53.079 If not stall, it'll probably fall because a lot of 0:13:53.120 --> 0:13:57.360 the consumers are relying on that that's seventy five hundred 0:13:57.400 --> 0:14:00.000 dollars to make sure, you know, to bring down the price, 0:14:00.520 --> 0:14:04.480 the effective price of the vehicle. Most evs sold in 0:14:04.520 --> 0:14:08.199 America are still very expensive. There's only a limited number 0:14:08.240 --> 0:14:11.760 of them that are under fifty thousand dollars. So the 0:14:11.800 --> 0:14:16.400 fear is, you know, it's going to stall EV penetration. 0:14:17.559 --> 0:14:19.640 The automaker is going to have a hard time because 0:14:19.640 --> 0:14:23.480 they's already invested. They've already committed investing a lot of 0:14:23.520 --> 0:14:28.000 money under the Inflation Reduction Act about one over one 0:14:28.080 --> 0:14:31.280 hundred and fifty billion dollars to onshore a lot of 0:14:31.360 --> 0:14:33.920 supply chains. So it's going to cause a lot of 0:14:34.000 --> 0:14:35.360 chaos within the industry. 0:14:35.520 --> 0:14:39.560 So they'll be under no pressure whatsoever moving forward, possibly 0:14:39.680 --> 0:14:41.600 to increase sales of evs. 0:14:42.200 --> 0:14:45.400 Yeah, I think the automaker is going to have to 0:14:45.520 --> 0:14:49.880 increase incentives. I think what could happen if the EV 0:14:50.040 --> 0:14:55.160 penetration rate does decrease from about eight percent currently in 0:14:55.200 --> 0:14:58.200 the US. He's going to be left with the strongest players. 0:14:58.320 --> 0:15:02.080 And to me, that looks like Tesla, because Tesla does 0:15:02.160 --> 0:15:06.840 have the lowest costs structure amongst all the EV makers 0:15:07.160 --> 0:15:12.480 in the US, and if the market shrinks, the weaker 0:15:12.520 --> 0:15:14.960 ones will probably fall on the wayside. 0:15:15.040 --> 0:15:17.560 And oddly enough, First Bro or what do we call him, 0:15:17.600 --> 0:15:20.640 first friend, Elon Musk, he's not necessarily in favor of 0:15:20.720 --> 0:15:24.240 these these tax subsidies for evs. 0:15:25.240 --> 0:15:28.960 Yeah, I think, you know, to him, I don't. He 0:15:29.040 --> 0:15:32.120 thinks Tesla doesn't need them, and I you know, it's 0:15:32.160 --> 0:15:36.080 it's partly true. If you look at the amount of 0:15:36.240 --> 0:15:42.600 cars that are least and eligible for the seventy five hundred, 0:15:42.680 --> 0:15:45.200 actually a lot of the seventy five hundred tax credit 0:15:45.680 --> 0:15:49.000 as actually from leased vehicles. If you look at the 0:15:49.040 --> 0:15:52.520 amount of least vehicles that Tesla have sold in the 0:15:52.560 --> 0:15:55.960 past twelve months, it's about twenty percent. So you know 0:15:56.000 --> 0:15:58.680 they'll get impacted. But if you compare it to Rivian. 0:15:59.280 --> 0:16:02.200 You know, Rivian has about fifty percent of their vehicles 0:16:02.280 --> 0:16:06.600 leased and those and eligible for the seventy five hundred, 0:16:06.680 --> 0:16:09.320 so it could be a bigger impact in Reviant. 0:16:09.440 --> 0:16:11.800 Yeah, there's a limit on you don't get the tax 0:16:11.840 --> 0:16:14.920 credit if you're buying a vehicle that costs more than 0:16:14.920 --> 0:16:17.720 eighty thousand dollars. And I believe there's a household income 0:16:18.920 --> 0:16:21.400 requirement as well, you have to be below a certain level. 0:16:21.560 --> 0:16:24.120 But if you lease it, you can get around at 0:16:24.200 --> 0:16:26.160 least one part of that tax credit. Isn't that right, Steve? 0:16:26.960 --> 0:16:27.440 That's right. 0:16:27.480 --> 0:16:29.840 That's actually what I'm referring to. So when we look 0:16:29.880 --> 0:16:32.440 at the companies who's going to get impacted, we really 0:16:32.480 --> 0:16:36.240 look at, you know, how many of those vehicles are leased. 0:16:36.520 --> 0:16:39.000 If you look at EV's in general in the US, 0:16:39.120 --> 0:16:42.800 the you know, the leasing penetration is actually upwards of 0:16:42.840 --> 0:16:45.600 seventy five eighty ninety percent, So a lot of people 0:16:45.640 --> 0:16:48.680 that actually buy evs are leasing it to get that 0:16:48.720 --> 0:16:49.960 seventy five hundred dollars. 0:16:50.040 --> 0:16:52.680 What does the EV market look like right now? I mean, 0:16:52.800 --> 0:16:56.960 I know, if you read the headlines, you would think 0:16:57.000 --> 0:16:59.400 that no one has bought an EV this year, Like, 0:16:59.800 --> 0:17:04.720 you know, the industry is in trouble because they're so unpopular, 0:17:04.800 --> 0:17:07.399 not just politically, but you know, since there's difficult to 0:17:07.480 --> 0:17:10.200 charge for a lot of people, it's just not an option. However, 0:17:10.480 --> 0:17:13.880 don't we still see EV sales actually growing? 0:17:15.000 --> 0:17:15.840 Oh, we are. 0:17:16.000 --> 0:17:18.520 We are seeing EV sales growing, especially in the second 0:17:18.600 --> 0:17:21.119 half of this year, because there's been a lot of 0:17:21.119 --> 0:17:24.520 price cuts right over the past eighteen twenty four months 0:17:24.880 --> 0:17:26.879 in the industry, and a lot of these vehicles have 0:17:27.000 --> 0:17:31.959 become more affordable, and even especially in the used EV market, 0:17:32.440 --> 0:17:37.080 those vehicles are very competitive to gasoline cars. What the 0:17:37.160 --> 0:17:41.800 industry is really facing is getting more impacted by the 0:17:41.840 --> 0:17:44.320 fact that interest rates are high. A lot of people 0:17:44.359 --> 0:17:47.560 cannot afford expensive cars these days, and EV's are a 0:17:47.560 --> 0:17:50.800 little bit more expensive than ice at the moment. So 0:17:50.840 --> 0:17:52.480 what the industry was trying to do, and I think 0:17:52.480 --> 0:17:54.800 what the IRA was trying to do, was trying to 0:17:54.840 --> 0:17:57.480 onshore a lot of the production while on shore a 0:17:57.480 --> 0:18:00.359 lot of the supply chain in the US and hopes 0:18:00.400 --> 0:18:06.320 of brain costs down so automakers can offer more affordable evs. 0:18:06.720 --> 0:18:11.040 And that's what we were expecting. We were actually expecting 0:18:11.080 --> 0:18:15.119 the EV penetration rate to rise, especially into twenty twenty 0:18:15.160 --> 0:18:16.320 six and twenty twenty seven. 0:18:17.680 --> 0:18:19.119 I got to break in here because I feel like, 0:18:19.440 --> 0:18:22.840 you know, Americans have shown a propensity for taking one 0:18:22.880 --> 0:18:24.680 thousand dollars plus monthly payments. 0:18:24.760 --> 0:18:26.119 I don't think it's about the price. 0:18:26.200 --> 0:18:27.840 Frankly, what do you think. 0:18:29.240 --> 0:18:30.000 That's the big problem. 0:18:30.080 --> 0:18:33.480 I'm test driving right now at GMC Sierra EV. It 0:18:33.560 --> 0:18:37.199 is a fantastic vehicle. It's expensive, but I think a 0:18:37.200 --> 0:18:39.359 lot of people are willing to take on debt to 0:18:39.359 --> 0:18:41.600 own a car like that. The problem is there's nowhere 0:18:41.640 --> 0:18:43.679 to charge it. I park in a garage across the 0:18:43.680 --> 0:18:46.800 street in Manhattan, you know, capital of the world, and 0:18:46.880 --> 0:18:50.119 the only option they offer is the slowest potential charge 0:18:50.119 --> 0:18:51.280 for twenty dollars a day. 0:18:51.320 --> 0:18:52.480 So it's just not worth it. 0:18:53.240 --> 0:18:56.120 Yeah, I think that's a very good point. Affordability is 0:18:56.160 --> 0:18:59.520 not the only hurdle. It's the charging and the range, 0:18:59.720 --> 0:19:02.760 and you know, dependent on the use. I think a 0:19:02.760 --> 0:19:05.400 lot of people with the second vehicle make it an EV. 0:19:06.280 --> 0:19:10.040 Someone who's using it for daily commutes make an EV. 0:19:10.880 --> 0:19:13.320 But you know, America is a big country and people 0:19:13.359 --> 0:19:17.680 love to drive cars, and there are a big majority 0:19:17.760 --> 0:19:21.840 of car buyers that are you know, probably staying away 0:19:21.840 --> 0:19:22.440 from ev. 0:19:22.520 --> 0:19:25.760 Because of that, all right? Thanks to Steve Man, Bloomberg Intelligence, 0:19:25.760 --> 0:19:28.480 Global Autos and Industrials Research Manager. 0:19:28.920 --> 0:19:31.520 Each week we look at research from Bloomberg and EF 0:19:31.600 --> 0:19:33.520 previously known as New Energy Finance. 0:19:33.640 --> 0:19:36.520 They're the team at Bloomberg that tracks and analyzes the 0:19:36.680 --> 0:19:41.679 energy transition from commodities to power, transport, industries, buildings, and 0:19:41.760 --> 0:19:45.080 agriculture sectors. This week, we took a look at how 0:19:45.119 --> 0:19:49.359 Donald Trump's upcoming presidency will impact the oil industry. 0:19:49.560 --> 0:19:51.600 For more guests, Sos, Molly Smith, and I were joined 0:19:51.600 --> 0:19:55.119 by ty Lou b n E, f oil market specialist. 0:19:55.440 --> 0:19:57.240 We first asked, Hi, if it is a fair assumption 0:19:57.320 --> 0:19:59.640 that Donald Trump will be good for the energy industry. 0:20:00.080 --> 0:20:03.680