Speaker 1: Bloomberg Audio Studios, Podcasts, radio news.
Speaker 2: Our own Dan Hole, noting that Tesla is giving some
Speaker 2: quasi bullish guidance. The company delivered one point eight million
Speaker 2: cars in twenty twenty three. Average selling prices fell in
Speaker 2: the quarter. There was some FX impact. There was a
Speaker 2: slight top line missus. Ed Ludlow points out on the
Speaker 2: live blog. The company's third quarter automotive automotive gross margin
Speaker 2: excluding credits came in way above estimates at seventeen point
Speaker 2: one percent. Estimates were for fourteen point nine percent. We
Speaker 2: got with us the perfect guest when it comes to
Speaker 2: what's going on with Tesla. Ross Gerber is joining us.
Speaker 2: He's president and CEO of Gerber Kawasaki Wealth Managed, Wealth
Speaker 2: and Investment Management. He joins us from Santa Monica, California. Ross,
Speaker 2: we got a lot to talk about with you. We
Speaker 2: got a good bit of time. First, your reaction to earnings.
Speaker 2: Investors are certainly happy to see this.
Speaker 1: Yeah, I am too. It seems as if, and granted
Speaker 1: they didn't really release a lot of data yet that'll
Speaker 1: come soon, I hope, where they were able to increase
Speaker 1: margins on the vehicle and therefore beat on earnings. So
Speaker 1: I'm not sure where that's coming from, but they seem
Speaker 1: to suggest that their cost of good sold is dropping
Speaker 1: quite rapidly and that's added margin to their vehicles, which
Speaker 1: is good news for Tesla. So it's very possible that
Speaker 1: because you know, like battery demand is down so much
Speaker 1: and lithium prices are down so much, that this is
Speaker 1: finally starting to get into the supply chain for Tesla.
Speaker 1: But you know, once again, I haven't seen all the
Speaker 1: numbers and been able to really parse where the margin
Speaker 1: gain has come from.
Speaker 3: And it's interesting too when it comes to the outlook.
Speaker 3: Tesla continues to state that plans for new vehicles, including
Speaker 3: more affordable models, remain on track for the start of
Speaker 3: production in the first half of twenty twenty five. More
Speaker 3: affordable models ross. Obviously that has been a major focal
Speaker 3: point for this company.
Speaker 1: Yeah, I mean, there's a more affordable model, why on
Speaker 1: sale use the three year old for an incredibly good
Speaker 1: price under abound twenty five thousand or so. So, you know,
Speaker 1: really Tesla runs into the problem of cannibalizing its other cars,
Speaker 1: and that I think is what's causing them to pause. Now,
Speaker 1: what I've been saying is if they would have put
Speaker 1: a steering wheel on that robocab. It would have been
Speaker 1: a much more exciting launch for me and I think
Speaker 1: for customers knowing that this two seater, cheaper car could
Speaker 1: be something we could actually just buy and drive. The
Speaker 1: robotaxi business is not a business that I'm excited about.
Speaker 1: It's not really what I think Tesla should be doing.
Speaker 1: There already are robotaxes that exist called Weimo, and Uber
Speaker 1: is already the master of transportation. So to me, Tesla
Speaker 1: should be selling evs, focusing on making great evs with
Speaker 1: grade software, and not trying to pivot into being some
Speaker 1: sort of robotaxi company. But you know, once again, I
Speaker 1: think people want to buy the cars and they worried
Speaker 1: about selling the cars will do just fine.
Speaker 2: Russ. I have a question for you that I've wanted
Speaker 2: to ask you for a few days now.
Speaker 3: Somebody did pause, so I'm excited.
Speaker 2: Yeah, Well, I'm interested to hear what Ross has to
Speaker 2: say about this. Okay, Elon Musk. In politics, he's donated,
Speaker 2: he's one of the largest donors to the Trump candidacy,
Speaker 2: to the Trump campaign, He's got his America Political Action
Speaker 2: Committee a super pack. He's become incredibly active. I'm wondering,
Speaker 2: from the perspective of business, if, in a time when
Speaker 2: we're so divided as a nation, if taking such a
Speaker 2: clear stance and doing so much to elect one candidate
Speaker 2: is a risk to the company.
Speaker 1: Yes, of course, you know why are you laughing? Strategic? Well,
Speaker 1: because I think it's an absurd risk to put your
Speaker 1: company in that you could avoid, right, So, you know,
Speaker 1: I I've personally tried to stay out of this election.
Speaker 1: I don't get any positive from my clients expressing my
Speaker 1: liberal opinions, which are liberal, and you know, I think
Speaker 1: people who work at my firm know that. And but
Speaker 1: you know, as a business person, it doesn't really serve
Speaker 1: my purposes to spouse my liberal beliefs on everybody. And
Speaker 1: that said, Elon's extremely right wing beliefs turn off a
Speaker 1: lot of his core demo. Now a lot of people
Speaker 1: don't believe that's happening. But I mean, look at what
Speaker 1: the effort they have to do to sell a car
Speaker 1: today and they still refuse to advertise. So taking this
Speaker 1: stance for Elon is kind of a lose lose for
Speaker 1: Tesla because if Trump wins, you know, doesn't give a
Speaker 1: crap about evs, he supports oil, and Elon's gonna learn
Speaker 1: about Trump, which is that he's a liar. And so
Speaker 1: all this money Elon's putting into Trump to hopefully have
Speaker 1: some power, he's gonna learn the hard way about Trump,
Speaker 1: just asked Juliani. So that's a lose, And if Trump loses,
Speaker 1: it's a disaster for Elon, just per and for his
Speaker 1: personal brand and for everything that he's been working on.
Speaker 1: And it really puts Tesla in a tough position because
Speaker 1: the administration isn't going to do anything to help them,
Speaker 1: that's for sure. So I don't get it other than
Speaker 1: I guess he thinks the America is in this horrible place,
Speaker 1: but the stock market's hitting all time highs every day,
Speaker 1: and I think America is in a wonderful place. But
Speaker 1: it's all a matter of perception, you know, And so
Speaker 1: I think this is the most political I've ever seen
Speaker 1: a CEO. And that's one of the reasons we've lowered
Speaker 1: our position in Tesla is we do think it affects
Speaker 1: sales and affects the brand and ultimately margins, And we're
Speaker 1: excited about margins going up instead of going down for
Speaker 1: a quarter which is great news, you know, but this
Speaker 1: is coming from the fact that the car market is
Speaker 1: so difficult that the cost of goods has gone down,
Speaker 1: not because Tesla is making more margin because people are
Speaker 1: willing to pay more for a Tesla.
Speaker 3: I want to talk a little bit more about Elon Musk.
Speaker 3: Matt Levine calls it the attention auction, you know, the
Speaker 3: there's just a lot of things competing for Elon Musk's attention.
Speaker 3: And you know, he's been involved with multiple companies for
Speaker 3: many years, of course, but now politics feels like a
Speaker 3: new wrinkle there, of course, and he is heavily involved
Speaker 3: when it comes to the Trump campaign. This has been
Speaker 3: discussed before, but I am curious to hear your opinion
Speaker 3: on whether or not the fact that Elon is so
Speaker 3: spread thin across these different efforts, how you're thinking about
Speaker 3: that when you're taking to look at your Tesla position.
Speaker 1: Well, this is probably one of the biggest issues is
Speaker 1: he doesn't actually work at Tesla, you know, like you
Speaker 1: go to work at your company every day like you're
Speaker 1: the CEO. I don't think that's what he does. And
Speaker 1: I don't think that Elon gets more hours in a
Speaker 1: day than you or I do so, so he might
Speaker 1: sleep four hours a day instead of eight. Well, you
Speaker 1: know where that's going to cost him is at the
Speaker 1: end of his life, because it's super unhealthy to live
Speaker 1: this way. You know. There's this sort of opinion that,
Speaker 1: you know, like he has some super human ability. He doesn't.
Speaker 1: So he's spending his time working for Trump right now
Speaker 1: and doing politics, and he's not spending his time getting
Speaker 1: his full self driving to work, which it still doesn't.
Speaker 1: And so this is really the issue for me as
Speaker 1: an investor, is shouldn't the CEO of your company be
Speaker 1: there every day or at least pretend, you know. And
Speaker 1: then the second thing is and I was just talking
Speaker 1: to a guy about this who's been following Tesla for
Speaker 1: a long time, and we were having a nice discussion
Speaker 1: about Tesla, and I said, the biggest difference between Tesla
Speaker 1: now and the Tesla of twenty nineteen, twenty twenty that
Speaker 1: made us all really wealthy was that Elon worked at
Speaker 1: Tesla every day. It was the fundamental thing he focused
Speaker 1: on one hundred percent of his energies and efforts. And
Speaker 1: that's why Tesla became successful because they were about to fail. Okay,
Speaker 1: so this lack of attention to what needs to be done,
Speaker 1: especially around full self driving, is really troubling to me
Speaker 1: because I see the competitors all over the place. I'm
Speaker 1: here in the heart of EVS right, and Rogue taxis
Speaker 1: away moo just drove by me just a second ago,
Speaker 1: you know, like they're everywhere. They're working in extremely difficult
Speaker 1: driving conditions that my cyber truck can't even come close
Speaker 1: to tackling. So I just am like, get back to work,
Speaker 1: focus on the job, or maybe it's time to just
Speaker 1: get a real CEO like when shot Well, you know
Speaker 1: she hasn't Yeah, yeah, I mean I think she deserves
Speaker 1: a metal Russ.
Speaker 2: Gotta we gotta go. We gotta let you get back
Speaker 2: to work. We do appreciate you joining us. It's always
Speaker 2: a treat when you are on our air, especially post
Speaker 2: Tesla learnings. Ross Gerber, president and CEO over at Gerber
Speaker 2: Kawasaki Wealth and Investment Management. I want to go now
Speaker 2: to Ed Ludlow, who's standing by in San Francisco, because
Speaker 2: he has had his eye on the live blog. He's
Speaker 2: had his eye on the numbers. ED shares surging in
Speaker 2: the after hours. Now, good report for Tesla what sticks
Speaker 2: out to you.
Speaker 4: Yeah, I think we still need to do the math
Speaker 4: on like all of it. So where would you got
Speaker 4: me to stop?
Speaker 2: I mean, Mark, let's do it. Where are those gross margins?
Speaker 2: Where did that beat come?
Speaker 1: Yeah?
Speaker 4: Actually, I think at the end of the day, remember
Speaker 4: that Tester is a public company and it prepares a
Speaker 4: very thorough earnings deck for investors. In that deck, there
Speaker 4: is a section about revenue and profit, the headwinds and
Speaker 4: tailwinds for the top and bottom line. And what they're
Speaker 4: telling us about the bottom line is that while there
Speaker 4: were lower average selling prices for their consumer cars, the
Speaker 4: cost of producing them is also coming down, both from
Speaker 4: sort of the technology they use to manufacture in the process,
Speaker 4: but also raw materials. The thing that really jumps out
Speaker 4: at me is they're now listing the sale of full
Speaker 4: self driving software as a direct contributor to profit, which
Speaker 4: I find really interesting because of two recent catalysts. FSD
Speaker 4: is available to cybertruck owners very recently, and they also
Speaker 4: have this actual smart sum and I won't give you
Speaker 4: the acronym feature that is also contributing to the bottom line.
Speaker 4: And I think that Ross was talking about that right,
Speaker 4: He was trying to understand where this margin boost was
Speaker 4: coming from if you strip out the impact of regulatory credits.
Speaker 2: Okay, Yeah, So that's where we're trying to figure out,
Speaker 2: and certainly there's going to be a lot of number
Speaker 2: crunching that happens, and I imagine a lot of questions
Speaker 2: from analysts too. I did want to get your thoughts
Speaker 2: on my line of questioning to Ross about political risk here,
Speaker 2: because I cannot name a CEO. In fact, you have
Speaker 2: CEOs right now coming out and avoiding talking about the election,
Speaker 2: whereas Elon Musk is going all in on this. In
Speaker 2: a different time, maybe that would make sense. But incredibly
Speaker 2: polarized country right now. Are analysts talking apart from Ross
Speaker 2: talking about the risk here? Yeah?
Speaker 4: I think that you know, whether they are sell side
Speaker 4: analysts or retail investors and institution investors, that there is
Speaker 4: a likely chance that Musk is asked a question about
Speaker 4: this on the call within the next hour. There's no
Speaker 4: mention of the election or either candidate. Sorry my mobile
Speaker 4: phone is ringing. Who knows who that is?
Speaker 3: You?
Speaker 4: Either candidate could be doubt it, either candidate in the deck.
Speaker 4: I think what's interesting that the important point to note
Speaker 4: here is that throughout the period of the administration, and
Speaker 4: the impact already to consumers are the benefit of the
Speaker 4: Inflation Reduction Act. There has not been a lot of
Speaker 4: sort of vocal support of the Biden administration for Musk.
Speaker 4: That's gone very quiet. The Harris camp has not talked
Speaker 4: much about Musk, where the Musk practically talks about them
Speaker 4: in the context of earning school, I would say, on balance,
Speaker 4: he probably will, but we'll have to find out.
Speaker 2: I mean, given given Elon's comments over the last few
Speaker 2: months about Kamala Harris, I don't imagine if she wins
Speaker 2: that they're going to have a very friendly relationship. Ed
Speaker 2: before we let you go, there's still a lot of
Speaker 2: you know, we're still wedding on the call. There's still
Speaker 2: a lot to get to when it comes to understanding
Speaker 2: more about these numbers. But is Tesla on its way
Speaker 2: out of the woods yet?
Speaker 4: Well, it's really interesting. So the stock's down year to date,
Speaker 4: but look at prior years of performance on the stock.
Speaker 4: They're telling us that they're going to grow modestly on
Speaker 4: the ev side, And if you do the math, as
Speaker 4: our bn F colleague Corey Cantor has done, they're going
Speaker 4: to have to have a record breaking fourth quarter to
Speaker 4: achieve that growth or beat the one point eight million
Speaker 4: units they did last year. No one ever really talks
Speaker 4: about the energy storage print that seems to be doing
Speaker 4: really well record energy storage and energy generation, and I
Speaker 4: go back to my earlier comment. They're listing it as
Speaker 4: a contributing factor to profit in a positive way in
Speaker 4: the earnings deck. Maybe we'll hear a bit more about that.
Speaker 4: But at the end of the day, the frustration Ross
Speaker 4: gave you is shared by many types of investors, which is,
Speaker 4: you keep steering us to a future where you are
Speaker 4: not doing the thing you currently do, which is selling
Speaker 4: cars to consumers. In the future, you're going to be
Speaker 4: an AI and robotics company with a proprietary ride hailing app.
Speaker 4: There's not a lot of mention of that in the deck,
Speaker 4: and I think on the call that that will be
Speaker 4: at least where the questions are asked whether or not
Speaker 4: Musk wants to go there of his own volition.
Speaker 2: Hi Ludlow. He is the co host of Bloomberg Technology
Speaker 2: on a Bloomberg TV each and every day. Also check
Speaker 2: them out on Twitter, Instagram and the like. Tesla shares
Speaker 2: right now surging in the after hours,