WEBVTT - Will Elon Get Paid 1,000,000,000,000,000? 0:00:02.480 --> 0:00:07.000 Bloomberg Audio Studios, Podcasts, radio news. 0:00:07.920 --> 0:00:10.559 Let me tell you we have a new star. A 0:00:10.720 --> 0:00:11.600 star is born. 0:00:11.600 --> 0:00:15.239 Elon humped up on Mars Jus and Kennemy. He is 0:00:15.280 --> 0:00:19.040 the Thomas Edison plus plus plus of our age. Probably 0:00:19.040 --> 0:00:21.159 his whole life is from a position of insecurity. I 0:00:21.160 --> 0:00:21.800 feel for the guy. 0:00:22.040 --> 0:00:25.319 I would say ninety eight percent really appreciate what he does. 0:00:25.400 --> 0:00:28.479 But those two percent that are nasty, they are out 0:00:28.840 --> 0:00:31.560 in four post. We were meant for great things in 0:00:31.600 --> 0:00:34.640 the United States of America, and Elon reminds us of that. 0:00:35.840 --> 0:00:37.400 I'm very disappointed in Elan. 0:00:37.479 --> 0:00:38.800 I've helped Elon a lot. 0:00:39.120 --> 0:00:49.080 At Welcome to Elan and Bloomberg's weekly podcast about Elon Musk. 0:00:49.159 --> 0:00:53.880 It's Tuesday, September ninth. I'm your host, David Popatoppolos. Okay, 0:00:53.880 --> 0:00:58.280 So Elon, it appears, just may have himself a new 0:00:58.360 --> 0:01:02.680 Tesla package. I'm I mean a very very big pay package. 0:01:03.120 --> 0:01:06.240 If all goes well, and you know, every home in 0:01:06.280 --> 0:01:10.040 America has an optimist robot wiping baby bottoms and a 0:01:10.160 --> 0:01:13.920 driverless car to parked in the driveway, and Tesla's stock 0:01:14.040 --> 0:01:16.160 is worth many times more than it is today, well, 0:01:16.200 --> 0:01:21.160 then the package could be worth one trillion dollars. Max, 0:01:21.440 --> 0:01:25.440 that's that's trillion with the T. Yeah, I'm getting this right. 0:01:25.600 --> 0:01:27.920 I mean, if it's wiping the baby bottoms though, that's 0:01:28.360 --> 0:01:30.000 a trillion dollar opportunity right there. 0:01:30.080 --> 0:01:33.120 Okay, you know that guy, that's co host Max Chafkin. Now, 0:01:33.160 --> 0:01:36.280 all the package needs is shareholder approval. The vote comes 0:01:36.280 --> 0:01:40.040 at the company's annual shareholder meeting on November sixth. We'll 0:01:40.040 --> 0:01:42.160 look ahead to that vote and break down the inns 0:01:42.200 --> 0:01:44.240 and the outs and the whys of the package the 0:01:44.280 --> 0:01:47.440 Tesla board is proposing. And also at that meeting, less 0:01:47.520 --> 0:01:50.920 dramatic perhaps, but also very important, shareholders will vote to 0:01:51.000 --> 0:01:56.200 determine if Tesla should start investing in Elon's AI company XAI. 0:01:56.800 --> 0:01:59.000 Will be joined a little later by Bloomberg Tech reporter 0:01:59.080 --> 0:02:02.360 Kurt Wagner at the sci Us that potential Tesla XA ideal. 0:02:02.440 --> 0:02:06.040 But first for Elon's payday. Sitting here with me is 0:02:06.160 --> 0:02:09.840 that guy, Max. Hey, Max, Hey, David, and over in 0:02:09.919 --> 0:02:15.520 Oakland Bloomberg's top muscologist, Dana Hall. Dana Hello, Hey, Hey, okay, 0:02:15.760 --> 0:02:20.120 so but wait a minute, by the way, Max, congratulations, 0:02:20.360 --> 0:02:22.200 you have big book news today. 0:02:22.320 --> 0:02:26.360 Yep, that's right, David and listeners. The paperback of my 0:02:26.440 --> 0:02:29.919 book The Contrarian, which is a biography of Peter Teal, 0:02:30.400 --> 0:02:34.760 is out today as we're recording this Tuesday, September ninth. 0:02:34.840 --> 0:02:38.600 I actually originally wrote it in twenty twenty one, but 0:02:39.040 --> 0:02:41.440 I updated it for the paperback. I wrote a new 0:02:41.560 --> 0:02:46.079 essay trying to kind of make sense of Elon and 0:02:46.120 --> 0:02:48.600 how he related to some of the stuff I wrote 0:02:48.600 --> 0:02:51.440 about back then. And yeah, I wrote a whole whole 0:02:51.440 --> 0:02:54.480 new essay about it. Basically, the argument in it, I'll 0:02:54.560 --> 0:02:57.919 keep the Church Sweet, is that Peter Teal's kind of 0:02:58.000 --> 0:03:01.480 activism and advocacy and waste and his money became kind 0:03:01.520 --> 0:03:04.760 of a model for Elon during the last election cycle. 0:03:04.880 --> 0:03:07.919 So hopefully it's something for people listen to this podcast. 0:03:08.040 --> 0:03:08.799 I've read it. 0:03:08.880 --> 0:03:10.680 I'd really appreciate it if you checked it out and 0:03:11.280 --> 0:03:11.720 review it. 0:03:11.760 --> 0:03:13.440 And so, oh, I already read it. 0:03:13.440 --> 0:03:14.320 Do I need to reread it? 0:03:14.400 --> 0:03:16.280 Yeah? You do from cover to cover? 0:03:16.560 --> 0:03:21.040 Jeez, Okay, then I shall excellent. Congratulations again, Max, very cool. 0:03:21.320 --> 0:03:24.320 All right, So Dan, before we talk about this new 0:03:24.480 --> 0:03:28.880 or potentially new Musk pay package, let's just step back 0:03:28.919 --> 0:03:31.400 a little for a minute and talk about the old 0:03:31.600 --> 0:03:33.760 Musk pay package, the one that ran into trouble in 0:03:33.800 --> 0:03:34.640 Delaware court. 0:03:35.440 --> 0:03:38.560 What exactly is the status of that? Is it totally dead? 0:03:38.800 --> 0:03:39.720 Mostly dead? 0:03:39.880 --> 0:03:39.960 What? 0:03:40.520 --> 0:03:43.160 No, not at all? So the Delaware Chance recurt struck 0:03:43.200 --> 0:03:46.120 down the pay package. Tesla appealed the pay package to 0:03:46.200 --> 0:03:50.200 the Delaware Supreme Court. Oral arguments for that are in October. 0:03:50.920 --> 0:03:54.440 In the interim, Tesla has already awarded Musk like a 0:03:54.480 --> 0:03:58.800 third of that twenty eighteen pay package, as like a hedge, 0:03:59.000 --> 0:04:02.720 depending on which way where it goes. But then you know, 0:04:02.840 --> 0:04:05.760 in Elon's mind, he still hasn't been paid, and he 0:04:05.800 --> 0:04:08.040 would like very much like to get paid, particularly if 0:04:08.040 --> 0:04:09.880 they want him to stick around. So this is a 0:04:10.000 --> 0:04:13.320 new it's like the go forward pay package. Like, forget 0:04:13.360 --> 0:04:16.359 about Delaware, forget about twenty eighteen. That's all up in 0:04:16.360 --> 0:04:19.800 the courts. How do we incentivize Elon to stick around 0:04:20.120 --> 0:04:23.080 for this new wave of growth which he sees as 0:04:23.160 --> 0:04:25.360 all being about optimism and robotics at AI. 0:04:26.000 --> 0:04:28.440 But to Dana's point, Tesla very much still plans to 0:04:28.440 --> 0:04:30.679 give him that money, that old pay package. 0:04:30.720 --> 0:04:32.080 What was that old one worth? 0:04:32.480 --> 0:04:35.320 I mean, it was like fifty billion dollars at the time. 0:04:35.520 --> 0:04:36.359 Jump change. 0:04:36.640 --> 0:04:37.000 Max. 0:04:37.200 --> 0:04:40.599 Yeah, yeah, but it's fluctuated a bit because it's the 0:04:41.040 --> 0:04:44.479 it reflects the stock press under So so fifty ish billion, 0:04:44.560 --> 0:04:48.760 give or take, still significantly smaller, I think if my 0:04:48.839 --> 0:04:50.400 math is right, then one trillion. 0:04:50.640 --> 0:04:52.280 Yes, So, Dana, here's the thing. 0:04:52.880 --> 0:04:56.240 When he had that package, and as you always reminded us, 0:04:56.320 --> 0:04:59.080 and as Max is doing again, so now there was 0:04:59.120 --> 0:05:01.760 no like truly set number on it because the value 0:05:01.760 --> 0:05:04.440 of the package, that old package fluctuated with the value 0:05:04.440 --> 0:05:07.560 of the stock and some other things. But that package 0:05:07.720 --> 0:05:14.599 was deemed, if I'm remembering correctly, totally unprecedented and slightly 0:05:14.640 --> 0:05:18.440 inconceivable to us mere masses. So how do we go 0:05:18.480 --> 0:05:22.120 from a number that already seemed large to a number 0:05:22.160 --> 0:05:28.360 that seems inconceivable. Why did the board feel obligated to say, hey, Elon, 0:05:28.520 --> 0:05:31.120 here's up to potentially one trillion. 0:05:30.760 --> 0:05:34.040 Dollars because Elon threatened to quit. So here's the thing 0:05:34.080 --> 0:05:35.720 that you need to understand about Elon and Max and 0:05:35.760 --> 0:05:38.920 I have talked about this a lot. Like money alone 0:05:39.120 --> 0:05:40.599 does not motivate Elon. 0:05:40.720 --> 0:05:41.560 He is already the. 0:05:41.560 --> 0:05:44.839 Richest person in the world. What motivates him is really 0:05:45.000 --> 0:05:47.919 huge Swinging from the fence's goals that everyone thinks is 0:05:47.960 --> 0:05:51.640 crazy and control, and what he wants is a bigger 0:05:51.720 --> 0:05:54.719 stake in Tesla. He wants twenty five percent. So the 0:05:54.720 --> 0:05:57.240 new pay package is a series of twelve trenches, and 0:05:57.279 --> 0:06:00.000 it's like a video game, like as you hit these milestone, 0:06:00.200 --> 0:06:03.000 you unlock a trnch, and the tronch is both market 0:06:03.040 --> 0:06:05.839 cap which goes up with these you know, the first 0:06:05.880 --> 0:06:08.159 tronch you have to hit two trillion dollars, the second 0:06:08.200 --> 0:06:10.280 tronch is two point five trillion, all the way up 0:06:10.320 --> 0:06:13.360 to the over eight trillion dollar mark. But you also 0:06:13.360 --> 0:06:15.520 have to hit operational milestones that have to do with 0:06:15.560 --> 0:06:21.640 revenue and like products like robotaxis, FSD, take rate, all 0:06:21.640 --> 0:06:24.599 this other kind of stuff. And with each tranch that 0:06:24.680 --> 0:06:29.359 Elon unlocks, presumably I mean shareholders win too, right, Like 0:06:29.480 --> 0:06:32.080 if the company goes for me worth a trillion dollars 0:06:32.120 --> 0:06:35.000 to over eight trillion, everybody wins. That is the premise 0:06:35.000 --> 0:06:38.000 of the pay package. And with each trnch, Elon gets 0:06:38.000 --> 0:06:40.880 more stock, which gives him more control. So conceivably, by 0:06:40.920 --> 0:06:43.000 the end of this he'll be a trillionaire and I'll 0:06:43.080 --> 0:06:44.839 have a twenty five percent stake in the company. 0:06:45.000 --> 0:06:48.560 I would amend what Dana said just slightly, which is 0:06:48.600 --> 0:06:50.720 to say, I agree with her that Elon does not 0:06:50.880 --> 0:06:54.040 care about money really, but he does care about really, 0:06:54.080 --> 0:06:57.120 really large amounts. And I think Dana's right, like a 0:06:57.160 --> 0:07:00.840 big part of this, like the money is part of it. 0:07:00.960 --> 0:07:03.120 And of course he has big plans, right he wants 0:07:03.120 --> 0:07:06.760 to colonize Mars. He can definitely find a use White 0:07:07.040 --> 0:07:11.600 Baby trillion dollars. But also like, this is a way 0:07:12.120 --> 0:07:17.520 I think to take the focus away from Tesla's current issues. 0:07:17.560 --> 0:07:20.040 And I went back to look at the context of 0:07:20.080 --> 0:07:22.600 that twenty eighteen award, because you're right, David, like at 0:07:22.600 --> 0:07:25.440 the time there were headlines like this is the biggest 0:07:25.520 --> 0:07:28.960 this is like more money than anyone could could conceivably 0:07:29.640 --> 0:07:32.080 be and the headlines were very similar. But on the 0:07:32.080 --> 0:07:34.080 other hand, like, if he were to do this, it 0:07:34.120 --> 0:07:37.520 would be like an amazing, unprecedented amount of growth. Now, 0:07:37.840 --> 0:07:40.400 what was happening in early twenty eighteen when that award 0:07:40.480 --> 0:07:44.200 was made, Well, Tesla was basically in crisis. They were 0:07:44.680 --> 0:07:49.600 frantically struggling to produce Model three Sedans. They were in 0:07:49.680 --> 0:07:52.360 what Elon you know, would took to calling quote unquote 0:07:52.360 --> 0:07:55.400 production hell, this all kind of seems quaint, but at 0:07:55.400 --> 0:07:58.680 the time it didn't seem totally clear that he was 0:07:58.720 --> 0:08:01.520 going to figure out a way to like actually mass 0:08:01.520 --> 0:08:04.840 produce this car and do so profitably. And as Dana remembers, well, 0:08:04.880 --> 0:08:07.160 they were short sellers who were convinced the company was 0:08:07.200 --> 0:08:09.040 going out of business, and this was kind of a 0:08:09.080 --> 0:08:13.640 way back then to say, Okay, let's ignore the problems 0:08:13.680 --> 0:08:15.720 for a second and think about what the future could 0:08:15.760 --> 0:08:18.360 look like. And I think that's what's happening again. This 0:08:18.520 --> 0:08:21.720 is a way, in addition to incentivize must to keep 0:08:21.800 --> 0:08:24.440 them from quitting, to from the point of view of 0:08:24.480 --> 0:08:26.760 a lot of Tesla investors, to pay them what is worth. 0:08:26.840 --> 0:08:29.280 It's a way to change the channel and to create 0:08:29.560 --> 0:08:33.760 some sort of defined goals. Elon loves talking about these 0:08:33.840 --> 0:08:38.400 kind of abstract, far off goals, stuff like optimize wiping 0:08:38.520 --> 0:08:42.040 baby butts without a clear timeline for doing so. But 0:08:42.120 --> 0:08:43.959 now look, we have a timeline. Sort of yeah. 0:08:44.000 --> 0:08:47.320 I mean, there is seemingly a somewhat fantastical quality to 0:08:47.440 --> 0:08:50.319 it all, and the changing the narrative thought is an 0:08:50.320 --> 0:08:53.120 interesting one, although I guess it's not super intuitive to me, 0:08:53.280 --> 0:08:55.920 And yet I look at the stock price, and the 0:08:55.960 --> 0:09:00.280 stock price Loan and Behold is grinding ever higher? Is 0:09:00.320 --> 0:09:02.720 that I don't I know, you don't follow every twist 0:09:02.720 --> 0:09:04.960 and turn of the stock price. But is some of 0:09:05.000 --> 0:09:09.000 that rebound in the stock predicated on the fact that 0:09:09.040 --> 0:09:11.400 it looks like the board has Elon signed on for 0:09:11.440 --> 0:09:12.040 the long haul? 0:09:12.720 --> 0:09:14.800 I think so, I mean, that's always you know, they're 0:09:14.840 --> 0:09:17.960 sort of in this like mutually assured chokehold right where 0:09:18.000 --> 0:09:20.840 like the board needs Elon, Elon threatens to quit, the 0:09:20.880 --> 0:09:23.320 board tries to appease him. He is the sort of 0:09:23.320 --> 0:09:26.560 singular person who's got the vision of the company. He's 0:09:26.559 --> 0:09:29.800 been the CEO since two thousand and eight. But another 0:09:29.800 --> 0:09:32.000 way to think about the pay packages is if the 0:09:32.000 --> 0:09:35.120 twenty eighteen package was described as like a moonshot that 0:09:35.160 --> 0:09:38.240 everyone thought was crazy, like he did actually achieve all 0:09:38.280 --> 0:09:41.560 the milestones and then some So now they're sort of 0:09:41.800 --> 0:09:44.640 re upping the same conceit, although now it's like a 0:09:44.679 --> 0:09:48.520 Mars shot and we're talking trillions not billions. And Musk 0:09:48.559 --> 0:09:50.720 has always said that he thinks that there's a path 0:09:50.760 --> 0:09:53.240 for Tesla to be the most valuable company in the world, 0:09:54.280 --> 0:09:56.439 and if that's what it takes to motivate him. I 0:09:56.440 --> 0:09:58.400 think the board has made the deduction like, well, why not, 0:09:58.480 --> 0:10:00.800 let's do whatever we can to motivate it and Wall 0:10:00.880 --> 0:10:03.160 win in the process. And I think that this will 0:10:03.240 --> 0:10:06.560 easily pass at the shareholder meeting on November sixth, And 0:10:07.520 --> 0:10:09.880 clearly there's gonna be like a whole campaign to get 0:10:09.920 --> 0:10:15.120 people engaged with shareholders, particularly the retail fan base. And yeah, 0:10:15.160 --> 0:10:18.440 it's like unprecedented incorporated America. But but Elon is an 0:10:18.520 --> 0:10:19.920 unprecedented figure. 0:10:20.160 --> 0:10:21.679 That's I was going to ask you that, so you 0:10:21.720 --> 0:10:24.880 see it totally sailing through, Max, you as well. This 0:10:25.040 --> 0:10:27.079 is like a ninety nine to one vote. 0:10:27.520 --> 0:10:31.440 Yeah, this is like Vladimir Putin's Latimer reelection. Yes, it's 0:10:31.480 --> 0:10:33.440 going to pass. This is a huge amount of money. 0:10:33.480 --> 0:10:37.000 And if you're if you're mad about inequity in the world, 0:10:37.280 --> 0:10:39.559 there are lots of reasons to sort of think this 0:10:39.600 --> 0:10:41.600 is a bad idea. I mean, it is kind of 0:10:42.120 --> 0:10:45.959 funny that like Elon Musk has spent the last I 0:10:46.000 --> 0:10:49.240 don't know a year or so, like just unbelie alienating 0:10:49.280 --> 0:10:54.760 his customers, like just totally taking essentially like a boring 0:10:54.800 --> 0:10:59.120 company flamethrower to his existing business. And the board has 0:10:59.160 --> 0:11:01.560 turning around thanking him and going to write him like 0:11:01.640 --> 0:11:04.400 a gigantic check. But as Danna says, what they're doing 0:11:04.480 --> 0:11:07.760 is saying, hey, if you can back up these these 0:11:07.920 --> 0:11:10.120 very brand statements that you've been making, Yeah, sure, we'll 0:11:10.120 --> 0:11:12.160 pay you. There's one thing I don't did Dana mention 0:11:12.280 --> 0:11:14.559 that that there's a succession planning part of this as well? 0:11:14.559 --> 0:11:17.800 I don't know that, like the latter tranches. 0:11:17.600 --> 0:11:22.880 With one of his kids, require him to. 0:11:22.679 --> 0:11:24.760 Come up with a succession plan and for the board 0:11:24.800 --> 0:11:28.280 to approve it. I think that also does kind of 0:11:28.320 --> 0:11:31.200 answer some of the concerns that you were seeing even 0:11:31.200 --> 0:11:34.760 from Tesla bulls around the time when Elon was kind 0:11:34.760 --> 0:11:36.600 of at his most erratic earlier. 0:11:36.600 --> 0:11:37.840 This my money's on X. 0:11:38.000 --> 0:11:40.400 If that's what they're he's grooming him at a young age, 0:11:40.720 --> 0:11:43.120 just get him, get him right there within twenty five 0:11:43.200 --> 0:11:44.400 years actually running the show. 0:11:44.520 --> 0:11:44.840 All right? 0:11:44.880 --> 0:11:47.720 So Dan, it sails through a November sixth in the 0:11:47.760 --> 0:11:53.320 shareholder meeting. Is there potentially any other court obstacles to 0:11:53.400 --> 0:11:55.800 overcome on this one too? Just like the prior one 0:11:56.120 --> 0:12:00.000 or the fact that Tesla is now domicile in Texas 0:11:59.840 --> 0:12:03.199 means that are no longer domicile than Delaware means nah, 0:12:03.559 --> 0:12:06.880 it's the core problems are a thing of the past. 0:12:07.360 --> 0:12:09.079 Yeah, I think that now that they are you know, 0:12:09.200 --> 0:12:12.680 legally domiciled in Texas, it will be much harder to 0:12:12.720 --> 0:12:16.520 bring a lawsuit, in part because there's also like the 0:12:16.559 --> 0:12:20.600 shareholder that brought the lawsuit in Delaware was like it 0:12:20.640 --> 0:12:22.440 was like a pocket plainiff, right, Like it's you know, 0:12:22.800 --> 0:12:24.680 basically the way these things work is you have plainiffs 0:12:24.679 --> 0:12:27.240 attorneys who like find a plaintiff to bring suit, and 0:12:27.280 --> 0:12:29.559 the plaintiff might own like ten shares. It's gonna be 0:12:29.640 --> 0:12:31.520 much harder to do that in Texas, and you have 0:12:31.559 --> 0:12:35.000 to have a larger shareholder. So I just think that 0:12:35.600 --> 0:12:37.719 they moved to Texas for a reason and they've got 0:12:37.720 --> 0:12:41.120 a very favorable court system there. The proxy also has 0:12:41.160 --> 0:12:43.800 some interesting language about how Muscus to quote unquote like 0:12:43.880 --> 0:12:47.920 wind down his political work within a reasonable timeframe, but 0:12:47.960 --> 0:12:51.800 it doesn't exactly specify what that means, Like does that 0:12:51.840 --> 0:12:56.480 mean he can no longer like fund you know, candidates 0:12:56.480 --> 0:12:58.680 and like elections. Does it mean that he has to 0:12:58.679 --> 0:13:01.960 stop like, you know, ripping on politics on X Like 0:13:02.000 --> 0:13:03.760 It's very ill defined. 0:13:03.960 --> 0:13:06.360 Yeah, I mean he's been doing a lot of politicking 0:13:06.440 --> 0:13:09.440 over the last last couple of days even so I know, 0:13:09.720 --> 0:13:10.560 so I don't know. 0:13:10.520 --> 0:13:13.040 But is that just can eat politic abroad or is 0:13:13.080 --> 0:13:15.880 it just domestic politics or all politics? I mean, can you, 0:13:16.120 --> 0:13:18.360 I don't know, go on and on about UK politics 0:13:18.400 --> 0:13:21.600 as long as you don't mention US politics, Hey. 0:13:21.480 --> 0:13:25.440 Dana, just question the political thing? Is that this proposal 0:13:25.480 --> 0:13:29.640 for political neutrality or that's a different No, it's separate, Okay, Okay. 0:13:29.800 --> 0:13:32.680 There's a sharel of our resolution about political neutrality that 0:13:32.720 --> 0:13:35.080 the Tesla board is urging everyone to vote know on. 0:13:35.280 --> 0:13:38.600 But within the proxy itself there's language about how they 0:13:38.640 --> 0:13:41.440 would like Musk to wind down his political activities in 0:13:41.480 --> 0:13:42.680 a reasonable fashion. 0:13:43.240 --> 0:13:46.200 Dana, before we move on to Tesla and Xai, anything 0:13:46.240 --> 0:13:47.960 else we need to know about this package. 0:13:48.400 --> 0:13:50.760 I just would really encourage all listeners of the show 0:13:50.960 --> 0:13:53.920 and investors to actually read the proxy. It's over three 0:13:54.000 --> 0:13:57.400 hundred pages long. Three board members are up for reelection, 0:13:57.720 --> 0:14:01.040 there are sixteen resolutions. It's a big package. If you're 0:14:01.080 --> 0:14:02.959 an investor, you really need to read the proxy. 0:14:03.240 --> 0:14:05.920 You know, Max is funny. The other day, I think 0:14:05.920 --> 0:14:10.200 when we had talked about a similar musk package. But 0:14:10.760 --> 0:14:14.920 if Elon's worth one trillion dollars, come on, you can't 0:14:14.960 --> 0:14:17.040 tell me that I'm not worth a billion. That I 0:14:17.040 --> 0:14:21.840 don't I'm not one one thousandth right as good as Elon. 0:14:21.960 --> 0:14:24.600 Give me a give me a give me a billion. 0:14:24.720 --> 0:14:26.080 Misplayed this negotiation. 0:14:26.360 --> 0:14:29.200 You gotta spend uh, you gotta start a political party, 0:14:30.040 --> 0:14:33.600 spend months fighting with the president. There's just a lot 0:14:33.600 --> 0:14:37.440 of lot of you haven't done that. Elon has done that. 0:14:37.440 --> 0:14:49.800 That fine, pam, Okay. So we're now joined by Bloomberg 0:14:49.880 --> 0:14:52.480 Ace Tech reporter Kurt Wagner. Kurt, Hello, and Kurt, by 0:14:52.560 --> 0:14:54.800 the way, no hard feelings. I think the last time 0:14:54.840 --> 0:14:57.360 I introduced you, it got you know, I kind of 0:14:57.360 --> 0:14:58.000 got in your face. 0:14:58.040 --> 0:15:00.240 You're good with that. We're good, We're cool. 0:15:01.280 --> 0:15:03.640 I'm sorry, who's talking to me about your name against sir? 0:15:03.960 --> 0:15:05.040 Of course we're good. 0:15:05.240 --> 0:15:08.040 We're always good on this pod. Yeah, that's all good. 0:15:08.080 --> 0:15:10.800 Welcome back, Hurt. So listen, we just talked about the 0:15:10.800 --> 0:15:13.080 pay package, which will be voted on at the shareholder 0:15:13.120 --> 0:15:17.280 meeting and no members six and then shareholders are also 0:15:17.320 --> 0:15:20.520 going to vote on whether Tesla should go ahead and 0:15:20.680 --> 0:15:24.080 invest in Xai tell Us a little bit about what 0:15:24.120 --> 0:15:25.280 this investment would look like. 0:15:26.200 --> 0:15:30.800 So Xai is Elon Musk's ai startup. It's been around 0:15:30.880 --> 0:15:33.920 for a little over two years now, and it's been 0:15:34.000 --> 0:15:37.520 raising money like crazy because the company is out buying 0:15:37.560 --> 0:15:41.280 all these expensive GPUs and data centers and trying to 0:15:41.360 --> 0:15:44.040 keep pace with the open aies of the world, the 0:15:44.080 --> 0:15:46.200 Googles of the world on the ai race, and so 0:15:46.760 --> 0:15:51.240 Elon has been fundraising heavily. He has talked publicly on 0:15:51.240 --> 0:15:54.720 several occasions on his x account about the idea of 0:15:54.880 --> 0:15:59.840 Tesla becoming an investor in Xai. But you know, instead 0:15:59.840 --> 0:16:02.680 of just simply making that decision himself, he says, we 0:16:02.720 --> 0:16:04.400 are going to put this to a shareholder vote, and 0:16:04.440 --> 0:16:06.280 so that is what will happen in November, is that 0:16:06.280 --> 0:16:11.000 the shareholders will decide should they essentially encourage the board 0:16:11.040 --> 0:16:13.800 to invest in Xai. Now, there's a few things I 0:16:13.840 --> 0:16:16.360 would point out, at least my interpretation of the proxy. 0:16:16.760 --> 0:16:20.000 The first is that they're not stipulating a dollar amount. 0:16:20.040 --> 0:16:21.720 They would leave that up to the board. Whatever the 0:16:21.720 --> 0:16:26.000 board deems appropriate would be sort of the decision here. 0:16:26.520 --> 0:16:29.760 But second, I my understanding, if you go to page 0:16:29.760 --> 0:16:32.400 one seventy six of the proxy. I'm sure everybody has 0:16:32.440 --> 0:16:36.440 been scouring this thing. It seems that this is a recommendation. 0:16:36.680 --> 0:16:39.920 It is not a binding vote. So even if shareholders 0:16:39.960 --> 0:16:42.440 say yes, we should invest inn XA, or even know 0:16:42.600 --> 0:16:46.280 we should not, those are just recommendations from shareholders. My 0:16:46.400 --> 0:16:48.880 understanding is that the board can make this decision one 0:16:48.880 --> 0:16:50.840 way or the other on its own, regardless of the 0:16:50.880 --> 0:16:51.400 outcome of. 0:16:51.400 --> 0:16:56.520 The vote, So non binding. In other words, to eat right. Indeed, 0:16:56.520 --> 0:17:00.720 even if shareholders this doesn't seem terribly likely, but shareholders 0:17:00.720 --> 0:17:04.119 say no, we're not going for this, the board just says, hey, no, 0:17:04.200 --> 0:17:05.320 we're going to do it anyways. 0:17:06.280 --> 0:17:08.800 That's my understanding. You know, it says that it's a 0:17:08.840 --> 0:17:11.639 non binding vote and that the board will continue to 0:17:11.760 --> 0:17:16.640 invest in AI based on its fiduciary responsibility. So in theory, 0:17:17.160 --> 0:17:19.080 even if shareholders say, please, don't do this, but the 0:17:19.080 --> 0:17:22.119 board believes it's in the best interest of shareholders. Okay, 0:17:22.200 --> 0:17:24.480 My again reading of it is that they can kind 0:17:24.480 --> 0:17:25.879 of make the decision they want, right. 0:17:25.800 --> 0:17:30.840 So Max, I ask you, sir, is this a bailout 0:17:31.320 --> 0:17:37.119 for Xai and Albatross going forward for Tesla or a 0:17:37.160 --> 0:17:40.480 great opportunity because what's hotter in the world, my friend 0:17:40.520 --> 0:17:41.520 than Ai. 0:17:42.200 --> 0:17:45.680 I mean it could be either, right, and I think 0:17:46.760 --> 0:17:50.200 if you're looking at Tesla like a normal company, this 0:17:50.280 --> 0:17:53.960 would be insane. I mean, you have a CEO who 0:17:54.200 --> 0:17:57.959 is ostensibly working on AI, the hottest industry there is, 0:17:58.119 --> 0:18:02.840 who has a side project started this other ostensibly maybe 0:18:02.920 --> 0:18:05.840 competing AI thing, kind of started. 0:18:05.480 --> 0:18:10.200 Poaching competing with Tesla. He's poaching employees. Xai is poaching 0:18:10.200 --> 0:18:10.719 from Tesla. 0:18:10.800 --> 0:18:13.399 Well, their employees have gone from Tesla at XAI. I 0:18:14.440 --> 0:18:17.160 don't think Elon Musk would would do something as as 0:18:17.240 --> 0:18:19.720 ruthless as try to try to poach employees from one. 0:18:19.640 --> 0:18:20.199 Company to the other. 0:18:20.240 --> 0:18:23.719 But I'm just saying, like from a normal perspective, like 0:18:23.760 --> 0:18:27.880 this is crazy. It raises so many different issues. From 0:18:27.880 --> 0:18:30.119 an Elon in perspective, I hate to say it, but 0:18:30.160 --> 0:18:32.359 it's totally normal. This is just like this is like 0:18:32.440 --> 0:18:36.440 Elon being Elon. He in so many different ways, doesn't 0:18:36.480 --> 0:18:40.440 operate as if these companies are separate. I'm sure that 0:18:40.560 --> 0:18:44.520 we're good reasons in his mind to create Xai as 0:18:44.520 --> 0:18:46.800 a separate and he allows it to raise money, you know, 0:18:46.840 --> 0:18:50.480 on private markets take advantage of this boom and venture 0:18:50.480 --> 0:18:55.399 capital like you can probably compensate these AI engineers in 0:18:55.480 --> 0:18:58.439 ways that are are helpful if you're especially if you're 0:18:58.440 --> 0:19:01.359 trying to recruit from some of the other privately held 0:19:01.440 --> 0:19:04.800 AI companies. So so, I don't know, I mean, it 0:19:05.040 --> 0:19:08.080 seems like this could turn into an albatross at the time. 0:19:08.920 --> 0:19:12.960 I think in retrospect, Tesla's purchase of Solar City, which 0:19:13.000 --> 0:19:15.080 Elon Musk also co founded. 0:19:14.800 --> 0:19:16.840 Yeah, I was gonna go there. So now that you've 0:19:16.920 --> 0:19:18.960 jumped the shark, so tell us remind us a little 0:19:18.960 --> 0:19:22.560 bit about the Tesla Solar City saga from years ago. 0:19:22.760 --> 0:19:26.880 Well, right, So, so Elon Musk started this solar company, 0:19:27.080 --> 0:19:31.119 Solar City, that went public and then ran into a 0:19:31.119 --> 0:19:34.000 lot of issues. Basically, it's its main business, which was 0:19:34.119 --> 0:19:38.800 installing solar panels, became less and less profitable, and Tesla 0:19:38.840 --> 0:19:41.880 eventually bought it in what, at the time to some 0:19:41.920 --> 0:19:46.040 critics looked like a bailout. I think in retrospect it 0:19:46.080 --> 0:19:50.000 does look that way, because Tesla has not done as 0:19:50.080 --> 0:19:53.040 much with solar than as I think some some sort 0:19:53.080 --> 0:19:56.560 of solar fans, you know, would have hoped. I think, 0:19:56.720 --> 0:19:58.480 you know, we could look back at this that way. 0:19:58.520 --> 0:20:01.200 On the other hand, you know, if when the singularity 0:20:01.280 --> 0:20:03.840 comes and when we're all praying to our robot gods 0:20:03.880 --> 0:20:06.600 and they're not already Yeah, not me, but I know 0:20:06.600 --> 0:20:08.720 that I understand that some are. But you know, maybe 0:20:08.760 --> 0:20:11.240 this will look like a smart move if Tesla's in 0:20:11.280 --> 0:20:14.080 the AI business, Elon Musk is somewhat distracted, has this 0:20:14.119 --> 0:20:17.640 other AI company. I do get the argument that even 0:20:17.640 --> 0:20:20.520 if you're just a Tesla shareholder being totally kind of 0:20:21.119 --> 0:20:23.000 rational about this, that you would just say it'd be 0:20:23.000 --> 0:20:24.000 better if these were one thing. 0:20:25.080 --> 0:20:26.080 Dnaholl what say you? 0:20:26.560 --> 0:20:29.439 Well, this is where related party transactions get super interesting 0:20:29.480 --> 0:20:32.920 because you have to remember that Xai is a customer 0:20:32.960 --> 0:20:36.560 of Tesla. Tesla sells their megapacks, which are the batteries 0:20:36.680 --> 0:20:40.160 that power utilities, you know, the big energy storage product 0:20:40.200 --> 0:20:43.679 that Tesla is banking on to Xai. This data center 0:20:43.720 --> 0:20:46.720 in Memphis that Xai is building is like now filled 0:20:46.760 --> 0:20:48.919