WEBVTT - David Welch on Tesla Earnings (Audio)

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<v Speaker 1>Well, let's get back to one of our top stories.

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<v Speaker 1>It's about Tessa with its third quarter revenue figures and

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<v Speaker 1>they fell shy of analysts estimates. Let's get over to

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<v Speaker 1>David Welch Bloomberg Detroit Period chief. David give this festival

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<v Speaker 1>in the overview of what test that did right and

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<v Speaker 1>wrong and what the company was saying. Yeah, I think

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<v Speaker 1>one thing they did right. So they did beat Arnings

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<v Speaker 1>for share our fire they beat by a couple of

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<v Speaker 1>but four pennies bypennies not terrible. But what the markets

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<v Speaker 1>reacting to in the last I work shares with down

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<v Speaker 1>four a half percent in after market trading, is they

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<v Speaker 1>missed on revenue and also missed on vehicle sales value.

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<v Speaker 1>The reasons they say are less to do with semiconductor

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<v Speaker 1>chips and that sort of supply chain stuff and more

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<v Speaker 1>to do with shipping. But investors still worried because they

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<v Speaker 1>don't know when they're going to get all of those uh,

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<v Speaker 1>supply chain and transportation issues fixed, and you know that

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<v Speaker 1>could pretend for maybe you know, missing sales again in

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<v Speaker 1>the four quarter. Euan Musk said that they're still going

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<v Speaker 1>to be able to hit their target of boosting sales

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<v Speaker 1>production this year, but they're going to have to have

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<v Speaker 1>a really real knockout fourth quarter at the plant level,

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<v Speaker 1>will be able to do that. They're gonna build about

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<v Speaker 1>five vehicles, so there's some doubt about that, and the

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<v Speaker 1>shares are done. I think people are taking a cautious look.

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<v Speaker 1>Let's take a closer look at China. It's it's understandable

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<v Speaker 1>in some ways that you know, we know what's happened

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<v Speaker 1>in China this past year and it's not likely to

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<v Speaker 1>change overnight. But that would investors not give Tesla a

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<v Speaker 1>little bit of a pass over that or do they

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<v Speaker 1>actually blame Tesla for so much exposure in China given

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<v Speaker 1>the way the country has moved. Um, I don't think

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<v Speaker 1>the investors are going to blame Tesla for having exposure there.

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<v Speaker 1>It's a good ev market, it's huge, the government mandates

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<v Speaker 1>in some places that that's pretty much all you can buy,

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<v Speaker 1>and they're a leader there, so they've got to be there.

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<v Speaker 1>They've got to capitalize on the growth that Chinese actually

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<v Speaker 1>really like that brand quite a bit. But they're gonna

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<v Speaker 1>be bumps here because of COVID, the way the government's

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<v Speaker 1>handling it and the economic issues that they're having in

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<v Speaker 1>the market, and everyone's going to have to weather through that.

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<v Speaker 1>Investors may take away and see attitude, and I think

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<v Speaker 1>they are in the case of Tesla, because the shares

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<v Speaker 1>are down thirty seven percent, which is a bigger drop

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<v Speaker 1>than the SEP has seen. So you know, clearly Testa

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<v Speaker 1>was taking once not only because of their exposure in

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<v Speaker 1>China on a sales basis, but I think their shares

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<v Speaker 1>are exposed to it as well. And you know, what

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<v Speaker 1>once was a high flying growth stock that was immune

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<v Speaker 1>to all of these different global economic inputs is now

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<v Speaker 1>kind of suffering along with everybody else. Yeah. But given that,

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<v Speaker 1>and given what's happened, what is the company saying about

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<v Speaker 1>its targets? Do you want must saying they can still

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<v Speaker 1>hit their their target for the year, but again that

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<v Speaker 1>that requires a grade fourth quarter. It's possible. There's often

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<v Speaker 1>a lot of up demand. A lot of times there

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<v Speaker 1>are vehicles that are built but not completely finished because

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<v Speaker 1>maybe it's chips, or there are things that just need

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<v Speaker 1>to u get shipped out or shipped in, and you

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<v Speaker 1>can can finish things quickly. Living here in the Detroit area,

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<v Speaker 1>we don't have Tessa production, but I can tell you

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<v Speaker 1>there are a lot filled with GM and four vehicles,

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<v Speaker 1>a C nearly finished trucks that are just waiting for

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<v Speaker 1>some semiconductor or some module and and so sometimes production

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<v Speaker 1>can be made up very quickly if it's just a

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<v Speaker 1>supply chain issue. But they're really gonna have to knock

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<v Speaker 1>it out of the park of the seventy in in

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<v Speaker 1>a quarter of the time. That's a third, that's more

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<v Speaker 1>than a third of what the yearly target is. So

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<v Speaker 1>it won't be easy, but again seasonally good period. Uh.

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<v Speaker 1>But the competition is coming for you. Are they not

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<v Speaker 1>there yet? Uh? This has been something that that analysts

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<v Speaker 1>investors have been watching for for quite a while with Tesla,

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<v Speaker 1>and I think when people question why didn't Tesla hit

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<v Speaker 1>their their sales targets, I don't think it's the case

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<v Speaker 1>in the third quarter they missed their sales targets because

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<v Speaker 1>competition is here, although board others are and the Korean

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<v Speaker 1>automakers are starting to sell more electric vehicles, but that

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<v Speaker 1>does kind of hang over the stock. I think the

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<v Speaker 1>markets looking for that moment when all the other carmakers,

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<v Speaker 1>the legacy carmakers as we call them, Mercedes, BMW, General

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<v Speaker 1>Motors scoord Volkswagen on Ikea start to sell a lot

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<v Speaker 1>of electric vehicles and cut into the market share of Tesla,

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<v Speaker 1>and they will, and because they're all gonna be selling

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<v Speaker 1>expensive vehicles. And I think, look, some of those other

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<v Speaker 1>car companies may be better positioned to capitalize on growth

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<v Speaker 1>in the mass market than Tesla, because Test those vehicles

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<v Speaker 1>are all expensive. You're gonna see uh Korean e v s,

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<v Speaker 1>and you're gonna see Ford and g M ebs that

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<v Speaker 1>sell forty or less. In the case of General Motors,

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<v Speaker 1>you're gonna see some on as little as thirty thousands,

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<v Speaker 1>and Tests it doesn't have anything like that. Their vehicles

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<v Speaker 1>are selling Fords. So yes, we see the market go

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<v Speaker 1>to e vs. I think others are better a position

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<v Speaker 1>to capitalize on mass market growth. Yeah, I've been joking that,

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<v Speaker 1>you know, investors are selling the dream. Tesla's down almost

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<v Speaker 1>fifty in the past year, selling the dream, buying you know,

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<v Speaker 1>more sort of stodgy, old fashioned, old American companies. Maybe

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<v Speaker 1>after hours down five point four percent today. Um, so

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<v Speaker 1>definitely a story that investors not all that comfortable with

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<v Speaker 1>these earnings. David Welch has been with us Bloomberg Detroit

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<v Speaker 1>Bureau Chief