Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: All right, Well, shares of Tesla are higher in the
Speaker 2: after hours right now as investors continue to digest those
Speaker 2: first quarter earnings numbers. Global vehicle inventory rose to twenty
Speaker 2: eight days. It's a huge jump from the fifteen days
Speaker 2: at the end of last quarter. Shares high right now
Speaker 2: by just about five percent. First quarter revenue coming in
Speaker 2: at twenty one point three billion dollars that was below
Speaker 2: estimates of twenty two point three billion dollars. Also a
Speaker 2: missed when it comes to EPs adjusted EPs, I should
Speaker 2: say that coming in at forty five cents versus estimates
Speaker 2: of fifty two.
Speaker 3: Cents, shares a teslap about five and a half percent
Speaker 3: in the aftermarket, but also Tesla to accelerate the launch
Speaker 3: of more affordable models at getting a red sticky by
Speaker 3: our team here at Bloomberg. All right, so let's get
Speaker 3: to it with us, Ross Gerber, president and CEO at
Speaker 3: Gerber Kawasaki Wealth and Investment Management, and also Bloomberg BusinessWeek
Speaker 3: columnist Max Chafkin. Ross out there in Santa Monica, California.
Speaker 3: Max here in our Bloomberg Interactive Brokeer studio getting ready
Speaker 3: for another round of Tesla bingo.
Speaker 1: We'll get it do in just a moment.
Speaker 3: Ross investors like it. What do you make of this
Speaker 3: report looking backwards looking forwards?
Speaker 4: Well, I think the good part of the report, because
Speaker 4: this is really the only good part of the report,
Speaker 4: is them saying that they're going to accelerate the production
Speaker 4: of this next gen vehicle platform. And they were pretty
Speaker 4: vague about what they're calling this or you know what
Speaker 4: robo taxi is or is a model to coming, And
Speaker 4: I think that'll be clarified on the conference call. So
Speaker 4: you know, once again, we don't really watch after hours
Speaker 4: trading because he really doesn't represent all the participants and so,
Speaker 4: and we haven't seen the conference call yet, so we'll
Speaker 4: see how this stock trades over the next several months.
Speaker 4: But but there really isn't any other good news in
Speaker 4: that report other than them saying they're going to accelerate
Speaker 4: production even though they just fired all the people that
Speaker 4: are in charge of accelerating production.
Speaker 2: Hey, Ross, remind everybody take a step back here, because
Speaker 2: Carol and I were looking at the terminal a little earlier.
Speaker 2: You've you know, you are a longtime Tesla bull until
Speaker 2: you weren't, and you were a longtime believer and have
Speaker 2: been a longtime believer in the company. You guys still
Speaker 2: own a substantial number of shares over at gerber Kawasaki,
Speaker 2: But what is your position right now in Tesla moving forward?
Speaker 4: So my position is that Tesla is a wonderful company
Speaker 4: that has enormous potential with the CEO who has become
Speaker 4: so divisive that people won't buy the cars. And that's
Speaker 4: why saying is just going to produce more cars doesn't
Speaker 4: address the real issue is why they're not selling cars today,
Speaker 4: and that's the issue that needs to be addressed that
Speaker 4: isn't being addressed. So as a shareholder, we have to
Speaker 4: assess what the future earnings potential of a company is
Speaker 4: based off what their business model is. And when we
Speaker 4: start investing in Tesla over ten years ago, and we've
Speaker 4: had a great run up until the purchase of Twitter,
Speaker 4: and so we've been lowering our position because what we
Speaker 4: feel is that Elon's behavior has hurt the brand in
Speaker 4: such a way that consumers actually don't want to buy
Speaker 4: a Tesla. It's just the best car on the road
Speaker 4: at the best price, so people buy the car reluctantly
Speaker 4: at this point, So I think, you know, we've got
Speaker 4: these problems to solve, and I'm not sure if that
Speaker 4: will be addressed on the conference call today. And that's
Speaker 4: you know, And I don't like being called a Tesla
Speaker 4: bear because I actually think they could turn the company
Speaker 4: around pretty quickly if Elon changed his behavior and stopped
Speaker 4: attacking everybody.
Speaker 1: But I just don't think that's going to happen.
Speaker 4: And so so I think the bigger issue that isn't
Speaker 4: being addressed is doesn't matter how many cars Tesla makes
Speaker 4: if nobody will buy them.
Speaker 3: All Right, So Max chaff can come on and you
Speaker 3: guys do the Elon Inc.
Speaker 1: Podcast.
Speaker 3: You're constantly looking at what he says, what he does.
Speaker 3: You're looking at his kind of his assets, his portfolio,
Speaker 3: your initial thoughts on kind of the headlines we got.
Speaker 5: Yeah, just to kind of underlo Ross is saying something
Speaker 5: like this, but like the note about the new products
Speaker 5: is very vague. It doesn't say we're going to have
Speaker 5: a model too, and it's going to come out on
Speaker 5: this state, which is what investors, many investors have been
Speaker 5: hoping for. It says it sounds like it's saying, I'm
Speaker 5: reading it correctly, They're going to try to essentially make
Speaker 5: the current models more affordable. Now that obviously could allow
Speaker 5: them to sell more cars, but it's a slightly different
Speaker 5: spin on things than what many people have been inspecting.
Speaker 5: The other thing is, as Ross is saying, you know,
Speaker 5: on a Tesla Earning's day, what Elon says, and more importantly,
Speaker 5: how he says it is just as important as as
Speaker 5: what's in these numbers, because he is going to hopefully
Speaker 5: anyway clarify some of this. We also hopefully get a
Speaker 5: sense of like where things stand with robotaxi, where things
Speaker 5: stand with potential affordable cars, and investors seemed to react
Speaker 5: to based on his optimism, you know, a couple quarters
Speaker 5: ago when he was in this kind of dower mood,
Speaker 5: we saw the stock go down. So it's like, do
Speaker 5: we get an optimistic version of Elon or the kind
Speaker 5: of very dour, pessimistic Elon.
Speaker 3: Well, I wonder if you have a question for Ross Max.
Speaker 5: Yeah, Ross, what is your reading on this on this product,
Speaker 5: on this paragraph about the product?
Speaker 1: Well, I think you're dead right about the two things
Speaker 1: you just said.
Speaker 4: Number one, they're of course vague because of the legality
Speaker 4: of it. If they put this down and they don't
Speaker 4: do it right, and since nobody seems to know what
Speaker 4: Elon's going to do, and I'm sure that everybody understands
Speaker 4: that nobody within Tesla knows what the business plan is
Speaker 4: either because they just don't at this point.
Speaker 1: But I think secondly, a.
Speaker 4: Lot of it will be how does Elon answer these
Speaker 4: questions from investors during the conference call?
Speaker 1: And what you said is right.
Speaker 4: If we have sort of a very positive Elon and
Speaker 4: he's refocused and he's going to be working at Tesla
Speaker 4: more and you know, he can play the room right,
Speaker 4: maybe we get a little rally on the stock, but
Speaker 4: it doesn't change the fundamentals. If he doesn't play the
Speaker 4: room right, this becomes a bloodbath. So you know, I'm
Speaker 4: just hoping that he understands the damage that he's done
Speaker 4: and starts to mitigate this versus diving in and sort
Speaker 4: of doubling down.
Speaker 5: It will be interesting to see if Twitter comes up
Speaker 5: or sorry X comes up, you know, because there is
Speaker 5: this question in this sense that he's spent gee Whiz
Speaker 5: a lot of time talking about X, tweeting about X,
Speaker 5: doing X related things. There's even a potential or they're
Speaker 5: going to have a Grock integration inside of the Tesla's
Speaker 5: and I think that to people who are really bought
Speaker 5: into the ev story rather than the you know, Elon
Speaker 5: Musk genius story, which those are two important constituencies here.
Speaker 5: I think for Tesla stock, you know, they would like
Speaker 5: to see him spend less time on his social media network.
Speaker 4: Yeah, well, it's not just less time, it's what he's saying,
Speaker 4: you know, It's like it's not the time, it's that
Speaker 4: what he's saying oftentimes is super divisive and basically racist.
Speaker 4: So it's like, it's really hard to sell products to
Speaker 4: people when the CEO says things that are really hurtful
Speaker 4: to people, including me.
Speaker 1: For that matter.
Speaker 3: Now, and we've talked with you about that absolutely ross.
Speaker 3: What could Elon say on the call, or Elon and
Speaker 3: company say on the call that would make you more
Speaker 3: excited about the company or once again say you know
Speaker 3: kind of oh Elon really well.
Speaker 4: If I had my dream come true, he'd say I'm
Speaker 4: coming back to work at Tesla, because he basically doesn't
Speaker 4: work at Tesla, and he would say, I'm done tweeting
Speaker 4: all this garbage and politics. I'm going to really focus
Speaker 4: on advancing sustainable transportation and energy, and that we're going
Speaker 4: to release this lower priced car and the strategy that
Speaker 4: we all bought into three years ago, you know, and
Speaker 4: the stock was at all time highs and earnings were
Speaker 4: going up, you know, fifty hundred percent a year.
Speaker 1: You know, it was like it was like a different
Speaker 1: world than today.
Speaker 4: And it's amazing to me he doesn't understand this difference,
Speaker 4: that that really is his responsibility. And so as a shareholder,
Speaker 4: I have to say it's an extremely distressing time because
Speaker 4: the valuation of Tesla is premised off all these great
Speaker 4: technological innovations, none of which have come to fruition yet.
Speaker 4: So his focus is one hundred percent what needs to
Speaker 4: be happening right now.
Speaker 2: Hey, Ross, I do want to just end with with
Speaker 2: one last question about the cost of producing these vehicles.
Speaker 2: It seems like Tesla is doing everything I can to
Speaker 2: bring down the cost of producing these cars, the cost
Speaker 2: of goods sold to Are they what numbers do you
Speaker 2: want to see there?
Speaker 4: Well, they are, but their margins continue to go lower.
Speaker 4: If you look at the report, which I've only had
Speaker 4: a minute to look at, you know, their vehicle margins
Speaker 4: continue to go lower. They're operating margins go lower. Their
Speaker 4: net margins go lower, so they're able to lower the
Speaker 4: price of the car. But what they're not able to
Speaker 4: do is keep that going as fast as they're they're
Speaker 4: lowering the price of the vehicles, so it's still hurting
Speaker 4: them even though they're lowering the cost of the car,
Speaker 4: and it doesn't bring in a bigger market.
Speaker 1: But you're not creating any demand. And this is I
Speaker 1: have said it a hundred times. Every company in America
Speaker 1: advertises for a reason.
Speaker 4: People need to know why your products are superior. And
Speaker 4: all the Tesla people have bought in Teslas, you know,
Speaker 4: so all these YouTubers can tweet all they want, but
Speaker 4: everybody wanted to Tesla bought a Tesla. So you've got
Speaker 4: to get new customers. And the new customers are being
Speaker 4: told that charging sucks and evs are bad and this
Speaker 4: and that and that, and Donald Trump says they're bad
Speaker 4: and this is all they see all day. And then
Speaker 4: it's like, why would they go buy a Tesla because
Speaker 4: there's not one ad anywhere that tells you how great
Speaker 4: the cars are?
Speaker 1: Because they are.
Speaker 3: Great, right and you still own them right real quickly?
Speaker 1: Yes or no, yeah I do.
Speaker 4: I just don't understand why they don't tell people how
Speaker 4: great their vehicles are.
Speaker 3: All right, Ross Gerbert, so appreciated. We know you've got
Speaker 3: to I think run over to our TV guys. President
Speaker 3: CEO Gerba Kawasaki, so appreciate you joining us. Max Chafkin
Speaker 3: is staying with us a Bloomberg BusinessWeek and we want
Speaker 3: to roll into the conversation.
Speaker 2: Ed Ludlow, Yeah, he's co host of Bloomberg Technology on
Speaker 2: Bloomberg TV. He joins us from the San Francisco Beer.
Speaker 2: I do want to note care all the Tesla first
Speaker 2: quarter automotive gross margin excluding regulatory credits is at sixteen
Speaker 2: point four percent yea for the quarter.
Speaker 3: Stack up six point three percent in the aftermarket.
Speaker 2: Hey, I'd come on in here and explain why you
Speaker 2: think the stock is moving higher given that a lot
Speaker 2: of these numbers came in below estimates.
Speaker 6: Yeah. I think that the print and the numbers in
Speaker 6: after has have nothing to do with the quarter gone.
Speaker 6: Everyone's looked past it. Frankly, what the shareholder deck outlines
Speaker 6: is almost line line exactly what Danna and I outlined
Speaker 6: in the Big Take on Sunday, which is on the
Speaker 6: affordable ev A big body of work had already been
Speaker 6: done at the component and production process level, and Tesla
Speaker 6: is moving forward with a more affordable lineup of evs
Speaker 6: based on that technology. It was really misunderstood. It's like
Speaker 6: the world was banking on the Honda Civic of evs
Speaker 6: and Tesla to be the one to bring it. But
Speaker 6: my understanding from sources that was never the case. And
Speaker 6: if you read the shareholder deck, they spell it out
Speaker 6: pretty clearly. They've looked at this kind of more holistically
Speaker 6: and there will be more affordable evs coming late twenty
Speaker 6: twenty five. Caution caveat Muskers often miss his own deadlines.
Speaker 4: You know that.
Speaker 6: I always say that, but it's like.
Speaker 5: A something for everyone.
Speaker 6: Yeah, you know that, And that was me protecting myself
Speaker 6: from all the people who may go after me on
Speaker 6: social media. But explicitly it states that they are working
Speaker 6: on a purpose built ROBOTAXI. And so we went into
Speaker 6: this saying, if you're a Wall Street institutional giant who
Speaker 6: really wanted to see an affordable EV, or you're the
Speaker 6: technology investor or the retail investor that's kind of all
Speaker 6: in on the Tesla thesis around autonomy, you've got that
Speaker 6: as well, And really I think the market adjoining in
Speaker 6: hands to play that in after hours.
Speaker 5: You know, the question is like what is an affordable
Speaker 5: EV And I think one of the things one of
Speaker 5: the ways that Elon Musk could clarify is to is
Speaker 5: to sort of say that, you know, he over the
Speaker 5: weekend amid all this speculation, he tweeted a screenshot showing
Speaker 5: the model. Why priced at twenty nine thousand dollars sounds prettyffordable.
Speaker 5: Course that includes tax credit, which you know not everybody gets,
Speaker 5: and a and like a five thousand dollars sort of
Speaker 5: assumption of gas savings.
Speaker 4: So so like you could.
Speaker 5: Imagine a situation where he tries to argue, like, look,
Speaker 5: we're going to cut a bunch of costs out of
Speaker 5: this thing, and we're going to make it affordable as is,
Speaker 5: like we don't need an additional model, which is a
Speaker 5: really intriguing proposal. That is a huge, you know, pretty
Speaker 5: big departure from how the car industry normally does things,
Speaker 5: and in certain ways I get is saying maybe not
Speaker 5: that surprising, right, that's kind of you know, Elon Musk
Speaker 5: has long model this company after Apple. You know, Apple
Speaker 5: sells a very you know, modest product line all the
Speaker 5: products kind of look the same. They're all kind of expensive.
Speaker 5: You know, you could sort of imagine his effort to
Speaker 5: do this, and and you know, who knows if it's
Speaker 5: going to work, but it definitely is outside of what
Speaker 5: you know, a normal sort of car company, nor normal
Speaker 5: car company analyst would expect to see, would want to see.
Speaker 3: You know, guys, I'm looking at a live blog Craik
Speaker 3: Kanter weighing in our BNF Electric Vehicle analysts and saying,
Speaker 3: you know where he talks about these new models and
Speaker 3: talks about I don't know, new models ahead of our
Speaker 3: previously communicated startup production the second half of twenty twenty five,
Speaker 3: accelerating that launch, he he writes by including these statements
Speaker 3: in the investor decka shows Tesla has identified that a
Speaker 3: lack of new models is a problem. But are there
Speaker 3: actually actions being taken or just a continued lack of clarity?
Speaker 3: And I guess you know, I'm going to go back
Speaker 3: to you Max for a second, like, right, we want
Speaker 3: a little bit more specifics, right, And what this means?
Speaker 5: Yeah, again, it almost it does have the feel of
Speaker 5: a deck that's being written for maximum optionality, and and
Speaker 5: you know this is all happening.
Speaker 1: Very very quickly.
Speaker 5: You know, we saw we've seen Elon Musk get re engaged.
Speaker 5: It appears in any case, you know, connected this layoff
Speaker 5: in a way that has seemed, at least according to
Speaker 5: you know, the reports that Bloomberg is published that Ed
Speaker 5: has has written very hasty, and so you do wonder
Speaker 5: like maybe they are trying to figure this out as
Speaker 5: we speak, and and and who knows if we're definitely
Speaker 5: going to get that level of clarity on the call
Speaker 5: from Elon Musk, although given Elon Musk like he cannot
Speaker 5: help himself but sort of say controversial things. You know,
Speaker 5: he's got that sort of trump characteristic of being sort
Speaker 5: of really really honest. Sometimes to a fault, he may
Speaker 5: you know, spout something off that could send the stock
Speaker 5: in any number of directions.
Speaker 2: And to that point, you know, what's like, what's what
Speaker 2: are you looking for on the call at if you're
Speaker 2: when you're tuning.
Speaker 6: In the car. So I don't want to be inconsistent,
Speaker 6: you know, I posted in the blog before we kick
Speaker 6: things off, clarity, but actually to be fair, I think
Speaker 6: that Tesla has given us one single line of clarity.
Speaker 6: So I'm just going to read it. This update may
Speaker 6: resolve in a result in achieving less cost reductions than
Speaker 6: previously expected. So Carol read out the section in which
Speaker 6: they outline the explanation. There will be multiple affordable models,
Speaker 6: but I think that the market, and indeed, because Elon
Speaker 6: Musk kind of guided us there was thinking this will
Speaker 6: be a brand new model, maybe it will be called
Speaker 6: M two, Maybe it will specifically cost twenty five thousand
Speaker 6: US dollars. I think in that single line of the
Speaker 6: shareholder deck on page ten, they're saying it will be
Speaker 6: less expensive than the average cost of a Y or three.
Speaker 6: Now it will not be twenty five thousand dollars. And
Speaker 6: so now we go to the big picture clarity. How
Speaker 6: many of these things will you build? And what is
Speaker 6: the strategy with that visa v ROBOTAXI because they all
Speaker 6: occupy the same physical production space in Austin. Based on
Speaker 6: our understanding, I also would think maybe the tone of
Speaker 6: Elon Musk tim to answer your question, I thought he'd
Speaker 6: be a bit combative and frazzled. Yeah, now I just
Speaker 6: don't know.
Speaker 3: Wait wait for surprise, all right, ed, Lola, We're gonna
Speaker 3: let you go because we know you've got a full
Speaker 3: play to continue. But of course Bloomberg Technology co host
Speaker 3: ed Ludlow. But we got to talk about with Max
Speaker 3: final minute here or so Elon Bingo right.
Speaker 5: You know again, I've talked about this three months ago.
Speaker 5: This is a thing that many Tesla watchers, bulls bears,
Speaker 5: everybody in between, Elon Musk, super fans, Elon Musk's haters
Speaker 5: tend to do, which is to kind of create a
Speaker 5: Bingo card and look for some of his catchphrases. So
Speaker 5: we at the Elon Ing Podcast, we've got a new
Speaker 5: episode out right now and we have this Bingo card.
Speaker 5: Just want to flag a few items. Horse that would
Speaker 5: be one. Now, Elon Musk has said that anyone who's
Speaker 5: driving a non autonomous card not a robotaxi, it'll be
Speaker 5: like driving a horse compared to a car. So see
Speaker 5: if he tries that line on us a few others
Speaker 5: and to Grock uh uh and uh for reasonably optimistic.
Speaker 5: He's often reasonably optimistic about lots of things. So so yeah,
Speaker 5: lots of fun to be had here and we'll see
Speaker 5: if anyone gets bingo.
Speaker 3: It's a fun card.
Speaker 2: Quefully we'll get you back in three months and also
Speaker 2: earlier than three months. I'll be sure to check out
Speaker 2: the Elon Inc. Podcast wherever you get your podcast. That's
Speaker 2: Max Chafkin, a columnist for Bloomberg Business Week,