WEBVTT - Boeing Cash Burn, Tesla Earnings 0:00:02.920 --> 0:00:10.840 Bloomberg Audio Studios, podcasts, radio news. You're listening to the 0:00:10.840 --> 0:00:15.040 Bloomberg Intelligence podcast. Catch us live weekdays at ten am 0:00:15.040 --> 0:00:17.480 Eastern on Apple car Playing and broud Otto with the 0:00:17.520 --> 0:00:21.320 Bloomberg Business app. Listen on demand wherever you get your podcasts, 0:00:21.640 --> 0:00:23.320 or watch us live on YouTube. 0:00:25.040 --> 0:00:28.400 Looking at Boeing, Boeing burned through three point nine to 0:00:28.400 --> 0:00:31.360 three billion in cash in the first quarter. That's a 0:00:31.520 --> 0:00:34.720 less dramatic dream than analys had expected. That's accounting for 0:00:34.760 --> 0:00:38.199 the stock moving higher as the embattled planemaker continues to 0:00:38.360 --> 0:00:41.200 slow output to get a handle on its manufacturing issues. 0:00:41.280 --> 0:00:44.639 So I guess trying to really focus on quality as 0:00:44.680 --> 0:00:48.159 opposed to as opposed to quantity. George Ferguson, he's been 0:00:48.200 --> 0:00:50.160 helping us along the way here with this Boeing story. 0:00:50.600 --> 0:00:51.080 All along. 0:00:51.200 --> 0:00:54.240 He covers airspace, he covers the airlines for Bloomberg Intelligence. 0:00:54.920 --> 0:00:58.760 He also is enjoying our Princeton campus. 0:00:58.520 --> 0:01:02.120 With Hallie Lucis sate show from Princeton is coming is strong. 0:01:02.240 --> 0:01:03.840 Yeah, we're going to We're going down to Princeton. 0:01:04.040 --> 0:01:06.920 Absolutely, God forbid you take a train into the world's 0:01:06.920 --> 0:01:07.760 financial capital. 0:01:08.360 --> 0:01:10.679 George Ferguson doesn't have to do that. People come to George. 0:01:10.880 --> 0:01:13.560 George talk to us about what we saw from Boeing 0:01:13.840 --> 0:01:15.920 in their results. What were the key takeaways for you? 0:01:16.959 --> 0:01:20.240 So I think we saw it not a lot, not 0:01:20.360 --> 0:01:22.840 a lot of detail inside here about what matters most 0:01:22.920 --> 0:01:26.200 going ahead. We did see cash burn for one Q, 0:01:27.560 --> 0:01:30.760 like you said, you know, combined with capex free cash 0:01:30.800 --> 0:01:34.880 flow usage, well three point nine billion. CFO had sort 0:01:34.920 --> 0:01:36.840 of told us that we would see something between four 0:01:36.920 --> 0:01:39.319 and four and a half billion. That came in lighter 0:01:39.400 --> 0:01:40.920 than that. The markets, I think are a little bit 0:01:41.000 --> 0:01:44.040 happier about that, but you can't live here long, right. 0:01:44.080 --> 0:01:46.440 I guess the big takeaway here too, is that there's 0:01:46.440 --> 0:01:49.960 about seven billion dollars in cash and equivalence on the 0:01:50.040 --> 0:01:53.600 balance sheet that's dwindling pretty quickly. They paid four point 0:01:53.800 --> 0:01:56.800 four billion I think it was in debt during the quarter. 0:01:58.080 --> 0:02:00.560 So something has to happen, right. They want to they 0:02:00.600 --> 0:02:04.160 want to buy Spirit Aerosystems. I hear all kinds of 0:02:04.200 --> 0:02:07.320 conflicting reports, but essentially I think it's break. You know, 0:02:07.520 --> 0:02:11.480 there's a lot of challenges around negotiating getting Airbus out 0:02:11.520 --> 0:02:16.760 of Spirit Aerosystems. So Boeing can buy it. They've talked 0:02:16.800 --> 0:02:19.680 about using cash to buy Spirit or I guess debt maybe. 0:02:20.360 --> 0:02:21.760 I think it's a company doesn't want to add a 0:02:21.800 --> 0:02:24.560 lot more debt to their balance sheet. Spirits market cap 0:02:24.600 --> 0:02:27.440 around four billion, you only have seven billion left in 0:02:27.480 --> 0:02:29.840 the balance sheet. Something's got to happen. You got to 0:02:29.919 --> 0:02:32.560 raise some capital here. You can't do this soll cash 0:02:33.040 --> 0:02:35.440 or you got to use Boeing stock and just the 0:02:35.520 --> 0:02:38.840 numbers they're getting small, right, the cash numbers are getting small. 0:02:39.200 --> 0:02:41.680 You're running out a runway here. They need to come 0:02:41.760 --> 0:02:43.600 up with this plan with the FAA and how they're 0:02:43.600 --> 0:02:47.880 going to stabilize production, start building airplanes, start generating cash 0:02:48.160 --> 0:02:49.720 because you can't do this many quarters. 0:02:50.000 --> 0:02:52.160 So, George Lyne, do you think that there's a risk 0:02:52.240 --> 0:02:54.799 that we could be hearing about some kind of financing 0:02:54.880 --> 0:02:57.960 activity from Boeing coming up? I mean, like you just said, 0:02:58.000 --> 0:03:00.280 I mean it's I think it'd be kind of hard 0:03:00.320 --> 0:03:03.079 to envision them doing a debt sale right now. That 0:03:03.240 --> 0:03:05.680 sounds like a little bit of maybe a red flag 0:03:05.760 --> 0:03:07.880 to me. But if they would do, I don't know. 0:03:07.960 --> 0:03:09.720 The equity is not worth a whole lot, Like what 0:03:09.800 --> 0:03:10.560 do you do from here? 0:03:12.000 --> 0:03:14.919 Yeah, so agreed, I think you know, what I heard 0:03:15.040 --> 0:03:16.959 from you is that could be hard to do a 0:03:17.000 --> 0:03:20.720 debt deal here. I think so. I mean, I think 0:03:20.760 --> 0:03:24.440 they wouldn't let four point four billion get repaid without 0:03:24.480 --> 0:03:27.880 sort of plumbing the markets and thinking about whether they 0:03:27.880 --> 0:03:31.200 would do an issuance here. But I mean, you know, 0:03:31.720 --> 0:03:34.120 you wouldn't want to raise equity here. I feel like 0:03:34.160 --> 0:03:37.120 it'd be hard to raise debt. You got a lot 0:03:37.160 --> 0:03:38.720 of You got a lot of money wrapped up at 0:03:38.760 --> 0:03:41.080 inventory on the balance sheet. Airplanes that have already been 0:03:41.120 --> 0:03:44.440 built haven't been delivered to customers that they've done. They've 0:03:44.480 --> 0:03:46.600 shipped some of those in the last quarter, which is 0:03:46.960 --> 0:03:48.560 free up some cash. But I think you really got 0:03:48.640 --> 0:03:54.080 to get the manufacturing, you know, process going again and 0:03:54.200 --> 0:03:57.120 genering cash that way. I think that would get folks 0:03:57.200 --> 0:03:59.760 more comfortable about giving more debt or equity. 0:04:00.400 --> 0:04:02.120 I don't know I could get a debt deal done 0:04:02.120 --> 0:04:02.960 in this marketplace. 0:04:03.280 --> 0:04:05.920 You personally, Paul, I could go sell. 0:04:05.760 --> 0:04:07.400 Some Boeing debt back in the day, if I had 0:04:07.400 --> 0:04:10.720 my seat back, Maybe some investment debt. Sure, no problem, 0:04:10.800 --> 0:04:15.840 all right, George, talk to us about deliveries. Where are 0:04:15.920 --> 0:04:19.080 we today? I'm kind of focusing on the seven fifty seven. 0:04:19.120 --> 0:04:21.440 That's kind of the main beast is, as you've told 0:04:21.520 --> 0:04:24.920 us in the past, where are we all on you know, deliveries. 0:04:24.440 --> 0:04:26.120 Today and where do they want to get to? And 0:04:26.480 --> 0:04:27.880 you have confidence that they can get there. 0:04:28.960 --> 0:04:31.200 Yeah, So I think we don't necessarily know where we 0:04:31.320 --> 0:04:34.920 are on deliveries today. We're going to find that out, 0:04:35.000 --> 0:04:36.920 I hope on the earnings call here in a couple 0:04:36.960 --> 0:04:39.520 of minutes. Again, I think that a number of the 0:04:39.560 --> 0:04:45.040 airplanes they delivered in in uh March and in February, 0:04:45.080 --> 0:04:47.960 we're probably out of inventory that we're already built. So 0:04:48.240 --> 0:04:49.760 you know, what I'm getting back is what the real 0:04:49.800 --> 0:04:53.040 build rate is. I've heard numbers in the twenties ish 0:04:54.560 --> 0:04:57.080 where they want to be. They should be at thirty eight, 0:04:57.279 --> 0:04:59.919 and they right now a month in the seven thirties 0:05:00.040 --> 0:05:03.359 Evan breaking to forty two, you know, near the end 0:05:03.400 --> 0:05:05.600 of the year, had they not had this problem with 0:05:05.800 --> 0:05:10.680 the panel blowout in the Alaska Airlines. So what I 0:05:10.720 --> 0:05:12.800 think we heard from the CFO at the Bank of 0:05:12.880 --> 0:05:18.560 America event, you know, a conference earlier this quarter and 0:05:18.680 --> 0:05:21.560 one quarter sorry one Q was that they want to 0:05:21.640 --> 0:05:23.560 be at thirty eight by the end of the year. 0:05:23.960 --> 0:05:27.039 Look around thirty eight. I think they were doing okay financially. 0:05:27.640 --> 0:05:30.599 They need to be breaking up into the forties and fifties. 0:05:31.040 --> 0:05:33.600 That's going to make them a lot more healthy, that's 0:05:33.640 --> 0:05:36.680 going to make their supplier base a lot healthier. Spirit 0:05:36.760 --> 0:05:40.120 couldn't really survive down at that thirty ish, you know, 0:05:40.240 --> 0:05:45.120 thirty eight level of build rate. So again, I think 0:05:45.279 --> 0:05:48.080 where they where they want to be is up in 0:05:48.320 --> 0:05:51.240 you know, up in the forties and fifties, where Airbus is. 0:05:51.600 --> 0:05:54.000 Airbus is getting ready to break into the you know, 0:05:54.320 --> 0:05:57.280 fifties and sixties. They want to be up there, but 0:05:57.320 --> 0:05:59.920 they're I mean from a fifty rate, I think they're 0:06:00.080 --> 0:06:02.440 or a year and a half away at least right now. 0:06:02.600 --> 0:06:04.840 And of course Airbus has just been like riding this 0:06:04.960 --> 0:06:08.400 whole Boeing disaster wave quite nicely to their benefits. So 0:06:09.120 --> 0:06:11.800 going well for our friends abroad over there. But you 0:06:11.920 --> 0:06:13.920 started off, George by saying that, you know, there's not 0:06:14.040 --> 0:06:16.120 a whole lot to go off of here that you know. 0:06:16.200 --> 0:06:18.680 Of course, Boeing didn't provide earnings guidance for the year. 0:06:19.000 --> 0:06:22.800 We've got some management changes coming up sometime within the year. 0:06:22.839 --> 0:06:25.800 We know that CEO Dave Calhoun is going to step 0:06:25.839 --> 0:06:27.800 down by the end of twenty twenty four. Do you 0:06:27.839 --> 0:06:30.600 think we'll get a little bit more guidance on that 0:06:30.760 --> 0:06:31.680 on the earnings call? 0:06:33.360 --> 0:06:37.120 Not sure, right? I think that. I think that if 0:06:37.160 --> 0:06:41.400 we knew something about the next CEO, I think they 0:06:41.839 --> 0:06:44.440 probably would have even told us before the earnings call. 0:06:44.839 --> 0:06:47.480 That's such a huge overhang in this company right now, right, 0:06:47.640 --> 0:06:52.400 I imagine, you know, we got this announcement. What I mean, 0:06:52.760 --> 0:06:56.040 it seems like we move in dog years here at Boeing, 0:06:56.160 --> 0:06:58.880 right one day is like seven anymore? I don't know. 0:06:58.880 --> 0:07:00.400 I think we got this a month ago, a couple 0:07:00.400 --> 0:07:03.840 of weeks ago, you know. I imagine there's a lot 0:07:03.920 --> 0:07:07.560 of work going on the search right now and feeling 0:07:07.640 --> 0:07:10.200 out constituents as to whether or not the folks they 0:07:10.280 --> 0:07:13.320 identify are the right people. So, and I think as 0:07:13.360 --> 0:07:16.320 soon as they know what they that they have someone 0:07:16.360 --> 0:07:18.960 in place, they'd announce it, because again, it's such a 0:07:19.040 --> 0:07:21.880 huge overhang. I think they need to get someone in place, 0:07:22.000 --> 0:07:25.320 and they need to have their plan fleshed out and 0:07:25.480 --> 0:07:28.600 bring that to the marketplace as soon as possible. I 0:07:28.640 --> 0:07:30.760 think that's going to create again a lot more comfort 0:07:31.400 --> 0:07:33.720 with investors. So I don't think they would hold that back. 0:07:34.440 --> 0:07:36.360 And I don't think that Dave Calhoun's going to be 0:07:36.400 --> 0:07:38.600 the one that's going to announce it either, And so 0:07:38.640 --> 0:07:40.440 I don't think anybody on the call would be a 0:07:40.480 --> 0:07:44.600 person announcing it. But I could be wrong. But again, 0:07:44.840 --> 0:07:46.760 I don't know that they're anywhere on that right now. 0:07:47.120 --> 0:07:48.240 And that's super important. 0:07:48.480 --> 0:07:53.160 Hey, George, Boeing's customers, the big airlines, what are their 0:07:53.240 --> 0:07:53.960 needs these days? 0:07:54.160 --> 0:07:56.200 Do they need more aircraft? 0:07:56.320 --> 0:07:58.800 Like if Boeing was it fifty or sixty percent production, 0:07:59.120 --> 0:08:00.520 would there be demand there for that? 0:08:01.840 --> 0:08:06.400 They need more faster, you know, as soon as possible. 0:08:06.440 --> 0:08:09.240 I guess. Look, I think if you take United as 0:08:10.000 --> 0:08:13.400 you know, one of the core customers, you know, there's 0:08:13.440 --> 0:08:16.480 sort of a there's a demand to fleet refresh around 0:08:16.520 --> 0:08:20.679 the world. Right The new Max is fifteen twenty percent 0:08:20.840 --> 0:08:23.920 more efficient than the old seven thirty seven or the 0:08:23.960 --> 0:08:27.080 A three twenty. Airlines want that efficiency as soon as 0:08:27.120 --> 0:08:30.120 possible in their fleets. The market I think is going 0:08:30.200 --> 0:08:33.079 to is looking fairly competitive. It may not, you know, 0:08:33.160 --> 0:08:35.200 this summer may be a little bit less competitive than 0:08:35.240 --> 0:08:37.839 we expect to give in Boeing's problems and some of 0:08:37.840 --> 0:08:41.319 the geared turbofan problems at raytheon that knocks on airplanes 0:08:41.360 --> 0:08:45.480 out of service. But fuels rising, airlines want to be 0:08:45.640 --> 0:08:48.240 very competitive. They need the most fuel efficient aircraft, so 0:08:48.320 --> 0:08:50.079 they want them as soon as possible, And like in 0:08:50.120 --> 0:08:54.680 the United's case, almost everybody is increasing size right. Size 0:08:54.720 --> 0:08:58.559 of aircraft are rising because pilot's got twenty percent plus, 0:08:59.320 --> 0:09:02.719 you know, wage increases. You got to find a way 0:09:02.760 --> 0:09:04.640 to drive down costs. One of the things we heard 0:09:04.679 --> 0:09:07.199 out of Jet Blue yesterday they're looking for ways to 0:09:07.320 --> 0:09:10.120 drive down costs. One of the things you always do 0:09:10.320 --> 0:09:14.360 is increase aircraft size, and therefore you're flying more passengers 0:09:14.800 --> 0:09:18.160 for the same cost of that pilot up front. That 0:09:18.320 --> 0:09:21.080 helps you improve efficiencies. They all want it, so they're 0:09:21.080 --> 0:09:24.520 all trying to find bigger aircraft to fly with more seats. 0:09:24.559 --> 0:09:28.520 And so yes, airlines want airplanes as soon as possible. 0:09:28.679 --> 0:09:31.240 If you're a Boeing customer, what also really ticks you 0:09:31.360 --> 0:09:34.839 off is you look across the street at the folks 0:09:34.920 --> 0:09:37.760 flying the Airbus airplane and they probably have little to 0:09:37.880 --> 0:09:42.280 no interruption this summer in their schedules. You're worried about 0:09:42.360 --> 0:09:44.800 what deliveries you're going to get. And your ability to 0:09:44.880 --> 0:09:48.160 fly your schedule, and that hurts if you're the bowing customer. Right, 0:09:48.160 --> 0:09:49.240 the airbus customers. 0:09:48.960 --> 0:09:52.040 Are smiling all right, George, thanks so much again for 0:09:52.280 --> 0:09:55.080 giving us an update there on the aerospace airline industry. 0:09:55.080 --> 0:09:57.599 George Ferguson he covers all the airlines and airspace for 0:09:57.760 --> 0:09:59.000 Bloomberg Intelligence. 0:10:00.559 --> 0:10:04.400 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:10:04.520 --> 0:10:07.439 weekdays at ten am Eastern on Apple card Play and 0:10:07.559 --> 0:10:10.440 Android Auto with the Bloomberg Business app. You can also 0:10:10.559 --> 0:10:13.719 listen live on Amazon Alexa from our flagship New York 0:10:13.800 --> 0:10:17.439 station Just say Alexa, playing Bloomberg eleven thirty. 0:10:18.600 --> 0:10:20.079 Right smack in the middle of earning season. 0:10:20.120 --> 0:10:23.720 I'll tell you that was a very very important earnings 0:10:23.760 --> 0:10:26.760 release and conference call last night for one Tesla, and. 0:10:26.840 --> 0:10:28.800 It looks like Elon Musk got the job done. The 0:10:28.800 --> 0:10:30.400 stocks up fifteen percent. 0:10:30.520 --> 0:10:33.200 Here today, let's break down what we did see from 0:10:33.280 --> 0:10:36.960 Tessa and what we did hear from mister Elon Musk. 0:10:36.960 --> 0:10:37.840 We'll check out with Steve Man. 0:10:37.880 --> 0:10:40.839 He's a global autos and industrials and analyst for Bloomberg Intelligence. 0:10:41.240 --> 0:10:44.360 He's down in Princeton, New Jersey. Very comfortable down in Princeton. 0:10:44.440 --> 0:10:46.280 He's not coming in to New York, he's not taking 0:10:46.320 --> 0:10:47.960 the train, He's done all that malarkey. 0:10:48.000 --> 0:10:50.760 But we love the studio guests. When we can get one. 0:10:50.679 --> 0:10:52.040 Yes and we need to go down to Princeton to 0:10:52.080 --> 0:10:54.120 our OFFICEA I got to show you that it is awesome. 0:10:54.040 --> 0:10:55.880 Especially with all of our BI friends, and that we 0:10:55.920 --> 0:10:57.040 should do a remote broadcast. 0:10:57.120 --> 0:10:58.720 We're going to do that. I'll put that in the books. 0:10:58.720 --> 0:11:01.600 We're going to great food and that's where we built 0:11:01.760 --> 0:11:04.280 BI from day one. Hey, Steve, thanks so much for 0:11:04.400 --> 0:11:07.000 joining us here. What are your takeaways from what we 0:11:07.480 --> 0:11:10.079 saw from UH Tesla and the results and what we 0:11:10.160 --> 0:11:11.600 heard from Elon Musk. 0:11:12.080 --> 0:11:12.720 Well, thanks, Paul. 0:11:12.920 --> 0:11:13.040 Uh. 0:11:13.520 --> 0:11:16.079 It's a sigh of relief. I think for a lot 0:11:16.120 --> 0:11:19.880 of investors. You know, if you look at the valuation 0:11:20.000 --> 0:11:22.319 of Tesla, there's actually two groups. You can actually break 0:11:22.360 --> 0:11:25.160 it down two groups investors. One who thinks is just 0:11:25.240 --> 0:11:28.600 a Tesla, is just an automotive company. The other really 0:11:28.679 --> 0:11:31.760 believes in the long term, the AI, the tons vehicle. 0:11:32.120 --> 0:11:36.319 I think yesterday's call and yesterday's announcement it sues a 0:11:36.440 --> 0:11:40.560 lot of the concerns that both parties had Yesterday especially 0:11:40.640 --> 0:11:43.160 with the announcement that they're going to pull forward, not 0:11:43.360 --> 0:11:46.959 just launch, but pull forward the The launch of the 0:11:47.040 --> 0:11:48.240 affordable EV. 0:11:48.559 --> 0:11:50.760 Is that something that you give a lot of credence 0:11:50.840 --> 0:11:53.240 to Steve because I feel like with Elon and with 0:11:53.360 --> 0:11:56.199 Tesla and the past, there have been these promises and 0:11:56.440 --> 0:11:58.320 you know, maybe not all of them have quite come 0:11:58.400 --> 0:11:59.000 to fruition. 0:12:00.360 --> 0:12:03.679 I think the you know, so, I think the affordable 0:12:03.760 --> 0:12:07.520 EV is is a real thing. You know, like you 0:12:07.920 --> 0:12:12.040 guys talked about earlier robo Taxi. I think there's still 0:12:12.520 --> 0:12:15.360 needs time for development. But if you look at the 0:12:15.600 --> 0:12:18.800 affordable EV actually kills two birds in one stone. You know, 0:12:19.200 --> 0:12:24.240 it actually increases a scale for Tesla, and you know, 0:12:24.520 --> 0:12:27.319 we're going to see revenue growth, we potentially see profit 0:12:27.400 --> 0:12:30.599 growth from that affordable EV. And that's exactly what the 0:12:30.679 --> 0:12:35.959 market needs. It's more affordable vehicles to increase penetration of 0:12:36.120 --> 0:12:40.479 EV's the other thing that's really important with this affordable 0:12:40.520 --> 0:12:47.000 EV launches. It actually helps Tesla increases reach globally because 0:12:47.720 --> 0:12:49.599 you know, you have a lot of emerging markets that 0:12:50.000 --> 0:12:51.640 you know a lot of people, a lot of consumers 0:12:51.679 --> 0:12:56.400 there cannot afford an expensive fifty thousand dollars vehicle forty 0:12:56.480 --> 0:13:00.800 thousand dollars vehicles, So up twenty thirty up thirty thousand 0:13:00.920 --> 0:13:05.600 vehicle is the right product for them to expand geographically. 0:13:05.520 --> 0:13:07.960 Steve, what do we know about the economics of such 0:13:08.040 --> 0:13:10.920 a new or lower cost vehicle? Can they produce that 0:13:12.000 --> 0:13:14.120 at a profitable basis on a per unit basis? 0:13:15.040 --> 0:13:17.640 Yeah, there's there's a couple of ways they can approach this. 0:13:18.080 --> 0:13:22.119 I think, you know, they can develop a totally new platform. 0:13:22.600 --> 0:13:25.280 But you know, in the other segments I've done with you, 0:13:25.559 --> 0:13:29.360 we've talked about vertical integration, and vertical integration has actually 0:13:30.040 --> 0:13:36.080 reduced the cost of you know, car production. So for them, 0:13:36.440 --> 0:13:39.880 you know, for TESTA, it's the only company that's profitable 0:13:39.960 --> 0:13:44.000 in producing evs. So the other option is actually think about, 0:13:44.320 --> 0:13:46.719 you know, what they can do with the three and 0:13:46.840 --> 0:13:50.160 the Y. You know, can they offer you know, lower trims, 0:13:51.280 --> 0:13:56.360 maybe even you know, you know, a smaller battery that's 0:13:56.440 --> 0:14:01.000 going to allow them to cut costs and also you know, 0:14:01.760 --> 0:14:04.040 make that available to the consumer at a lower price. 0:14:04.600 --> 0:14:07.439 So this obviously was the best part of the report. 0:14:07.520 --> 0:14:09.440 This is what the stock is rallying on right now. 0:14:09.559 --> 0:14:12.559 But you still had elsewhere in the earnings report, we 0:14:12.640 --> 0:14:16.320 had falling vehicle sales, we had worse than expected revenue 0:14:16.360 --> 0:14:19.480 and profit and a pretty significant cash burn figure. So 0:14:20.080 --> 0:14:23.360 I mean, Steve, are you totally optimistic here? What kind 0:14:23.360 --> 0:14:25.200 of concerns do you still have here? 0:14:25.960 --> 0:14:28.680 I've always said, you know, I think this year and 0:14:29.120 --> 0:14:32.240 even into next year, there's some bumps on the road. 0:14:32.640 --> 0:14:36.600 You know, cyber truck is still ramping up. It's a 0:14:36.720 --> 0:14:42.280 very difficult vehicle to build. They're still working on those issues. 0:14:43.480 --> 0:14:43.640 You know. 0:14:44.080 --> 0:14:47.440 We don't think the EV market actually, especially in the US, 0:14:48.040 --> 0:14:52.000 will pick back up until twenty twenty five, late twenty 0:14:52.080 --> 0:14:55.520 twenty five, in the twenty twenty six because the market 0:14:56.400 --> 0:15:01.160 really needs a lower cost, more affordable EV to entice 0:15:01.360 --> 0:15:06.080 kind of more new buyers into the market. So long term, 0:15:06.560 --> 0:15:09.360 long term, I'm very positive. I think I think this 0:15:09.600 --> 0:15:13.360 this company has done everything right in terms of you know, 0:15:13.800 --> 0:15:16.320 looking at AI, looking at AV. I still believe the 0:15:16.520 --> 0:15:20.680 e V, the the e V, uh, you know, shift 0:15:20.960 --> 0:15:25.080 has actually sailed. We're gonna have evs for the long terms. 0:15:25.600 --> 0:15:25.720 Uh. 0:15:25.800 --> 0:15:29.240 And I think that subscription based software based vehicle that 0:15:29.320 --> 0:15:31.760 they're trying to build is is the right move right 0:15:31.840 --> 0:15:33.960 strategy for the industry. 0:15:34.120 --> 0:15:37.080 Steve, what did the elon say or to what extent 0:15:37.120 --> 0:15:39.280 did he address just kind of the developments in China, 0:15:39.360 --> 0:15:41.880 how things are developing there from a competitive standpoint, a 0:15:41.960 --> 0:15:42.920 sales standpoint and all that. 0:15:44.320 --> 0:15:47.240 Yeah, it's uh, I actually see that. We'll continue to 0:15:48.800 --> 0:15:49.440 be bumpy. 0:15:49.880 --> 0:15:50.000 Uh. 0:15:50.240 --> 0:15:53.120 They probably likely to lose market share, continue to lose 0:15:53.200 --> 0:15:56.000 some market share there. But I think you know, Tesla 0:15:56.160 --> 0:15:59.120 is leveraging China, not just for sales, but it's a 0:15:59.160 --> 0:16:03.120 low cost manufat actoring base for the company. The Shanghai 0:16:03.240 --> 0:16:05.640 factory still pumps out a million vehicles, close to a 0:16:05.720 --> 0:16:08.760 million vehicles a year at a very low cost. They 0:16:08.840 --> 0:16:12.080 still are able to source battery from companies like c 0:16:12.240 --> 0:16:14.960 at L, the largest EV battery maker in the world, 0:16:15.800 --> 0:16:20.360 at a very attractive price given their volume. So, you know, 0:16:20.920 --> 0:16:25.080 China sales will probably slow. There's it's a hyper competitive market, 0:16:25.600 --> 0:16:29.640 shall me, which is a you know, a major cell 0:16:29.640 --> 0:16:32.720 phone maker in China. They're launching a vehicles that's also 0:16:32.840 --> 0:16:36.200 very affordable, so they're gonna see more competition in China. 0:16:36.680 --> 0:16:41.480 So but again, China is not just a sales for sales, 0:16:41.800 --> 0:16:44.160 it's a manufacturing, low cost manufacturing base. 0:16:44.240 --> 0:16:44.480 For them. 0:16:44.840 --> 0:16:48.120 So something else on the call, Steve that Elon had 0:16:48.160 --> 0:16:50.880 took a dig at the car makers that are pairing 0:16:51.000 --> 0:16:53.360 back on the EV production plans and going more to 0:16:53.480 --> 0:16:56.760 the gas electric hybrids instead. You didn't call them out, 0:16:56.840 --> 0:16:59.680 but GM and Ford are among those ones. And but 0:16:59.760 --> 0:17:03.440 it's that really where consumers are going more proportionally right now, 0:17:03.640 --> 0:17:06.640 more into the plug in hybrid space, or maybe non 0:17:06.680 --> 0:17:10.120 plug in hybrid, but just hybrids in general versus full 0:17:10.200 --> 0:17:10.800 on evs. 0:17:11.720 --> 0:17:14.200 Yeah, I think the consumer I think you know, we 0:17:14.520 --> 0:17:17.240 did a survey not so long ago. I think what 0:17:17.400 --> 0:17:19.960 we got from that survey was that I think the 0:17:20.160 --> 0:17:24.240 consumer needs to trial evs. They actually need to be 0:17:25.440 --> 0:17:29.200 educated on, you know, how to make EV works work 0:17:29.240 --> 0:17:32.520 in their daily life. So, you know, PHVs plug in 0:17:32.600 --> 0:17:37.120 hybrids hybrids is actually good transition into full evs. 0:17:38.119 --> 0:17:39.359 They alleviate some of. 0:17:39.400 --> 0:17:41.879 The concerns in terms of range, in terms of the 0:17:42.000 --> 0:17:45.960 lack of infrastructure that that we you know, that that's 0:17:46.040 --> 0:17:49.120 for the EV market right now. So PHIV and EV 0:17:49.720 --> 0:17:52.639 are a good transitional product, but it's not a long 0:17:52.760 --> 0:17:55.560 term product because if you look at some of the 0:17:55.640 --> 0:17:59.879 emission standards, it's continued to continue to be tighter and tighter. 0:18:01.400 --> 0:18:06.840 Eventually hybrids and phgvs are probably won't even meet the lower, 0:18:07.160 --> 0:18:10.159 the more stringent emission standards down you know, in the 0:18:10.240 --> 0:18:10.880 next decade. 0:18:11.400 --> 0:18:16.280 Steve thirty seconds. What's the call here on just Elon? 0:18:16.359 --> 0:18:17.560 Has he focused on Tesla? 0:18:19.080 --> 0:18:21.440 He has focused on task Site. There was a question 0:18:21.640 --> 0:18:24.760 last night on that and he reiterated that, you know, 0:18:25.359 --> 0:18:28.639 I mean this is his baby, you know, AI his baby, 0:18:28.800 --> 0:18:31.879 that's his that's his I want to say, that's his 0:18:32.040 --> 0:18:36.040 dream YEP is to make cars, robots and timeless. So 0:18:36.400 --> 0:18:38.200 he's he's laser focused on that. 0:18:38.320 --> 0:18:40.320 All right, good stuff, Steve Man, thanks so much for 0:18:40.440 --> 0:18:43.280 joining us as always Global Autos and Industrials research channels 0:18:43.320 --> 0:18:46.880 for Bloomberg Intelligence, joining us from Prince New Jersey via 0:18:47.760 --> 0:18:48.240 zoom here. 0:18:48.359 --> 0:18:51.639 And the investors certainly liked what they heard last night. Molly, 0:18:51.760 --> 0:18:52.280 oh my gosh. 0:18:52.359 --> 0:18:54.439 Yeah, that stock is ripping today, and how didn't Nora 0:18:54.600 --> 0:18:56.640 just send I mean it was down quite a bit 0:18:56.800 --> 0:19:00.280 on the year, so this is uh, I mean, remember, 0:19:00.320 --> 0:19:02.520 I mean the job cuts too have been like really 0:19:02.960 --> 0:19:05.840 quite something. In our colleagues, I'm out in San Francisco, 0:19:06.280 --> 0:19:09.200 Dana Hall and Ed Ludlow and all over that. So 0:19:09.600 --> 0:19:12.040 I think the marketing division that was the most recent 0:19:12.119 --> 0:19:14.560 one to go right that we've decided that ads are 0:19:14.600 --> 0:19:16.600 no longer worth it. Ye, people are just gonna buy 0:19:16.640 --> 0:19:16.920 the car. 0:19:16.880 --> 0:19:17.360 Word of mouth. 0:19:17.400 --> 0:19:19.399 Yeah it's yeah, it's word of mouth and it's the 0:19:19.640 --> 0:19:21.520 it's the strength of the brand out there. 0:19:21.560 --> 0:19:23.040 So the stock is up fourteen don't. 0:19:22.840 --> 0:19:23.879 Know if I really disagree with that. 0:19:24.000 --> 0:19:24.440 Yeah, I don't. 0:19:24.480 --> 0:19:25.840 Yeah, I don't you known, you know. 0:19:25.960 --> 0:19:27.720 So anyway, it's got a market cap of four and 0:19:27.920 --> 0:19:30.680 twenty five billion dollars, So we'll see how this plays out. 0:19:30.800 --> 0:19:34.359 So a good day for the shareholders of Tesla. 0:19:36.800 --> 0:19:40.640 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:19:40.760 --> 0:19:43.840 weekdays at ten am Eastern on Apple Car playing Android 0:19:43.880 --> 0:19:46.920 Auto with the Bloomberg Business app. Listen on demand wherever 0:19:47.000 --> 0:19:50.160 you get your podcasts, or watch us live on YouTube. 0:19:51.520 --> 0:19:54.760 Down Paul Sweeney. We're live on our Bloomberg Interactive Brooker's studio, 0:19:54.880 --> 0:19:55.480 and we're also. 0:19:55.320 --> 0:19:56.639 Streaming live on YouTube so that you can hit over 0:19:56.680 --> 0:19:59.560 to YouTube dot com search Bloomberg Podcast and that's where 0:19:59.560 --> 0:20:02.919 you find all right. Facebook kids call it. 0:20:03.000 --> 0:20:06.680 Meta heads the professionals Facebook for me. 0:20:07.280 --> 0:20:09.399 Stock's up forty percent, year to date, it's up one 0:20:09.440 --> 0:20:11.320 hundred and thirty percent over the last twelve months. When 0:20:11.320 --> 0:20:13.920 you see stock that's had that kind of performance. 0:20:14.000 --> 0:20:16.639 Since the bar high bai, I mean what else do? 0:20:17.119 --> 0:20:17.280 Yeah? 0:20:17.280 --> 0:20:19.760 And it means they better, they better really deliver on 0:20:19.800 --> 0:20:21.520 their earnings. And they're going to report earnings I think 0:20:21.520 --> 0:20:23.160 after the close tonight. So let's get a little preview. 0:20:23.520 --> 0:20:26.040