Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg Business
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Speaker 1: and Tim Stenebeck from Bloomberg Radio.
Speaker 2: Jess pulling up shairs of Nvidia on the terminal because
Speaker 2: we want to talk about It's up about four percent. Listen.
Speaker 2: We talk about a Hi every Day, came up at
Speaker 2: a conversation that a Lisa Bramo It's had with JP
Speaker 2: Morgan Chase CEO Jamie Dimond. You can find that by
Speaker 2: the way on the Bloomberg and at Bloomberg dot Com.
Speaker 2: We'll hear more too from Jamie Diamond in our next segment.
Speaker 2: But when it comes to AI, there have been a
Speaker 2: lot of concerns about it, when it comes to the
Speaker 2: electricity demands of artificial intelligence commute computing. On that, Nvidia
Speaker 2: is out today tauting the energy efficiency of its latest
Speaker 2: chips and that is why you're seeing some support in
Speaker 2: in video shares. As I said, Tim up about four percent.
Speaker 3: Here with more on that. Bloomberg News US semiconductor and
Speaker 3: networking reporter Ian King. He joins us from our San
Speaker 3: Francisco bureau in we have this AI summit in Washington,
Speaker 3: d C. Tell us about the event and what news
Speaker 3: we got out of Nvidia, and I just want to
Speaker 3: contextualize this a little bit. Torston slock over it, Apollo
Speaker 3: sunds out notes all the time. He sent one today
Speaker 3: that talked about data centers use twenty six percent of
Speaker 3: Virginia's total power consumption. So just a little idea of
Speaker 3: what we're talking about when it comes to demand of
Speaker 3: these things.
Speaker 4: Yeah, I mean, in general, Invidio in Washington trying to
Speaker 4: make a pitch to government and various industries. You know,
Speaker 4: if the rest of the industry is kind of trying
Speaker 4: to chase them in terms of hardware and make hardware
Speaker 4: as good as I kind they're already basically forging food
Speaker 4: and saying, hey, no, we're going to make it possible
Speaker 4: for everybody to use AI. And you know if you
Speaker 4: like that, trying to shift the whole industry forward, and
Speaker 4: that's why they're in Washington. But as you say, the
Speaker 4: power of is a continuing kind of concern that everybody
Speaker 4: has about the overall adoption of this technology, and therefore,
Speaker 4: in video is trying to position themselves and their technology
Speaker 4: as kind of the answer rather than the problem.
Speaker 2: All right, so tell us about exactly what we got.
Speaker 2: I read in your story in Blackwell chips using three
Speaker 2: gigawatts of power to develop open ais GBT for software.
Speaker 2: So that's a pretty big reduction from what it has used.
Speaker 4: Well, this is that for their sort of illustration purposes.
Speaker 4: This is they're arguing that this is more efficient. And
Speaker 4: the reason they're doing that is because the previous generation
Speaker 4: of Hopper chips they drew about seven hundred watts. The
Speaker 4: new version that's coming to the market right now, called
Speaker 4: Blackwell will draw one point three killer watts, and that's
Speaker 4: obviously a lot more. So everybody's like, oh dear, is
Speaker 4: this going to like cause the earth to go dark?
Speaker 4: And the answer is maybe maybe not. I mean, the
Speaker 4: problem Their argument is, look, it works so much faster,
Speaker 4: therefore it's more efficient. And that is true in one way.
Speaker 4: But if you deploy more black Wells then you deployed Hoppers,
Speaker 4: then maybe we've got more overall power being drawn. So
Speaker 4: there's a very nuanced argument being made here for how
Speaker 4: these things should be deployed.
Speaker 3: Maybe it will cause the world to go dark unless
Speaker 3: we put nuclear reactors and nuclear power plants back online
Speaker 3: like Microsoft Constellation are trying to do when it comes
Speaker 3: to Through Mile Island.
Speaker 5: Maybe.
Speaker 4: Yeah, I mean, there are a lot of solutions, a
Speaker 4: lot of to this problem, and nuclear is one of
Speaker 4: the power source problems building these data centers in where
Speaker 4: there's more renewable energy available. Jensen Wang, he talks to
Speaker 4: about it on like a micro level, where a lot
Speaker 4: of the power and is wasted in cooling these things
Speaker 4: down because they get so hot. So his latest generation
Speaker 4: is going to be actually water cooled, which is kind
Speaker 4: of a back to the future sort of approach towards
Speaker 4: this thing, and that will reduce the overall energy. So
Speaker 4: there are lots and lots of solutions being offered, but
Speaker 4: there's no doubt that they are absolutely needed because of
Speaker 4: the path that we're on in terms of data manipulation
Speaker 4: and what that means for the amount of computing that's
Speaker 4: being deployed.
Speaker 5: Yeah.
Speaker 2: There's another story today right about Google working with utilities
Speaker 2: in the US and other countries to assess nuclear power
Speaker 2: as a possible energy source for them. Okay, all right,
Speaker 2: So it just feels like yay innovation, yay, possibly other
Speaker 2: big problem. Having said that, in video, Ian also talked
Speaker 2: about agent blueprints some software news. What's that all about?
Speaker 2: Help us understand, help us become smarter? When it comes
Speaker 2: to what end Video is up.
Speaker 4: To, Yeah, I mean they're basically trying to do it
Speaker 4: all for everybody. Anything that they see as an obstacle
Speaker 4: towards the adoption of AI, they're coming up with a
Speaker 4: solution for. It's a remarkably dynamic effort, and whether it'll
Speaker 4: be successful or not, we'll see, but it's very hard
Speaker 4: to fault the effort levels that are going on. What
Speaker 4: an agent is. It's that kind of last mile, that
Speaker 4: last piece of software where you've trained your big model.
Speaker 4: You're a company, you've trained your big model, you have
Speaker 4: all of the intelligence built in, but then you have
Speaker 4: to have something that deals with the customer open AIS
Speaker 4: general solution isn't good enough, right, You need something specific,
Speaker 4: something that either will help you design a new vehicle,
Speaker 4: or it'll deal with your customer service problems, or it'll
Speaker 4: help you solve a drug discovery issue. And so what
Speaker 4: in video is saying is, hey, we'll give you the
Speaker 4: blueprints to do these so you can go even faster,
Speaker 4: no obstacles towards deployment. Companies get out there and do it.
Speaker 4: That's what they're doing, and hard to argue that they're
Speaker 4: not foreseeing all of the problems and trying to solve
Speaker 4: them right now.
Speaker 2: Again, it's like, buy all our stuff and we'll make
Speaker 2: AI create everything for you. I don't mean to be cynical.
Speaker 2: I just feel like we're trying to find our way
Speaker 2: through this.
Speaker 4: No, it's not being cynical. It's absolutely on point. That's
Speaker 4: what they're doing.
Speaker 3: It's time for the periodic question about invidious competitors and
Speaker 3: just how they're doing it.
Speaker 2: We have music for that.
Speaker 3: We haven't got to check in with you in a
Speaker 3: little bit, but help us understand how the competitors are
Speaker 3: doing and if they're even on the tracks of video yet.
Speaker 4: Well, we'll find out a little bit more about that
Speaker 4: this week. Where you know, the purported closest competitor, AMD,
Speaker 4: they're having a conference later this week, so perhaps we'll
Speaker 4: see some new hardware there, perhaps we'll see some new software.
Speaker 4: We won't know, but that should give us a nice
Speaker 4: update coming later in the week. But in general, terms
Speaker 4: in video is generally perceived as being sort of still
Speaker 4: over the horizon that everybody else is really chasing hard
Speaker 4: and not really making much of a dent anytime soon.
Speaker 2: If we weren't talking about Nvidea all the time, if
Speaker 2: we weren't talking about intelling its woes all the time,
Speaker 2: what would be the chip company that would be front
Speaker 2: and center for you.
Speaker 4: Well, we've just seen some song the world's kind of
Speaker 4: second largest largest chip maker, depending upon what day it
Speaker 4: is and how you slice it, coming out and saying hey,
Speaker 4: we're really sorry, we're not good enough. We should be
Speaker 4: better than this. Companies like Micron, companies like SKA Hennicks
Speaker 4: have really struggled in some song's wake over the years,
Speaker 4: and some songs kind of dominance has never really been
Speaker 4: doubted in that kind of memoryship area. Sometimes they're admitting
Speaker 4: weakness here. Admittedly Intel would like to have the kind
Speaker 4: of weakness that Samsung has, which is less profits rather
Speaker 4: than no profits. But that's kind of, you know, looks
Speaker 4: like a change of the guard for an industry that's
Speaker 4: really been set in stone for a very long time.
Speaker 2: On Intel, anything that you know you're expecting any kind
Speaker 2: of news on them anytime soon.
Speaker 4: Well, you know, we're coming into earning season again, and
Speaker 4: really this is a company that cannot afford any more
Speaker 4: unforeseen disasters. I think people will be sort of pleasantly,
Speaker 4: sort of reassured if they can manage to do what
Speaker 4: they said they were going to do. You remember last
Speaker 4: time we were significantly below forecasts. Intel really needs a
Speaker 4: quarter where it does what it said it was going
Speaker 4: to do to kind of help restore stability.
Speaker 2: Unbelievable stuff, all right, bottom line back to Nvidia, because
Speaker 2: I'm just going all around.
Speaker 3: It's going to be where you're gainers.
Speaker 2: It is one of my gainers. Okay, on a scale
Speaker 2: of one to ten, the News in terms of importance
Speaker 2: to the company's business, growth, trajectory and valuation.
Speaker 4: Growth is everything, right now? Can they keep this growth going?
Speaker 4: That's all anybody wants to see.
Speaker 2: All right, that's all we need to know. All right, Hey, Ian,
Speaker 2: thank you so much. Bloomberg News US semi conductor and
Speaker 2: networking reporter Ian King. He is out there in our
Speaker 2: San Francisco bure. Be sure to check out his story.
Speaker 2: All of his reporting really so informed on the semi space.
Speaker 2: You can find it at Bloomberg dot Com meantime and
Speaker 2: video shares still.
Speaker 3: Up, Yeah, three point nine percent as we speak. If
Speaker 3: you check out on the Bloomberg Terminal, it's the highest
Speaker 3: going back all the way to July tenth, where it
Speaker 3: was out one hundred and thirty four dollars and ninety cents.
Speaker 2: Anian mentioned Samsung, and you know one of the things
Speaker 2: that we love to do, because they were kind of
Speaker 2: a little like sorry that it was so weak or
Speaker 2: some problems. But I look at the supply chain function.
Speaker 2: Apples their number one customer, Best buys their second, Dell
Speaker 2: is their third, so Apple about six point seven percent
Speaker 2: of their revenues for Samsung. So it just makes you
Speaker 2: think about be going on or whatever.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us
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Speaker 3: Yeah brings us to today's at Bloomberg.
Speaker 5: A big take.
Speaker 3: It's a story that our editorial team deems is a
Speaker 3: must read. Also a must read on the Bloomberg termin all.
Speaker 3: The story I most read on the Bloomberg Terminal, The
Speaker 3: story takes us to.
Speaker 6: Two US towns.
Speaker 3: They sit on opposite sides of a year's long tariff
Speaker 3: battle over a mundane product. The global economy needs to
Speaker 3: keep moving, Carol, we're talking about shipping container trailers.
Speaker 2: I love these stories and they're often done by our
Speaker 2: Sean Donnan because it takes us across the country, tells
Speaker 2: us a story, It helps explain so much. Let's head
Speaker 2: to our Washington DC bureau for more. That's where we
Speaker 2: do find Sean Donnan. He's Bloomberg New senior economics writer.
Speaker 2: I'm Sean. You do you take us across America? Tell stories,
Speaker 2: explain our economy. Tell us about Pittsview, Alabama, and Poria, Virginia.
Speaker 2: Why you are writing about these two areas.
Speaker 5: Yeah, thanks so much, Carol.
Speaker 7: Look it often when we talk about tariffs, we think
Speaker 7: about who pays for them, or we get into a
Speaker 7: debate about whether or not they're good economic policy for
Speaker 7: a country. And one of the reasons economists actually hate
Speaker 7: tariffs generally is that they create these kind of messy
Speaker 7: fights between interest groups oftentimes, and that's really what we want.
Speaker 7: We set out to kind of look at here, and
Speaker 7: there is this mundane product it's incredibly important. It's the
Speaker 7: thing that carries those shipping containers that has zipping by
Speaker 7: you on I ninety five or other interstates, and those chassis.
Speaker 7: At one point during the pandemic, when we had all
Speaker 7: that supply chain logjams, they were actually in short supply.
Speaker 5: There was actually a shortage of them.
Speaker 7: And part of the reason for that, and a lot
Speaker 7: of the ports were arguing, was these tariffs that had
Speaker 7: gone into place that suddenly had stopped the imports of
Speaker 7: these trailer shafts seeds that were predominantly made in China
Speaker 7: at the time and by a company called CIMC. And
Speaker 7: so these tariffs went into place in twenty twenty one
Speaker 7: after they were lobbied for in twenty twenty by US producers,
Speaker 7: and we look at what came next, and really what
Speaker 7: happened there is that CIMC, this big Chinese company, tried
Speaker 7: to set up production in the US in California and
Speaker 7: in the tiny town in Poria, Virginia, just near the
Speaker 7: North Carolina border in the southern part of the state,
Speaker 7: and wanted to start doing what Donald Trump and other
Speaker 7: advocates of tariffs would argue they'd like to see foreign
Speaker 7: investors do, and that has created some factory jobs in
Speaker 7: the United States. We've also, at the same time, you
Speaker 7: had in Pitts U, Alabama, an outfit called Pitt's Enterprises,
Speaker 7: which was one of the US companies that had lobbied
Speaker 7: for these tariffs to.
Speaker 5: Go into place on CIMC.
Speaker 7: It spotted an opportunity in the shortage of trailer chassis
Speaker 7: at the time and decided it was going to import
Speaker 7: some from Vietnam. Well, those chassis actually turned out to
Speaker 7: be largely Chinese customs imposed the tariffs on these Pits
Speaker 7: Enterprise trailers that Pitts Enterprise had lobbied for in.
Speaker 5: The first place. Wait a second, keep out imports. It's
Speaker 5: this messy fight.
Speaker 7: And that's the whole point really here, is that when
Speaker 7: you get these tariffs in place, you get these messy
Speaker 7: fights that come out of them. You get these unintended consequences.
Speaker 7: What I didn't tell you is that CIMC was then
Speaker 7: hit with its own investigation about its shassis and.
Speaker 5: Where they were coming from.
Speaker 7: That shut down production there for more than a year
Speaker 7: and led to a couple hundred people losing their jobs.
Speaker 7: US workers losing their jobs. So you know, it's a
Speaker 7: messy fights all about undintended consequences and where kind of
Speaker 7: tariffs get you. It's complicated, but that's kind of the point.
Speaker 2: I'm just going to say, the global supply chain, it's messy,
Speaker 2: it's complicated. Like that's one of the big takeaways too.
Speaker 3: And just a reminder, so net net shawan in the end,
Speaker 3: are these towns better off now than they were pre tariff?
Speaker 3: Or these companies better off now? Is this company better
Speaker 3: off now than it was pre tariff? Or if the
Speaker 3: executives could go back in time, would they not have
Speaker 3: lobbied for it?
Speaker 7: So look, I think the net result potentially for the
Speaker 7: United States when all the dust clears, is some more
Speaker 7: manufacturing jobs in the United States. But we're talking about
Speaker 7: a couple hundred, maybe a few thousand manufacturing jobs. And
Speaker 7: we're also talking about higher prices for trailer chassis. And
Speaker 7: this is going to get us back into who pays
Speaker 7: the cost of tariffs that you know, those higher cost
Speaker 7: schassis mean that it's more expensive to transport goods around
Speaker 7: the United States, which means higher prices for consumers. It
Speaker 7: should be said that right now in Emporia, Virginia, they're
Speaker 7: just starting to get back to work. CIMC was eventually
Speaker 7: cleared and they're ramping up production in Pittsview, Alabama. They're
Speaker 7: still facing a terror bill in the tens of millions
Speaker 7: for these trailers that they imported, and they've lost something
Speaker 7: like two hundred and fifty million dollars in revenues and
Speaker 7: they're still fighting this in federal court.
Speaker 5: And if they lose that fight.
Speaker 7: That's not going to be good for the company or
Speaker 7: the people of Pittsview, Alabama.
Speaker 3: One thing that we've also seen sean in the wake
Speaker 3: of tariffs being slapped on Chinese companies during the Trump
Speaker 3: administration those tariffs largely being kept in place by the
Speaker 3: Biden administration is the surgeon manufacturing over the border in Mexico.
Speaker 3: So not necessarily bringing jobs to the US is it
Speaker 3: was intended, but Chinese companies setting up shop just over
Speaker 3: the border and then importing certain goods across the border
Speaker 3: to get around those tariffs.
Speaker 7: Yeah, and look that is we're seeing that in all
Speaker 7: sorts of different sectors. That's one of the big concerns
Speaker 7: that Donald Trump talks about when he talks about Chinese evs,
Speaker 7: that they will start producing them in Mexico and avoid
Speaker 7: tariffs and coming into the US that way. In the
Speaker 7: case of trailer sh sassis, there has been some production
Speaker 7: that's ramped up in Mexico apparently, and some of the
Speaker 7: US producers are taking advantage of cheaper production in Mexico.
Speaker 7: It's you know, it's a complicated picture, and I hate
Speaker 7: to keep saying that, but part you know, one of
Speaker 7: the reasons it's complicated as well is that we've seen
Speaker 7: a bit of a trucking recession here in the United States,
Speaker 7: and things have slowed down a bit in terms of
Speaker 7: the movement of goods. There may be too many chassis
Speaker 7: that were produced or brought in at one point, so
Speaker 7: that may be a bit of a glut of chassis,
Speaker 7: but that can all turn around very quickly. One of
Speaker 7: the things we heard in the lead up to this
Speaker 7: port strike, for example recently, is that people were again
Speaker 7: worried that there might be a shortage of chassis because
Speaker 7: when shipping containers sit around, they usually have to sit
Speaker 7: on some wheels, and that means that those chassis can't
Speaker 7: be used to move other shipping containers, and that means
Speaker 7: all of a sudden you get a shortage and more logjam.
Speaker 2: You know, one of the things you reference to the
Speaker 2: idea of you know, being a as a manufacturer here
Speaker 2: in the United States or US based manufacturer, you know,
Speaker 2: who do tap into the global supply change on is
Speaker 2: that being able to say made in America and the
Speaker 2: rules around that. I guess what I want to pose
Speaker 2: to you, and I'm not sure forgive me if you've
Speaker 2: got an answer, But I mean, does it matter to
Speaker 2: the American public? I will say increasingly, I am looking
Speaker 2: at where things are made. But I just wonder for
Speaker 2: most Americans doesn't matter? Do they care? You know, they
Speaker 2: might say, if you were asked, you know, would you
Speaker 2: rather support American jobs versus non American jobs? And people
Speaker 2: might say yes. But would you rather pay for cheaper
Speaker 2: goods that are made outside of America than others? They
Speaker 2: probably would say yes to that too. So I'm just
Speaker 2: curious if this issue matters.
Speaker 5: Yeah.
Speaker 7: Look, I think the answer is all over the place
Speaker 7: on this, and I think surveys are all over the
Speaker 7: place on this. You'll often see consumer surveys. Let's say,
Speaker 7: people are willing to spend more if a product is
Speaker 7: American made, But then you know, people go to Best Buy,
Speaker 7: go to Walmart buy a new TV, and that TV
Speaker 7: typically is not made in the United States. It's typically
Speaker 7: made in China or somewhere in Asia. And it is
Speaker 7: that cheap, and it is that big for that cheap
Speaker 7: because it was made overseas. So I think on a Sunday,
Speaker 7: when people sit down to watch the NFL, they don't
Speaker 7: necessarily care about how where that TV was made. They
Speaker 7: care about what a bargain they got and how big
Speaker 7: that TV is and how big those players look on
Speaker 7: their living room wall.
Speaker 3: Just thirty seconds. The workers though, they.
Speaker 7: Care, Yeah, the workers, the workers absolutely care. But look
Speaker 7: one of the stories of and it's totally true that
Speaker 7: we saw a real de industrialization in parts of America
Speaker 7: in the early two thousands as a result of these
Speaker 7: jobs going overseas. But the reality, unfortunately, is that the
Speaker 7: number of workers who lost their jobs is much smaller
Speaker 7: than the number of consumers who have benefited from.
Speaker 5: Broader, cheaper prices.
Speaker 7: We are having a huge political debate about this because
Speaker 7: the question is where the balance sits.
Speaker 2: Well, another story from you with a snapshot of America
Speaker 2: to tell a larger story that is certainly part of
Speaker 2: our political narrative. Shawandan and Bloomberg New Senior Economics writer
Speaker 2: on Today's Bloomberg Big Take.
Speaker 1: You're listening to the Bloomberg Business Week Podcast. Listen live
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Speaker 3: It is time for another edition of Bloomberg Plugged In.
Speaker 3: It's your weekly look at EV's Carol. You'll remember on Friday. Yes,
Speaker 3: Rivian was one of my decliners during simulcast. Shares taw
Speaker 3: close to nine percent. The company said it had to
Speaker 3: drastically cut its twenty twenty four production targets over yet
Speaker 3: another supply chain hiccup. Analysts Ed Ludlow and Kyle porter
Speaker 3: Wright were puzzled as to why Rivian had to do
Speaker 3: such a thing. Ed love thoughs co host of Bloomberg
Speaker 3: Technology on Bloomberg TV. He joins us from our San
Speaker 3: Francisco bureau. You and Kyle got to the bottom of
Speaker 3: this d What happened here with the supply chain hiccup?
Speaker 8: Something's been going on at Rivian for a little while,
Speaker 8: and we've been kind of drip fed information, and by
Speaker 8: Friday we knew it was something to do with the
Speaker 8: electric vehicle motor electric motor that they make. It was
Speaker 8: a specific single part for a single supplier, and we
Speaker 8: just got to the bottom of it. The single part
Speaker 8: is copper windings, and we can talk about what copper
Speaker 8: windings are. The single supplier, according to sources, is Essex
Speaker 8: for Akawa, and the backstory to how they ended up
Speaker 8: in this pickle is quite a backstory indeed.
Speaker 2: All right, so how did they get here?
Speaker 8: Okay, let's do this as simply as we can. Okay,
Speaker 8: Earlier this year, Rivian made a mistake. They did a
Speaker 8: booboo and they miscalculated how much copper they would need
Speaker 8: for the electric motors that they made in house. So
Speaker 8: it was an error. They phoned up their supplier, for
Speaker 8: want of a better explanation, Essex, and were like, this
Speaker 8: is how much we need and they got it wrong.
Speaker 8: So Essex has other customers. They sell copper wire to
Speaker 8: all kinds of ev makers, and so they just got
Speaker 8: on with their business. They assigned their machines that make
Speaker 8: the copper windings to other people. So when Rivian realized
Speaker 8: its mistake. It went back to Essex was like, yeah,
Speaker 8: we got it wrong. We need lots more. Can you
Speaker 8: do that? And they were like no, no, we can't.
Speaker 8: And so Rivian literally just learned the hard way that
Speaker 8: you can't do that, and now it's left unable to
Speaker 8: make its motors, and without its motors, it can't build
Speaker 8: its cars.
Speaker 3: Copper windings ed, are these found in all electric motors?
Speaker 3: Are we familiar with some of we've taken apart, like
Speaker 3: we had electric electric cars when we were kids, like
Speaker 3: remote control cars exactly.
Speaker 8: The very serious part of this story is that it's
Speaker 8: the absolute crucial part of the electric motor. In simple terms,
Speaker 8: the copper windings go on to the rotor around the
Speaker 8: metal core of a motor. You run an electric current
Speaker 8: through it. It makes an electro mechanical field and that's
Speaker 8: what spins the motor. And if you were to tear
Speaker 8: a motor apart, you would be familiar with the image.
Speaker 8: You just basically see lots of copper wire wound round
Speaker 8: and round around around. Every ev has a motor in
Speaker 8: it that has that kind of copper And so you know,
Speaker 8: a lot of people ask me a lot of questions
Speaker 8: along the way, even after we broke the story, like,
Speaker 8: how could this possibly have happened? Because this is the
Speaker 8: absolute integral part of an EV motor that Rivian makes itself,
Speaker 8: and a part of it, of course, is the risk
Speaker 8: of only having one supplier in that domain.
Speaker 2: It's yes, so well, I guess it says to me.
Speaker 2: Though then internally the company has to make sure it
Speaker 2: gets it right right, Like there are people who are
Speaker 2: in charge of figuring out, okay, what's our production demands?
Speaker 2: Our needs to make sure that there is no next
Speaker 2: And we know companies are lean and mean and just
Speaker 2: in time inventory, we talk about it all the time
Speaker 2: and so on and so forth. But if it's so
Speaker 2: crucial and there's only one place they can get it,
Speaker 2: they've got to get it right. So does this say
Speaker 2: something about Rivian's internal management of the company?
Speaker 8: Yeah, and something really? Does you know? Rivian made a
Speaker 8: mistake right, And they've been a really sexy company to
Speaker 8: read about to cover people so interested, But they are
Speaker 8: a startup right in experience, most OEMs or sorry automakers
Speaker 8: would have several suppliers, but if you're only building a
Speaker 8: few cars a year, you don't need them, So they
Speaker 8: just had one, and yeah, they learned the hard way.
Speaker 3: Are their companies affected by this shortage?
Speaker 8: But this is the thing, this isn't an industry problem.
Speaker 8: This is a Rivian problem calculated right right, And you
Speaker 8: know again, with time and volume and experience, you know
Speaker 8: Rivian will learn its lesson. And they did actually try
Speaker 8: to sort of triage this. They went and found backup
Speaker 8: supplier that could have provided the copper. But of course
Speaker 8: what did the supplier say, Oh, sure you can have
Speaker 8: the copper, but we'll charge you this amount for it.
Speaker 8: And it's just not economical for Rivian.
Speaker 2: So when do they get back on track? When does
Speaker 2: this kind of well figure its way out here?
Speaker 8: Unfortunately, I don't have an answer for you. What the
Speaker 8: official line from Rivian is is that the problem is
Speaker 8: more acute than it was earlier in the quarter, and
Speaker 8: it's ongoing. So there isn't an answer. They're just going
Speaker 8: to have to wait until Essex is able to provide them.
Speaker 8: But what we know is the original production target was
Speaker 8: fifty seven thousand EV's this year, it's now a range
Speaker 8: of forty seven to forty nine thousand. In other words,
Speaker 8: they're cutting the target by ten thousand vehicles.
Speaker 3: Where's what's being cut? Is it the Amazon vans? Is
Speaker 3: it the r one good question?
Speaker 5: The suv? Is it the pick up? What is it?
Speaker 1: Here?
Speaker 8: Is why it's such a pickle. The enduro motor is
Speaker 8: common to all three lines, so they're shutting down the whole.
Speaker 3: Place, which which you know, ostensibly is an advantage to
Speaker 3: the company that it would have, you know, the same parts,
Speaker 3: the same technology in all of its products. But in
Speaker 3: this case enough so much ed Yes.
Speaker 8: In this case, the commonality means that if they can't
Speaker 8: build any enduro motors, they won't have enough. I guess
Speaker 8: it's also like they have They probably have some copper,
Speaker 8: but they don't have it at the volume that they
Speaker 8: need to meet their original targets. They could be selective,
Speaker 8: I suppose, and I guess, you know, give preferential treatment
Speaker 8: to the consumer cars rather than the van that they
Speaker 8: make for Amazon. But again, it's kind of like either
Speaker 8: you call it teething problems inexperience, or you call it
Speaker 8: embarrassing and a blunder. But it's not good.
Speaker 2: Can they recover? Do we have any good guess yet
Speaker 2: on that?
Speaker 8: You know that the cell side worry is that this
Speaker 8: this bleeds into next year. You know, there's no guarantee
Speaker 8: that Essex can kind of turn around and fix the
Speaker 8: issue in any stated or given timeframe. What the outstanding
Speaker 8: question is is Rivian had self declared that they were
Speaker 8: going to achieve this milestone of a gross profit in
Speaker 8: the final three months of this year, and psychologically that
Speaker 8: probably would have been great, particularly for the stock, and
Speaker 8: there is a lot of doubt now that that will happen.
Speaker 2: Sounds pretty rough. I feel like it's been a little
Speaker 2: bit rough too for Elon when it comes to the Robotaxi.
Speaker 2: But he's got a big wish. I see anybody who
Speaker 2: can say pickle I can be a little spicy. So
Speaker 2: having said that, this is supposed to be a big
Speaker 2: week or what are we expecting when it comes to
Speaker 2: the robotaxi.
Speaker 8: Yeah, I mean similar to what we discussed the other week.
Speaker 8: I think this is going to be one of the
Speaker 8: bigger weeks in my career covering technology. Either Tesla is
Speaker 8: going to deliver something or they're not and not deliver
Speaker 8: in terms of handover to someone deliver to the market's expectations.
Speaker 8: Elon has been talking about a vehicle that can drive
Speaker 8: itself for many years and the event on Thursday night,
Speaker 8: Build we Robot is what it's being called. You know
Speaker 8: what the minimum expectation is is that we see a
Speaker 8: purpose designed ROBOTAXI called Cybercab that is somehow unique and
Speaker 8: evidence that they're moving toward a world where Tesla doesn't
Speaker 8: sell cars to consumers. Tesla operates a proprietary ride hailing
Speaker 8: app app where there are a fleet of robotaxis on there.
Speaker 8: And it's really hard still to see the jump.
Speaker 3: What happens on Thursday, ed I are you going to
Speaker 3: be there?
Speaker 8: Okay?
Speaker 3: So do and other things.
Speaker 8: You're pretty busy, so I am going to be in
Speaker 8: the greater Los Angeles area. I'll say that our colleagues
Speaker 8: at Bloomberg an EF Andrew Grant really like him. He's
Speaker 8: just such a smart analyst, has put out his preview.
Speaker 8: All I'll say is that Dana Hole and I will
Speaker 8: put out some thoughts and some reporting ahead of the
Speaker 8: then soon and you guys, maybe we can check in
Speaker 8: after we put that out.
Speaker 5: Are we going to see you this?
Speaker 8: You can see me where I'll be standing and coming
Speaker 8: to you live from. I think very much remains up
Speaker 8: in the.
Speaker 3: Air, all right, Yeah, it's just h enough hints, I think.
Speaker 3: But you know the reason I ask is we'll be
Speaker 3: in the greater Los Angeles area as well.
Speaker 5: You will, so I don't know.
Speaker 3: So we'll see if we'll see if we see ed.
Speaker 2: Are we going to hear anything else? Are we going
Speaker 2: to hear anything though, on anything else within the Tesla
Speaker 2: universe chargers for example? Like is there other stuff that much?
Speaker 4: You know?
Speaker 8: My feeling is that Elon's going to try and tell
Speaker 8: a story that ties all of the arms of the
Speaker 8: business together. So I wouldn't be surprised if we hear
Speaker 8: about the Optimus robot program, their work on artificial intelligence
Speaker 8: generally speaking, and then how all of that feeds into
Speaker 8: a future where they're building robotaxis in service of this
Speaker 8: ride hailing service. That's going to be really interesting because
Speaker 8: now investors are going to have to say, Okay, how
Speaker 8: long are we going to be waited on this for
Speaker 8: and what's the funding of that dream going to look like?
Speaker 2: Or if there's a tim robot in his future?
Speaker 5: Yeah, I wish can it do dishes?
Speaker 3: That's all I want?
Speaker 2: All right, Listen, We're gonna look forward to your reporting,
Speaker 2: no doubt about that. Fun stuff. Wherever you may be
Speaker 2: or whatever you may be doing, we will certainly be
Speaker 2: checking out all right, ed, Thank you so much, Be
Speaker 2: well ed. Ludlow Safe Travels, co host of Bloomberg Technology
Speaker 2: on Bloomberg Television, joining us from San Francisco. Catch him
Speaker 2: and Caroline Hide every day at eleven am Wall Street
Speaker 2: Time on Bloomberg Television. The latest and greatest when it
Speaker 2: comes to all things technology. M brother Marc a journal
Speaker 2: How about you let me drive?
Speaker 5: No, no, no, no, who's going to drive?
Speaker 1: Honey? Please do gravels.
Speaker 6: Let's wat I want to drive. It's a good question.
Speaker 6: This is the drive to the clone long to music well.
Speaker 1: On Bluebirg Radio.
Speaker 3: TikTok everyone, it is that time. It is look at
Speaker 3: that less than twenty minutes ago to the close of
Speaker 3: trading here in New York City. Let's get to it.
Speaker 3: We got Larry Patowski with US, managing partner and portfolio
Speaker 3: manager over at Goodhaven Capital Management, joining us from Millbourne,
Speaker 3: New Jersey.
Speaker 5: Larry, how are you?
Speaker 6: I am well?
Speaker 5: Tim? How are you?
Speaker 3: We're doing pretty well? A little bit of a sell
Speaker 3: off yesterday and a little bit of a recovery today.
Speaker 5: Rates.
Speaker 3: We talked about him earlier today with Michael McKenzie tenure
Speaker 3: back up that four percent important milestone, important marker. How
Speaker 3: are you thinking about the environment right now?
Speaker 9: You know, hey, Carol Tim, it seems to me that
Speaker 9: we've got an environment where inflation has come down dramatically,
Speaker 9: that has reduced interest rates and seems to be considering
Speaker 9: reducing them further.
Speaker 6: The economy scene, Okay. You know, in early twenty twenty.
Speaker 9: Three of Bloomberg Apollo survey, seventy percent of the respondent
Speaker 9: said they expected a recession within twelve months. And that's
Speaker 9: not to say that I predicted differently. It's just to
Speaker 9: be a reminded about hard it is to make accurate
Speaker 9: macro calls with some level of frequency. So if we
Speaker 9: seem to be in a reasonably functioning economy, we will
Speaker 9: continue here at good Haven and just turn over rocks
Speaker 9: and look for individual situations that we think we have
Speaker 9: an agent understanding.
Speaker 8: Yeah.
Speaker 2: You know who also seems to be turning over lots
Speaker 2: of rocks or husband for a while is JP Morgan's CEO,
Speaker 2: Jamie Dimon. And I'm kind of obsessed with this because
Speaker 2: I think a lot about when it comes larry to inflation,
Speaker 2: some of the macro factors that are impacting our environment
Speaker 2: and have been for a while, and whether it's the
Speaker 2: pushback on globalization. He talked specifically about longer term trends
Speaker 2: fiscal deficits in the US and around the world. He said,
Speaker 2: the green economy is inflationary, demographics are inary, and so
Speaker 2: this plays into what he thinks that you know, we'll
Speaker 2: see higher interest rates maybe being with us for a while,
Speaker 2: and I do wonder if there are some things that
Speaker 2: are going on that change the rate environment again, you know,
Speaker 2: it goes back to that new normal. Is that Does
Speaker 2: that factor in for you at all?
Speaker 6: Not terribly.
Speaker 9: I mean, I certainly pay attention to anything mister Diamond
Speaker 9: has to say.
Speaker 6: Look, we're at ten four percent.
Speaker 9: I mean, that may be a dramatically higher level than
Speaker 9: we've been used to over the last seven eight nine
Speaker 9: years up until recently, but it's it's hardly a dramatically
Speaker 9: higher than normal rate if you go back a bunch
Speaker 9: of decades.
Speaker 6: So maybe we all got a little bit.
Speaker 9: Used to rates being fictitiously low and maybe expecting them
Speaker 9: to go dramatically lower as not.
Speaker 6: The right call.
Speaker 9: But for us here, you know, we don't think we
Speaker 9: have a great edge in trying to make those predictions.
Speaker 9: But I don't think there's anything wrong, you know, with
Speaker 9: assuming that what we're looking at as far as a
Speaker 9: interest rate outlook and you know, inflation a bit above
Speaker 9: two percent maybe where we are for a while. And
Speaker 9: I don't think that is a dysfunctional place to be.
Speaker 9: And we'll just again keep turning over rocks with that
Speaker 9: is what seems like the backdrop.
Speaker 3: Okay, we want to get to a stock pick that
Speaker 3: you have. We love talking names. Uh xor e XO
Speaker 3: is the ticker? Why do you love it?
Speaker 2: Based in Amsterdam? Right, it's it doesn't. I couldn't find
Speaker 2: am I wrong. I couldn't find an A dr no.
Speaker 6: No a DRSKA.
Speaker 9: I mean there is a five letter symbol which is
Speaker 9: you know Nasdeka has created. But you know, Tim, I
Speaker 9: got the hint from Carol that I better show up
Speaker 9: with a cheap stock that is enough.
Speaker 6: A lot for the year and has a good story.
Speaker 6: So the pressure's on.
Speaker 9: It's it's kind of stressful, but I'll do my best.
Speaker 2: We will see, we will see continued.
Speaker 3: Please, you got a tough crowd there.
Speaker 6: We'll see that even the preamble wasn't even good enough,
Speaker 6: all right.
Speaker 9: Well, look, XOR is the holding company controlled by the
Speaker 9: Agnelly family run by John Elkin, which owns a huge
Speaker 9: amount of Ferrari Stalantish and also Phillips. The track record
Speaker 9: they're going by the numbers they have put out recently,
Speaker 9: is dramatically better than the MSCI over the period they
Speaker 9: just announced from you know nine through the middle of
Speaker 9: twenty four. It is a holding company the trades that
Speaker 9: you know, let's call it an excess of a forty
Speaker 9: percent discount NAV And most importantly, the NAV has dramatically
Speaker 9: outperformed the benchmark they think is an appropriate benchmark over
Speaker 9: the you know since nine, So what's not to like?
Speaker 9: And they have been repurchasing shares recently. And the fact
Speaker 9: that you know, Carol had a little trouble finding an
Speaker 9: ADR means maybe it's not even though it's a twenty
Speaker 9: one billion euro market cat, maybe it's not quite as
Speaker 9: discovered as it should be.
Speaker 2: And is it forgive me, it's not new to market
Speaker 2: or it is new to market. It is not new
Speaker 2: to okay, all right, so maybe this has just.
Speaker 6: Been around for a while.
Speaker 9: I think last year's shareholder letter by mister Elkin was
Speaker 9: particularly clear. And I think they've articulated the game plan,
Speaker 9: which is too over time, you know, do a little
Speaker 9: bit more. You know, in areas such as healthcare, as luxury,
Speaker 9: and as such as luxury.
Speaker 6: Ferrari is the biggest holding by far.
Speaker 9: The interesting thing about Ferrari is you saw over the
Speaker 9: recent couple of months a lot of kind of luxury
Speaker 9: companies run into a tough time.
Speaker 6: But no, no tough times at Ferrari.
Speaker 3: Yeah, tough times for people who don't have Ferraris.
Speaker 4: That's a good point.
Speaker 5: Yeah.
Speaker 6: I don't have one either, Tam.
Speaker 5: I'm with you, all right.
Speaker 6: I mean I don't admire the brand.
Speaker 5: I don't have that.
Speaker 6: I'd be too nervous. I'd be too nervous looking for
Speaker 6: a parking spot.
Speaker 5: You know.
Speaker 2: I do wonder too that. You know, we've had a
Speaker 2: lot of guests I feel like over the last six
Speaker 2: to twelve months talking more about opportunity these overseas. Are
Speaker 2: you finding interesting opportunities overseas at this point or is
Speaker 2: it still you know us because there's a little bit
Speaker 2: more maybe clarity about the outlook here.
Speaker 6: Well, it's an interesting question, Carol. You know, the good
Speaker 6: Haven Fun.
Speaker 9: We do have some non US holdings, you know, we
Speaker 9: have Xor, We have an amazing Canadian company called Terra Vest,
Speaker 9: and we do cast a wide net.
Speaker 6: We have a lot of flexibility.
Speaker 9: We do when we look outside of the US want
Speaker 9: to ask ourselves, wait, do we really understand the brand?
Speaker 9: Do we really understand how it resonates in the local market.
Speaker 9: But with Xor, though it's it's really the heritage is Italian,
Speaker 9: it's based in Amsterdam. Now it's traded you know in
Speaker 9: the urinext you know, Ferrari is the biggest holding, then Stilantis,
Speaker 9: which was the combination of Jeep.
Speaker 6: And Pougeot, and then Phillips.
Speaker 9: You know, I don't think it necessarily requires understanding some
Speaker 9: particular local habit or local market.
Speaker 6: These are these are mostly global fans.
Speaker 9: And you know, at our Canadian company, Travist, it's a
Speaker 9: you know, Canadian and North American, uh, you know marketplace
Speaker 9: and products We believe we understand.
Speaker 6: But it is interesting.
Speaker 9: I think it's fair to say that non US markets
Speaker 9: in aggregate may provide more opportunities. But you know, we
Speaker 9: take it very carefully when we go outside of our
Speaker 9: own turf. But we you know, we're happy with what
Speaker 9: we found in some of these markets.
Speaker 2: All right, good stuff. Sorry, I'm so tough.
Speaker 3: She's tough, tough crowd.
Speaker 6: Okay, well, how'd I do? Cal You did?
Speaker 5: Okay?
Speaker 6: You did?
Speaker 2: Okay, Larry, you.
Speaker 3: Can come back okay.
Speaker 5: I mean if you.
Speaker 2: Come back, that usually means you did.
Speaker 3: Okay, You're welcome back.
Speaker 2: All right, Be well, stay safe. Lara Pitkowski, Managing director,
Speaker 2: Imagining Partner I should say, and portfolio manager good Haven
Speaker 2: Capital Manage It joining us from Millburgh, New Jersey. I
Speaker 2: hear that a lot that I'm tough. It's not about
Speaker 2: I have a big heart, but I'm a little tough.
Speaker 2: All right, everybody's still.
Speaker 3: Go to I'm not saying anything, you know.
Speaker 5: Please.
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