Speaker 1: From the heart of where innovation, money and power collide
Speaker 1: in Silicon Valley and beyond. This is Bloomberg Technology with
Speaker 1: Caroline Hyde and Ed Ludlow.
Speaker 2: Live from New York.
Speaker 3: I'm Caroline Hyde, and this is Bloomberg Technology coming up
Speaker 3: a volatile Nasdaq as after posting its worst quarter in
Speaker 3: nearly three years, plus grants from the US Chips Act
Speaker 3: in limbo as a Commerce secretary pushes semi companies to
Speaker 3: expand their US projects and amid trade anxiety and week
Speaker 3: at Tesla Sales, we sit down with the CEO of
Speaker 3: Evy Giant Rivian. The first we check in on these
Speaker 3: markets that.
Speaker 2: Actually had trying to push.
Speaker 3: Back into the green after what was a pretty horrific quarter.
Speaker 3: The first quarter for the Nasdaq one was the worst
Speaker 3: since the second quarter of twenty twenty two. You are
Speaker 3: seeing the setos in the terms of woman twenty percent
Speaker 3: for many of those magnificent seven names, Nvidiot down almost
Speaker 3: twenty cent, twenty percent. You see broad Com having its
Speaker 3: worst quarter in its history. Let's break down the moves
Speaker 3: and what a signals for this quarter now Isabelle Lee
Speaker 3: is with us for more and it was the most
Speaker 3: loved names for twenty three twenty four that got punished the.
Speaker 4: Hardest exactly, and altogether they shed some two trillion dollars
Speaker 4: in market cap. Lots of superlatives out there, we won't
Speaker 4: really lose track. Microsoft, Amazon, Meta down twenty percent from
Speaker 4: their peak, broad Coom down thirty three percent since December.
Speaker 4: And it's just interesting how these tech bihemos are now
Speaker 4: dragging the markets lower. And for more than two years
Speaker 4: they've been the darlings of AI. They're the ones that
Speaker 4: powered the markets to really it's bull run, and now
Speaker 4: questions about AI are coming out of time when there's
Speaker 4: just really a lot of macroeconomic uncertainty all around and
Speaker 4: thorough and deep sea. I read this and it really
Speaker 4: struck me with Ali Baba's co founders saying they're rushing
Speaker 4: to build new facilities to get ahead of AI services.
Speaker 4: In contrast, you have an analyst report about Microsoft saying
Speaker 4: they're walking away from new projects. Microsoft, we've committed almost
Speaker 4: eighty billion for data centers, they've earmarked that, and altogether
Speaker 4: these big spenders earmarks three hundred billion.
Speaker 2: So what's next.
Speaker 3: It's really an interesting time, and you'll basically pointing to
Speaker 3: a very massy narrative for AI right now, Josi clearly
Speaker 3: trying to dash the hopes of AI.
Speaker 2: Saying there's a bubble here in the United States. But
Speaker 2: at the same time, as.
Speaker 3: You say, Ali Baba is busy investing more than fifty
Speaker 3: billion itself in AI infrastructure, in the future of artificial intelligence.
Speaker 3: And then we have TDCN, which continues on this narrative
Speaker 3: of Microsoft. Are people feeling that at these valuations with
Speaker 3: more than a bear market ultimately and a lot of
Speaker 3: these names down more than twenty percent, as you say,
Speaker 3: is now the time to stop buying in Do we
Speaker 3: feel that that factors in that price is in moving
Speaker 3: out of the bubble?
Speaker 2: It depends on who you ask.
Speaker 4: But I interviewed fund a mutual fund manager, and he
Speaker 4: says that tech is still expensive, it's still volatile. Well,
Speaker 4: I mean, yes, it's come down. It's followed to twenty
Speaker 4: four times as demated profits from twenty seven last month,
Speaker 4: but the historical average is still around twenty so it's
Speaker 4: still expensive.
Speaker 2: But they still on it.
Speaker 4: He said, he has a little because he calls it
Speaker 4: caught risk management. So you really see that they still
Speaker 4: have a foothold on the market. But it's really interesting
Speaker 4: because the IPO market, you expect it to be hot,
Speaker 4: but it wasn't. You look at core Weep, it was
Speaker 4: a dudt. Although newsbacks maybe that's the exception that was exciting.
Speaker 4: It's surge around eight hundred percent yesterday.
Speaker 2: I meant retail name and find different business.
Speaker 3: MAT's fair in Corey's, but it's notable that corey is
Speaker 3: actually up more than ten percent today. Okay, so maybe
Speaker 3: we're getting a little bit of buying around the edges
Speaker 3: on what had been a pretty beaten up name. It's
Speaker 3: it's now just above its IPO listing price, but it
Speaker 3: does just seem so murky for public marketing investors when
Speaker 3: they're looking at private markets and they're looking at a
Speaker 3: forty billion dollar round for Open AI Sam Altman saying
Speaker 3: that there's basically insatiable demand and his GPUs of melting
Speaker 3: because everyone's using his product. Is that still the tariff
Speaker 3: overhang that perhaps lends to the downside for these names.
Speaker 2: Absolutely.
Speaker 4: Before the narrative was just like tech valuations AI, but
Speaker 4: now it's like Liberation Day tomorrow. I was just on
Speaker 4: talking in six floor upstairs with Anna Malaria of Allspring,
Speaker 4: and she said, we will get some information tomorrow, but
Speaker 4: not the clarity that everyone is hoping for. It's liberation Day,
Speaker 4: but I mean, what does that mean? So she was
Speaker 4: saying that we're still on the defensive, We're still on
Speaker 4: the weight and see because what will happen.
Speaker 2: I mean, everyone's.
Speaker 4: Hoping that we will have a magical list tomorrow per country,
Speaker 4: per tariff, but we won't see that.
Speaker 2: So she's still very concerned.
Speaker 4: If you look at Bitcoin, which is really the risk proxy,
Speaker 4: it's down around ten percent this year, but from its
Speaker 4: peak it's down twenty percent. And I know that bitcoin
Speaker 4: is a lot of fans but also skeptics, but one
Speaker 4: can't deny that it's a broad gauge of risk sentiment.
Speaker 4: And for now the gloom is palpable. It is well
Speaker 4: said Isabelle Lee. We thank you for that breakdown.
Speaker 3: Let's just get into the weeds on chips specifically, now,
Speaker 3: COMMA Secretary Howard Littnan may withhold chipsack grants to push
Speaker 3: companies to expand their US projects. That's according to sources,
Speaker 3: his goal is to generate tens of billions of dollars
Speaker 3: in additional semiconductor investment commitments for not actually increasing federal grants.
Speaker 2: Blombergs Peter Elstrom joins us on this.
Speaker 3: Now, we'd all known that President Trump was not a
Speaker 3: fan of the Biden Harris Administration's Chips Act, even though
Speaker 3: it was bipartisan nature. But it looks as though they're
Speaker 3: looking in a different way to orchestrate it.
Speaker 5: Yeah, that's exactly right.
Speaker 6: So just to back up a step, the Chips Act,
Speaker 6: of course was passed with bipartisan support. The whole idea
Speaker 6: is getting these chips companies to invest more in the
Speaker 6: United States. It's fifty two billion dollars in grants and
Speaker 6: then tax credits, which are very very important here too.
Speaker 6: So the Biden administration scrambled in their last days to
Speaker 6: try to finalize the agreements with a bunch of the
Speaker 6: most important chip companies in the world, including TSMC and
Speaker 6: Samsung and Intel and Micron. They finalized the terms of
Speaker 6: these accords, but they didn't disperse all the money. The
Speaker 6: whole idea was that these companies would hit benchmarks and
Speaker 6: then the money would go out. So what Ludnik has
Speaker 6: decided to do is he's decided to use those disbursements
Speaker 6: as leverage with these companies to try to get them
Speaker 6: to commit even more money to the United States, so
Speaker 6: the chips awards are not going to go up in
Speaker 6: terms of value. But before he actually writes those checks,
Speaker 6: he wants companies to come forward and pledge more money.
Speaker 5: The example for this is TSMC.
Speaker 6: TSMC originally was going to invest about sixty five billion
Speaker 6: dollars in chip capacity in the United States. It came
Speaker 6: forward and they said they're going to put in another
Speaker 6: one hundred billion dollars. The Trump administration loves to be
Speaker 6: able to have those kinds of announcements, especially TSMC's the
Speaker 6: most important chip maker in the world right now, so
Speaker 6: for them to say we'll put another one hundred billion
Speaker 6: dollars in the market is very important.
Speaker 3: The administration would say that was the effect of tariffs.
Speaker 3: TSMC has said they just like the American market and want.
Speaker 2: To invest there.
Speaker 3: But what's also interesting is the nuance on the tax
Speaker 3: credit Peter, because in many ways that's more important than
Speaker 3: the grants.
Speaker 6: Right for many of these companies, including TSMC and probably
Speaker 6: Samsung and Intel.
Speaker 5: Also, the tax credit is very very important.
Speaker 6: It could be a lot more money, and so there
Speaker 6: are discussions about maybe increasing that tax credit.
Speaker 5: It has been twenty five percent.
Speaker 6: It could be even more in the future, and that's
Speaker 6: important for companies that actually have the money right now.
Speaker 6: If you can put in one hundred billion dollars, it
Speaker 6: s easy to do the math on that. That's twenty
Speaker 6: five billion dollars in tax credits for you. That can
Speaker 6: save you a lot of money down the line.
Speaker 5: And you're right. TSMC sees a lot of opportunities in
Speaker 5: the United.
Speaker 6: States market to be able to make investments, build some
Speaker 6: of those cutting age chips here and then sell them
Speaker 6: to domestic customers. You also have companies like Samsung and
Speaker 6: Intel that could do things like this are embarking on
Speaker 6: these kinds of projects. But lud Nick is exerting a
Speaker 6: lot of leverage right now in these companies to try
Speaker 6: to get bigger numbers, more eye popping numbers into the headline,
Speaker 6: so that they can take credit for bringing some of
Speaker 6: this production back to the United States.
Speaker 3: At a time when with a lot of uncertainty, particularly
Speaker 3: with tariffs hanging over the semiconductor industry, it must be
Speaker 3: a difficult time to commit to more spending from these CEOs.
Speaker 6: Right You're just talking about the tariff uncertainty out there. Well,
Speaker 6: I guess we'll find out some things tomorrow, but there
Speaker 6: are a lot of this we just don't know at
Speaker 6: this point. And you're right, Lutnik and the Trump administration
Speaker 6: have pointed to tariffs is part of the reason that
Speaker 6: some of these companies are investing more in the United
Speaker 6: States in the tech sector, the chip sector in particular.
Speaker 5: It's unclear. We don't really know what the tariffs are
Speaker 5: going to look like.
Speaker 6: There's been talk about putting tariffs on the chips themselves,
Speaker 6: maybe the products, the end products that chips go into.
Speaker 6: It's not clear exactly how that's going to play out.
Speaker 6: So I think they need more information. And of course,
Speaker 6: the time frames are totally different. They're changing these policies
Speaker 6: almost by the week, as we've seen, and when you
Speaker 6: invest in a chip company, you have to plan for
Speaker 6: decades at a time, so the time frames really don't
Speaker 6: match up here. They're gonna have to resolve some of
Speaker 6: those conflicts going down the line.
Speaker 3: Peter Alstrom, brilliant to have you, Thank you very much, indeed,
Speaker 3: thank you. Let's stick on chips and chip makers Global Foundries,
Speaker 3: and it's exploring a potential merger with the Taiwanese chip
Speaker 3: maker United micro Electronics as a way to create a
Speaker 3: more resilient manufacturer of all the generation semiconductors. It's all
Speaker 3: according to sources that a deal would face multiple hurdles,
Speaker 3: including financing, potential opposition from Taiwan's government, and regulatory approval
Speaker 3: from China and another chip name that of course is
Speaker 3: affected by potential Chipsack grants, but also the new change
Speaker 3: of CEO is intel of by two point four percent,
Speaker 3: and that's after lip Bhutan took to the stage yesterday.
Speaker 3: We heard him for the first real time articulating the
Speaker 3: future of this business under his leadership and is saying
Speaker 3: they liked his reality check, they like his focus on
Speaker 3: talent key and client secondary, but maybe lacking a little
Speaker 3: bit of detail on what next product innovation will be coming.
Speaker 3: We're off by two point three percent, but coming up Tesla.
Speaker 3: It's slumping again in Europe when it comes to sales.
Speaker 3: The shares are interestingly on the higher side for the
Speaker 3: latest numbers in terms of sales from France, Dismal.
Speaker 2: We'll discuss that next.
Speaker 3: This is BLUEMBG Technology.
Speaker 2: Let's just check in on the shares of Tesla now.
Speaker 3: They're actually rebounding this day up more than five percent
Speaker 3: after what, of course was a pretty horrific quarter previous
Speaker 3: doub thirty five percent.
Speaker 2: In Q one, we're up five percent.
Speaker 3: Even though sales in France fell thirty seven percent, they
Speaker 3: actually fell further.
Speaker 2: In countries like Denmark.
Speaker 3: And that's as we expect Tesla's global auto deliveries for
Speaker 3: the first quarter to come out tomorrow. Bloomgs David Welts
Speaker 3: joins US for more Tesla's woes when it comes to
Speaker 3: real fundamentals, when it comes to sales looking ugly worldwide,
Speaker 3: right now, that's right.
Speaker 7: They've got a few different pressure points here. Clearly in Europe,
Speaker 7: given what's going on politically and eon musks involving with
Speaker 7: the Trump administration, some buyers are shying away, to say
Speaker 7: the least, But there are some other factors here. There's
Speaker 7: a lot more competition in the EV space now in Europe,
Speaker 7: in the US especially and in China, bids coming out
Speaker 7: strong and taking a lot of moreeare and we do
Speaker 7: have a model YE change over here and they make
Speaker 7: that vehicle on every Teslo plant, which means you're going
Speaker 7: to be losing a certain amount of production. It's hard
Speaker 7: to quantify how much that's biting into sales. I think
Speaker 7: that's very real. So it's not get too carried away
Speaker 7: with buyers don't like you on Musk's politics. There are
Speaker 7: some who don't. I think that's real. But there are
Speaker 7: some just regular business factors here with Tesla and their
Speaker 7: product change over that are affecting it. And also he's
Speaker 7: got a lot of competition and bid with record sales.
Speaker 7: They just keep growing and growing, doubling sales since last year.
Speaker 7: They're a real force in Tesla has a real business
Speaker 7: in China. So add those together and sales are done
Speaker 7: and we'll see what happens tomorrow when the numbers come out.
Speaker 3: I think that's really important to know the competition, the
Speaker 3: element there's interesting. Wells Fargo putting out a note today
Speaker 3: saying Testa just needs some magic at this particular point,
Speaker 3: because they do say, yes, you've got this turnover in
Speaker 3: terms of production, but are people really going to be
Speaker 3: rushing out for a new iteration of the model. Why
Speaker 3: they worry about cannibalization of any cheaper product. Also, the
Speaker 3: fundamentals of the US in terms of that five hundred
Speaker 3: dollars buyer credit there's likely to come away right that's right.
Speaker 7: Look, you could see a little bit of a bounce
Speaker 7: for Tesla, particularly in the US because.
Speaker 8: Tesla is at least.
Speaker 7: Affected by tariffs among the car companies, but they still
Speaker 7: would get hit with some and some buyers may say, hey,
Speaker 7: Tesla has parts that are imported, so I don't want
Speaker 7: to have to pay more for a Tesla in three
Speaker 7: or four months because of tariffs, and then some people
Speaker 7: may We've seen this so far with numbers that are out.
Speaker 7: Buyers are going out there thinking that if Donald Trump
Speaker 7: is going to make go down his tariff threats, he
Speaker 7: will probably make go down in his threats to get
Speaker 7: rid of the seventy five hundred dollars EV tax credits.
Speaker 5: So we've seen it jump.
Speaker 7: We saw in the fourth quarter, we're seeing it again
Speaker 7: so far with the companies who've reported in the first quarter.
Speaker 7: Ford and Honda both had big jumps in their EV
Speaker 7: sales so far, and st at Hundai. So people are
Speaker 7: going out Americans, I should say, going out and buying
Speaker 7: evs before before the credits go away, and Tessel will
Speaker 7: probably take advantage of that and get a bounce from
Speaker 7: it as well.
Speaker 3: We'll see how those deliveries shake out when they published
Speaker 3: later in the week.
Speaker 2: David Welch, thanks for the latest on all things Tesla.
Speaker 2: Let's dig in further. Jimhang.
Speaker 3: Lee's with us, founder and CEO of jl WARN Capital.
Speaker 3: You're an independent equity research firm focusing on Chinese companies
Speaker 3: but also listed multinationals in China. You bring such expertise
Speaker 3: when it comes to Tesla It's history in China and
Speaker 3: the fact that it's kind of losing its edge over there,
Speaker 3: how much we're seeing it lose out to competition right now.
Speaker 9: Jianhang, it's very interesting. Tesla has a luscio lot of
Speaker 9: history in China. GF three, which was the largest the
Speaker 9: factory in Shahai now accounts for about fifty five percent
Speaker 9: of the global shipment, was only started to make cars
Speaker 9: back in that twenty twenty that's five years ago. So
Speaker 9: since twenty twenty, the EV adoption China accelerated initially at
Speaker 9: sixty percent year over year, then gradually comes down to
Speaker 9: ninety percent, set seventy percent and fifty percent year of
Speaker 9: year last year. So in the process, Tesla has been
Speaker 9: losing market to share to to in a market that
Speaker 9: it has created and helped the to accelerate. So twenty twenty,
Speaker 9: Tesla's market share in China with double digits about eleven
Speaker 9: twelve percent, and today it's only four percent. So it's
Speaker 9: really interesting. Even though China remains to be the only
Speaker 9: major market that grows itself for the brand, it's trading
Speaker 9: the overall growth of the China brad EV market.
Speaker 2: Yeah, give us the competition. Is it all about BYD.
Speaker 3: There's also show Me, which is flipped from a phone
Speaker 3: manufacturer to a car manufacturer. Now there's current headlines about
Speaker 3: show Me and a fatal accident that occurred, many worrying
Speaker 3: about FSD and ultimately av issues with that particular model.
Speaker 2: Is that something to be keeping an eye on.
Speaker 9: Yeah, I think it's in the case of the deep
Speaker 9: seek uh. If anything, that story tells you how fast
Speaker 9: the Chinese can commoditize a software. Same is the case
Speaker 9: with the hardware. So it's not just BID, it's everybody.
Speaker 9: It created the market, has helped to create the market
Speaker 9: that introduced a lot of competition. So over the course
Speaker 9: of five years, show Me is the latest competition. But
Speaker 9: meanwhile there's the three large independent EV makers that are
Speaker 9: listed in the US. Not saying like everyone is as
Speaker 9: profitable as the TESTLA, but incrementally on the incremental scale,
Speaker 9: Test has been losing market share because it's just not
Speaker 9: able to keep up with the product and new launch
Speaker 9: that the market uniques. China market uniques uniquely demands. So
Speaker 9: and show me a report this morning is very uttuching
Speaker 9: a sense that how EV is no longer just a vehicle, right,
Speaker 9: I mean it has elevated to a technologlogically like a
Speaker 9: new uh new height, So FSB uh you know, as
Speaker 9: driving it really invites a lot new issues, such as
Speaker 9: who is responsible in case there's a bug in the
Speaker 9: software that causes accidents that develops that becomes a you know,
Speaker 9: tragedy or like a death. So is it the software maker,
Speaker 9: the driver, or the battery maker or any components uh
Speaker 9: maker of the car? So I mean those really those
Speaker 9: issues need to be addressed before a commercial adoption of
Speaker 9: the FSB can be seen anywhere in the.
Speaker 5: World, Junghang.
Speaker 3: What we haven't discussed is politics, many would say, if
Speaker 3: you look at Apple, for example, there was an erosion
Speaker 3: of market share. Some people felt that it was because
Speaker 3: Chinese purchases wanted to buy domestic made products.
Speaker 2: Is that happening in the e V.
Speaker 3: Space at all, or is it more that the competition
Speaker 3: is face and the price point is better.
Speaker 9: I don't think Tesla has the same issue Apple has
Speaker 9: just yet. I think the brand is strong. China's issue
Speaker 9: is really product issue, competition issue. I mean, it's very
Speaker 9: different from what we see in the Western markets, where
Speaker 9: you know, Testla's they almost polarizing political politics, you know,
Speaker 9: cannibalizes the buyer's demographics. In China though you know the
Speaker 9: price yes, yes, you know in the upper middle UH
Speaker 9: sector and the brand is strong, it's just very slow
Speaker 9: in launching new products, and there's a product fatigue, and
Speaker 9: then the competition is really offering a lot more attractive,
Speaker 9: exciting newness that the consumers in China demand.
Speaker 3: Junghang is so good to get your expertise on China
Speaker 3: and the demand there, Junghangli from One Capital, We appreciate it.
Speaker 3: Time now for talking tech and first up SpaceX Well
Speaker 3: Let's launched the first ever human spaceflight over the Earth
Speaker 3: polar regions. The RAM two mission took off a Fulcon
Speaker 3: nine rocket Monday evening, carrying four passengers. The trip is
Speaker 3: expected to take three to five days and will be
Speaker 3: used to conduct research on the impact of spaceflight on
Speaker 3: human health. Plus, the ECB president Christine Lagarde says that
Speaker 3: the use of AI could up in Europe's social model.
Speaker 3: Speaking and an ECB conference, Laguard recognize the productivity gains.
Speaker 2: That could be achieved with AI, but warns.
Speaker 3: That the technology also has the potential to increase labor
Speaker 3: market inequality across the region. Meanwhile, soft Bank is seeking
Speaker 3: a loan of as much as sixteen and a half
Speaker 3: billion dollars to help fund its AI investments in the
Speaker 3: United States.
Speaker 2: It's all according to sources.
Speaker 3: The Bridge loan would help to find finance that five
Speaker 3: hundred billion dollar AI infrastructure project, as well as the
Speaker 3: forty billion dollar funding round of which is committing thirty
Speaker 3: billion to which it leads on Open AI. Talks with
Speaker 3: banks are in early stages and details may change over
Speaker 3: the coming weeks, but we're going to stick with soft
Speaker 3: Bank's funding of.
Speaker 2: Open AI now.
Speaker 3: The company behind Chatchubt, of course, says it has finalized
Speaker 3: that funding round of a record forty billion dollars. It
Speaker 3: was led by soft Bank, and it's putting the company
Speaker 3: now at a three hundred million dollar valuation for morblommegs,
Speaker 3: Seth Thiegeman joins us.
Speaker 2: So it's interestingly structured.
Speaker 3: But SoftBank basically is giving thirty billion, and then there's
Speaker 3: other investors co To and the like that are chipping
Speaker 3: in the other ten bill.
Speaker 10: Yeah, I mean, this is an incredibly complex deal. Soft
Speaker 10: Bank is basically creating a syndicate in investors to help
Speaker 10: them finance this. But the round is not happening all
Speaker 10: at once. There's ten billion now, thirty billion later, but
Speaker 10: also maybe not thirty billion later. It depends on whether
Speaker 10: this company, open Ai, can restructure as a for profit
Speaker 10: or not. So as far as these rounds go, unprecegentive
Speaker 10: in size, we're also kind of unpressicundating complexity and.
Speaker 3: Also a new relationship being formed between Microsoft and open Ai,
Speaker 3: because before they were the biggest backer.
Speaker 10: Really for sure, I mean, I think we've all felt
Speaker 10: that there's been a slow motion split happening for the
Speaker 10: last year and change between these two companies. Microsoft is
Speaker 10: still part of the syndicate investors here, that relationship still stands,
Speaker 10: but if this deal goes through, by the end of
Speaker 10: its stoft Bank will presumably be the largest financial backer
Speaker 10: of open Ai. Displacing Microsoft, and at the same time
Speaker 10: stoft Bank is key and integral to helping open Ai
Speaker 10: diversify away from Microsoft on the data center side.
Speaker 3: The revenue numbers, though that we're starting to get a
Speaker 3: glintse into they're good. We're seeing spectacular growth of open Ai,
Speaker 3: and meanwhile Sam Altman continues to worry about whether we
Speaker 3: can deliver the products are so successful as gpuser melting.
Speaker 3: How are they going in terms of an internal growth model?
Speaker 10: Yeah, I mean again, you're seeing revenue triple or more
Speaker 10: than triple from the last year, potentially from the projections
Speaker 10: that we've seen to twelve point seven billion I think
Speaker 10: for this year is the estimate. At the same time,
Speaker 10: worst profitability here we have seen that cash flow positive
Speaker 10: not projected to come until the end of this decade.
Speaker 10: And that's why they need to raise tens of billions
Speaker 10: of dollars to prop up this.
Speaker 3: Business that compute in ancient keep seth Fiegerman fun of
Speaker 3: the pun.
Speaker 2: We thank him.
Speaker 3: Welcome back to Blue Meg Technology and Karen Hide in
Speaker 3: New York. And we have a slight bounce back after
Speaker 3: the worst quarter for the NASA that one hundred since
Speaker 3: almost three years we're up six tens percent. In fact,
Speaker 3: technology is on the higher side when you looked in
Speaker 3: over in China, up almost percentage point on the Golden Dragon.
Speaker 3: We're also looking at stock six hundred in Europe which
Speaker 3: now is closing up more than one point one percent
Speaker 3: on that Tech index. But this is all.
Speaker 2: Amid the worries about tariffs. About Liberation Day.
Speaker 3: Let's just go there, because the EU says it's ready
Speaker 3: to fight back against President Trump's global tariffs, stating that
Speaker 3: they have quote strong plan to retaliate if necessary. Let's
Speaker 3: get more from Katie Lines over in Washington and person
Speaker 3: of ononderline trying to ready a response here.
Speaker 11: Yeah, we've already seen the EU promise a response to
Speaker 11: the twenty five percent steel and aluminum tariffs that have
Speaker 11: already been announced and put into place by the Trump
Speaker 11: administration that will affect about twenty six billion euros and
Speaker 11: goods from Harley Davidson's to things like bourbon and whiskey.
Speaker 11: But what the EU is promising here is potentially greater
Speaker 11: retaliation after tomorrow, which is assumed to be the implementation
Speaker 11: of twenty five percent tariffs on auto imports, which obviously
Speaker 11: affects European auto manufacturers, as well as whatever reciprocal tariffs
Speaker 11: for EU nations the President ultimately decides on. As for
Speaker 11: what that retaliation could look like, the big question here
Speaker 11: is going to be whether or not the European Union
Speaker 11: decides that anti coercion instruments are going to be justified here,
Speaker 11: which is essentially a set of tools that are designed
Speaker 11: to be in response to countries using trade or other
Speaker 11: economic policies to try to coerce the European Union. That
Speaker 11: could have specific implications for big tech companies in particular,
Speaker 11: keeping in mind that one of the anti coorgianist instruments
Speaker 11: could affect intellectual property as well as digital services trade
Speaker 11: things that technology companies obviously are involved in. The irony
Speaker 11: is Caroline. If ultimately that is how things end up
Speaker 11: in terms of European retaliation. It is one of the
Speaker 11: things that President Trump is most upset about in terms
Speaker 11: of what he sees as unfair practices by Europe. It's
Speaker 11: not just about tariffs, but so called non tariff barriers,
Speaker 11: which he sees is not just the value add attacks,
Speaker 11: but also some of their regulatory policies around technology.
Speaker 3: I want to go there in a minute Kyley a
Speaker 3: little bit deeper. But for now we're seeing some European response. Mercedes,
Speaker 3: of course, big automaker in Germany, saying it's weighing pulling
Speaker 3: its US entry level cars because of Trump tariffs. Of Course,
Speaker 3: the cheaper Mercedes, they're going to be hit the most
Speaker 3: in terms of ultimate profitability when shipped to the United
Speaker 3: States and tariffs upon them. So Mercedes is weighing pulling
Speaker 3: its US entry level cars over.
Speaker 2: The Trump tariffs.
Speaker 3: But then go to the digital services side of the equation,
Speaker 3: as you said, they is that was what really annoys
Speaker 3: big US tech in particular Mark Zuckerberg seems to be
Speaker 3: his eyes on the digital service tax and how would
Speaker 3: that be rectified or how would that go deeper if
Speaker 3: the EU responds in this way.
Speaker 11: Well it's not just Mark Zuckerberg, Caroline. President Trump doesn't
Speaker 11: like this either. He is repeatedly in his remarks to
Speaker 11: reporters talking about the justification for imposing tariffs entrating partners
Speaker 11: like the European Union as them being unfair to US
Speaker 11: technology companies. He has said this on multiple occasions. As
Speaker 11: for what that looks like, it could obviously manifest in
Speaker 11: a number of different ways. Including overall just the tightening
Speaker 11: of regulation around big technology companies. Is the European Union
Speaker 11: obviously is a big importer of services, which gives them
Speaker 11: a little bit of leeway as to how exactly those
Speaker 11: services businesses are able to conduct themselves. As I mentioned,
Speaker 11: intellectual property rights also one way in which anti coercion
Speaker 11: instruments could come in to the picture. All of that said,
Speaker 11: there could potentially be some serious retaliation for that retaliation
Speaker 11: from President Trump, as we have already seen in respon
Speaker 11: spants to the threat of retaliating against those tariffs on
Speaker 11: Harley Davidson's and alcohol products. He suggested a two hundred
Speaker 11: percent tariff on things like European wine and champagne. So
Speaker 11: this could go back and forth in a lot of
Speaker 11: different realms.
Speaker 3: Caroline retaliation on retaliation, Kaylee.
Speaker 2: Lines, thanks so much.
Speaker 3: Now, amid of course this US EU trade tension and
Speaker 3: the brace for tariffs, we need to bring you an
Speaker 3: expert voice, Tom Wheeler. He's the former SEC chairman, current
Speaker 3: visiting fellow at Brookies' institution.
Speaker 2: You are putting so much thought.
Speaker 3: Into the impact of this for tat let's call it,
Speaker 3: but what ultimately do you think the US can achieve
Speaker 3: here for its US big tech companies with the threat
Speaker 3: of tariffs anything.
Speaker 12: Well, I think Kailey did a terrific job of explaining
Speaker 12: what the issues are here at Caroline. But at the
Speaker 12: root there is a sea change in what tariffs are
Speaker 12: all about that could be forthcoming. We don't know what's
Speaker 12: going to happen exactly tomorrow, but if this discussion of
Speaker 12: responding to regulation comes through. Traditionally tariffs were imposed to
Speaker 12: protect production. But on February twenty first, the President issued
Speaker 12: instructions to his tariff enforcers instructing them to deal with
Speaker 12: the how can they protect big tech profits? So the
Speaker 12: move from protecting production to protecting profits, as I said,
Speaker 12: is a.
Speaker 5: Sea change, and if we.
Speaker 12: See that tomorrow, undoubtedly the EU is going to respond.
Speaker 12: And this won't be the first step. There will be
Speaker 12: next steps. And we're entering a world that we really
Speaker 12: have not experienced before.
Speaker 3: Can you go into how you've thought about this might
Speaker 3: even work? Because there's one thing about tariffing a product,
Speaker 3: tariffing data flows.
Speaker 2: How does one do that exactly?
Speaker 12: There's a huge difference between cars and champagne and zeros
Speaker 12: and ones. Shame, but yes, and so it's you know,
Speaker 12: how to tariff a bottle of champagne that's coming in.
Speaker 12: How do I respond to zeros and ones and particularly
Speaker 12: I think there's two parts to that. One. How do
Speaker 12: you respond when those digital services are going out of
Speaker 12: the country into Europe where they're being regulated rather than
Speaker 12: being brought in from Europe like a bottle of champagne.
Speaker 12: And sure you can go after European companies like bookings,
Speaker 12: dot Com and and and those, But that's that's the
Speaker 12: tip of the iceberg.
Speaker 5: That's that's small potatoes.
Speaker 12: How do you deal with You then have to get
Speaker 12: how do you deal with data flows? You then have
Speaker 12: to get down to the question of okay, let's just
Speaker 12: think about this. Where are the data flows in and
Speaker 12: out of the EU. Well, they're financial transactions even more
Speaker 12: than digital services activities. So do you put some kind
Speaker 12: of a tariff on those flows? Do you put kind
Speaker 12: some kind of a tariff on when information is accessed
Speaker 12: in American databases? I mean, there's a there's a whole
Speaker 12: new world that we're entering here. You know, the United
Speaker 12: States dominates the cloud services market.
Speaker 5: When you access a cloud service.
Speaker 12: Provided by an American company, is there a tariff on that.
Speaker 12: I mean, this move from hard goods to soft goods
Speaker 12: is revolutionary. And as I said before, what happens tomorrow
Speaker 12: is just the first step, not the last step.
Speaker 3: So take us through a few more steps and whether
Speaker 3: ultimately the desire to retaliate to protect profits could actually backfire,
Speaker 3: could end up making us more biifurcated with Europe.
Speaker 12: So the fascinating question here, Caroline is will Donald Trump
Speaker 12: make European tech great again? Because of the fact that
Speaker 12: he is creating reasons to sever relationships with American tech companies.
Speaker 12: You know, the underlying theme of the relationship between the
Speaker 12: US and Europe has been around security, and the European
Speaker 12: countries have all recognized they have to step up to
Speaker 12: their own security.
Speaker 5: But what is security today?
Speaker 12: You know, sure, you can switch from making cars to
Speaker 12: making tanks, but that doesn't reflect, for instance, what's been
Speaker 12: going on in Ukraine, where it is not expensive heavy
Speaker 12: weapons systems like tanks that are decisive, but inexpensive software
Speaker 12: based systems like drones. And so we've seen a change
Speaker 12: in the battlefield.
Speaker 13: Where it used to be that software supported hardware kinetic
Speaker 13: hardware systems, Now you have software instructing that hardware what
Speaker 13: to do.
Speaker 8: And you've got to believe.
Speaker 12: That the Europeans, as they go to increase their defense capabilities,
Speaker 12: aren't going to ignore the fact that it's not just
Speaker 12: hardware anymore, it's software and can we rely on United
Speaker 12: States software service providers. For instance, right when Donald Trump
Speaker 12: shut down Starlink's access to the Ukraine Army as a
Speaker 12: part of leverage with Zelenski foodfoot what kind of message
Speaker 12: did that send?
Speaker 5: Tom?
Speaker 3: We must leave it there from the Brookings, we thank you.
Speaker 3: We welcome our global radio and TV audiences. Now, evmaker
Speaker 3: Rivian recently announcing it will be spinning out a new
Speaker 3: company called Also, with the aim to develop evs for
Speaker 3: short trips one hundred and five million dollar funding from
Speaker 3: Rivian and VC firm Eclipse for more. I'm very pleased
Speaker 3: to say we're welcoming Eclipse partner Jetting Bell and Rivian
Speaker 3: CEO r J.
Speaker 2: Scarrange.
Speaker 3: Great to have you both here, and RJ I start
Speaker 3: with you the spin out of Also Now, why is
Speaker 3: it better now to let it thrive in a solo manner?
Speaker 8: Yeah, well, well thanks for having us on.
Speaker 14: Yeah, you know, we think about overall transportation space and
Speaker 14: what needs to happen. Of course, there's electrification of the
Speaker 14: vehicles and the infrastructure that we know of today, and
Speaker 14: that's what Rivian's been focused on. Of course, first the
Speaker 14: United States, and you know with our R two program,
Speaker 14: soonent Europe. But there's a lot of trips and a
Speaker 14: lot of miles that are much shorter distance and actually
Speaker 14: work better with something that's a much smaller form factor.
Speaker 14: And so we kicked off a skunkworks team a few
Speaker 14: years ago to look at how we could take our
Speaker 14: core technology stack can apply it in a very low cost,
Speaker 14: much smaller form factor. And as had played out, we
Speaker 14: realized that the idea was really had a lot of
Speaker 14: had a lot of legs.
Speaker 8: It was a.
Speaker 14: Powerful idea, and we decided that this idea was big
Speaker 14: enough to deserve being its own business, and so we took.
Speaker 8: The decision to spin it out.
Speaker 14: Eclipse led the financing of that with one hundred and
Speaker 14: five million dollar investment, as you said, and we're really
Speaker 14: excited about what's the commet We haven't shown any of
Speaker 14: the products yet, but they're absolutely incredible.
Speaker 3: Let's therefore ask Jsane, how is this relationship going to evolve?
Speaker 3: What's the sort of closeness you're going to be doing
Speaker 3: because RJ is going to be on the board.
Speaker 8: Yes.
Speaker 15: I think it's exciting because I spent many years at
Speaker 15: Rivian working closely with RJ, and now in this new
Speaker 15: role at Eclipse, you know, really excited to invest in
Speaker 15: this opportunity and really disrupt the micromobility space.
Speaker 8: Yeah.
Speaker 15: I'm really excited to partner again with RJ and the
Speaker 15: Rivian team as well as the Also team to you know,
Speaker 15: bring this vision to life.
Speaker 3: Jten, I ask you the consumer issues here though we're
Speaker 3: a little bit worried, to say the least about the
Speaker 3: economy here in the US. Do you think that the
Speaker 3: consumer is going to be there to back this more
Speaker 3: than one hundred million dollars that you're putting behind this
Speaker 3: offering that starts to get into our hands in twenty
Speaker 3: twenty six.
Speaker 9: Yeah.
Speaker 5: Absolutely.
Speaker 15: I think if you look at the transportation ecosystem around
Speaker 15: the world, it's under so much of stress when it
Speaker 15: comes to infrastructure limitations, when it comes to congestion, comes
Speaker 15: to pollution, and micromobility is a very important piece of
Speaker 15: that puzzle. And more cars, more buses, more trains is
Speaker 15: not going to be the answer you need something smaller,
Speaker 15: something more flexible to complement those other modalities, and we
Speaker 15: believe that micromobility is a perfect solution to that. It's
Speaker 15: a large market already, it's growing very rapidly around the world.
Speaker 15: But if you look at the solutions, you know they're
Speaker 15: very weak technically, very poor user experience, They lack reliability,
Speaker 15: and this is where the opportunity is. And I think
Speaker 15: the consumer is waiting for something more compelling to hit
Speaker 15: the market.
Speaker 4: Ah.
Speaker 3: Jay, it's a global opportunity on micro ambility, and you
Speaker 3: just talked about how it's a global opportunity for you
Speaker 3: Right now with Rivian and the R two roll out,
Speaker 3: this is a difficult time to be a global business.
Speaker 3: How are you preparing yourself to access the European market
Speaker 3: when we're worrying about tariffs and you've always set aside
Speaker 3: hundreds of millions of dollars in potential policy in Beloce.
Speaker 14: Yeah, I mean it's as you know, it's a very
Speaker 14: complex environment. You know, as Rivian, we're spending a lot
Speaker 14: of time interpreting and understanding what the teriff implications are
Speaker 14: for us of course here in the United States. But
Speaker 14: I think importantly recognizing that, you know, in particular Europe
Speaker 14: may respond, and so how the ultimately the teriff structure
Speaker 14: sets out and lays out is going to have a
Speaker 14: big impact on some of the decisions to make over
Speaker 14: the next year.
Speaker 8: We're staying very, very close to it, but it's, as
Speaker 8: you've called out.
Speaker 14: It's a very dynamic situation and I think some of
Speaker 14: the uncertainty is what makes it the most challenging to navigate.
Speaker 3: Oh, Ja, are you in close discussions with the administration itself.
Speaker 3: Have you been getting a glean and what they're thinking
Speaker 3: of for the future.
Speaker 14: Well, I think, you know, one of the things to
Speaker 14: that's important just if we take a big step back
Speaker 14: from all the noise of what's happening, you know, what's
Speaker 14: going to happen tomorrow with sort of the tariffs that
Speaker 14: have been talked about and will be rolled out. I
Speaker 14: think big step back is there's a clear directive to
Speaker 14: drive technology and manufacturing into the United States.
Speaker 8: And for Rivian, we're a US company.
Speaker 14: We have just under seventeen thousand employees here here in
Speaker 14: the US. We have a plant in Chicago, or just
Speaker 14: south of Chicago and Normal, Illinois, and we're building another
Speaker 14: plant in Georgia. So we're growing rapidly here in the
Speaker 14: United State's one hundred percent of our vehicles that they
Speaker 14: are produced here and all of our technologies here. So
Speaker 14: in terms of the administration's objectives, we're very aligned with.
Speaker 8: What's being asked and.
Speaker 14: What's what I think the overall policy framework is trying
Speaker 14: to drive towards. But you know, in terms of how
Speaker 14: that translates to our expansion in Europe and elsewhere, you know,
Speaker 14: we do have to recognize that it's a very dynamic environment.
Speaker 14: Our production footprint may be different than will be originally planning.
Speaker 14: But I think all of us, you know, across all
Speaker 14: the different auto manufacturers are waiting to see how things
Speaker 14: look once.
Speaker 8: It does sells.
Speaker 3: And that uncertainty, Jaten, I'm sure is affecting you as
Speaker 3: a team of operators investors.
Speaker 2: How are your other founders coping with this moment?
Speaker 15: Yeah, I think uncertainty is the key word here. I
Speaker 15: feel that what is in our control is to focus
Speaker 15: on two things. Making sure that founders building in the
Speaker 15: physical industries have the maximum control on the stack, you know,
Speaker 15: on what they design, what they engineer. If you have
Speaker 15: control over it, then you're able to make decisions to
Speaker 15: optimize around different environments. And the second thing is to
Speaker 15: build that resilience and flexibility in the supply chain so
Speaker 15: that it is able to navigate again short term, medium term,
Speaker 15: and long term changes in the policy environment. So I
Speaker 15: think the key word there for our founders is control
Speaker 15: the controllables. There are things that are going to change,
Speaker 15: things are going to change back. I think what is
Speaker 15: most important is to build a resilient strategy and a
Speaker 15: supply chain network within the company that can navigate all
Speaker 15: these different environments.
Speaker 3: A Jay a quick thirty second one for you. Do
Speaker 3: you think you've benefited from people moving away from Tesla
Speaker 3: for political reasons?
Speaker 14: Well, you know, one of the things that I think
Speaker 14: is often missed is we think about electrifications. Today, only
Speaker 14: about eight percent new vehicle sales are electric here in
Speaker 14: the United States, and so when we think about competition
Speaker 14: and growing our market share, the biggest opportunity is bringing
Speaker 14: people into our new technology vehicles and introducing people into
Speaker 14: what it feels like to be in a connected, smart,
Speaker 14: of course electric vehicle. And so we really believe there
Speaker 14: needs to be a lot of choice in order for
Speaker 14: us to go from eight percent to fifty percent to
Speaker 14: eventually one hundred percent. We need lots of successful companies.
Speaker 14: I mean, Tesla be successful, we continue to be very successful.
Speaker 14: We need Rivian to be successful. We need the existing
Speaker 14: legacy manufacturers to be successful. And so with our our
Speaker 14: two program, it's a much lower price vehicle. It's really cool,
Speaker 14: it's an incredible product. But what that'll do is we'll
Speaker 14: give customers another choice. And so we think the presence
Speaker 14: of another choice is going to be important from a
Speaker 14: brand and product.
Speaker 8: Attributes point of view.
Speaker 3: Thank you both so much for your clarity of thought
Speaker 3: today when there is not much clarity in the economy.
Speaker 2: To Tenboo of Eclipse, r J Scarrang of Rivian. Great
Speaker 2: to have you both on the show. Thank you.
Speaker 3: Eil Musk is looking to not another political win by
Speaker 3: using the same tactic during the Trump campaign, spending millions
Speaker 3: of his own dollars.
Speaker 2: To influence an outcome.
Speaker 3: This time it's for the Wisconsin Supreme Court race that
Speaker 3: could ta balance in favor of the Conservatives on the court.
Speaker 3: For more of Bloombergs, Mike Shepherd joins us. Now, I
Speaker 3: mean this is a playbook that seems to be repeated
Speaker 3: even with the big checks, Well very much.
Speaker 16: So he's putting seventeen million dollars of his money through
Speaker 16: two groups toward this race. And you would think, why
Speaker 16: do we care about Wisconsin's Supreme Court, But remember it's
Speaker 16: a swing state and Musk has taken a deep interest
Speaker 16: in this not only because of abortion rights and labor
Speaker 16: laws that the court could decide, but also questions about
Speaker 16: congressional redistrict gang and that could help tip the balance
Speaker 16: back toward Republicans, with whom Musk has aligned along with
Speaker 16: Donald Trump.
Speaker 2: Eighty two million dollars being spent.
Speaker 3: This is more millions than we've ever seen on such
Speaker 3: a race, right.
Speaker 16: Well, that's right. And Musk has also helped supercharge spending
Speaker 16: in a lot of other areas, and we saw it
Speaker 16: during the presidential race and in congressional races. And he
Speaker 16: is promising to stay on the stage politically going through
Speaker 16: the midterm elections in twenty twenty six. So this is
Speaker 16: creating for many in Congress and many down the ballot too,
Speaker 16: this notion that they will have to reckon with Musk
Speaker 16: as a factor. And it's also been an issue for
Speaker 16: some Republicans here and wondering do I challenge Donald Trump
Speaker 16: on something, because if they do, they run the risk
Speaker 16: of perhaps facing a primary challenge funded by Musk and
Speaker 16: backed by Donald Trump.
Speaker 2: And it's tomorrow the results Mike.
Speaker 16: Well, we may be hearing as soon as tonight, but
Speaker 16: it will depend Caro on how close this contest is.
Speaker 16: And we're also watching other contests elsewhere in Florida where
Speaker 16: Musk has also put some money. These are two special
Speaker 16: congressional races. They're not expected to be perhaps quite as tight,
Speaker 16: but all of them also are going to be a
Speaker 16: little bit of a referendum on what the public views
Speaker 16: of Elon Musk and his new political role.
Speaker 2: Mike Sheppard or the Inside Track, We thank you now.
Speaker 2: That does it for there's a position of Bloomberg Technology.
Speaker 2: Do not forget to check out our podcast.
Speaker 3: You can find it on the terminal as well as
Speaker 3: online on Apples, Spotify and iHeart from New York from
Speaker 3: HERSEF there's a blombg Technology