WEBVTT - The Nasdaq’s Worst Quarter, Rivian Spins off “Micromobility” Startup 0:00:00.800 --> 0:00:05.120 From the heart of where innovation, money and power collide 0:00:05.320 --> 0:00:10.639 in Silicon Valley and beyond. This is Bloomberg Technology with 0:00:10.760 --> 0:00:13.240 Caroline Hyde and Ed Ludlow. 0:00:27.040 --> 0:00:27.840 Live from New York. 0:00:27.840 --> 0:00:30.600 I'm Caroline Hyde, and this is Bloomberg Technology coming up 0:00:30.840 --> 0:00:34.400 a volatile Nasdaq as after posting its worst quarter in 0:00:34.479 --> 0:00:37.839 nearly three years, plus grants from the US Chips Act 0:00:37.920 --> 0:00:41.199 in limbo as a Commerce secretary pushes semi companies to 0:00:41.280 --> 0:00:45.320 expand their US projects and amid trade anxiety and week 0:00:45.320 --> 0:00:47.920 at Tesla Sales, we sit down with the CEO of 0:00:48.040 --> 0:00:51.440 Evy Giant Rivian. The first we check in on these 0:00:51.479 --> 0:00:52.159 markets that. 0:00:52.240 --> 0:00:54.520 Actually had trying to push. 0:00:54.280 --> 0:00:58.080 Back into the green after what was a pretty horrific quarter. 0:00:58.200 --> 0:01:01.080 The first quarter for the Nasdaq one was the worst 0:01:01.120 --> 0:01:03.880 since the second quarter of twenty twenty two. You are 0:01:03.920 --> 0:01:06.480 seeing the setos in the terms of woman twenty percent 0:01:06.840 --> 0:01:09.880 for many of those magnificent seven names, Nvidiot down almost 0:01:09.920 --> 0:01:13.080 twenty cent, twenty percent. You see broad Com having its 0:01:13.160 --> 0:01:16.600 worst quarter in its history. Let's break down the moves 0:01:16.720 --> 0:01:18.800 and what a signals for this quarter now Isabelle Lee 0:01:18.920 --> 0:01:21.360 is with us for more and it was the most 0:01:21.400 --> 0:01:23.959 loved names for twenty three twenty four that got punished the. 0:01:23.880 --> 0:01:27.560 Hardest exactly, and altogether they shed some two trillion dollars 0:01:27.800 --> 0:01:30.479 in market cap. Lots of superlatives out there, we won't 0:01:30.560 --> 0:01:34.320 really lose track. Microsoft, Amazon, Meta down twenty percent from 0:01:34.360 --> 0:01:37.440 their peak, broad Coom down thirty three percent since December. 0:01:37.480 --> 0:01:39.840 And it's just interesting how these tech bihemos are now 0:01:39.920 --> 0:01:42.559 dragging the markets lower. And for more than two years 0:01:42.560 --> 0:01:44.840 they've been the darlings of AI. They're the ones that 0:01:44.959 --> 0:01:47.200 powered the markets to really it's bull run, and now 0:01:47.280 --> 0:01:49.600 questions about AI are coming out of time when there's 0:01:49.720 --> 0:01:52.840 just really a lot of macroeconomic uncertainty all around and 0:01:52.920 --> 0:01:55.440 thorough and deep sea. I read this and it really 0:01:55.480 --> 0:01:57.880 struck me with Ali Baba's co founders saying they're rushing 0:01:57.920 --> 0:02:01.120 to build new facilities to get ahead of AI services. 0:02:01.240 --> 0:02:04.360 In contrast, you have an analyst report about Microsoft saying 0:02:04.400 --> 0:02:08.160 they're walking away from new projects. Microsoft, we've committed almost 0:02:08.400 --> 0:02:11.480 eighty billion for data centers, they've earmarked that, and altogether 0:02:11.600 --> 0:02:13.760 these big spenders earmarks three hundred billion. 0:02:13.919 --> 0:02:14.640 So what's next. 0:02:14.720 --> 0:02:17.120 It's really an interesting time, and you'll basically pointing to 0:02:17.919 --> 0:02:22.200 a very massy narrative for AI right now, Josi clearly 0:02:22.240 --> 0:02:25.480 trying to dash the hopes of AI. 0:02:25.320 --> 0:02:27.640 Saying there's a bubble here in the United States. But 0:02:28.000 --> 0:02:28.960 at the same time, as. 0:02:28.840 --> 0:02:31.200 You say, Ali Baba is busy investing more than fifty 0:02:31.200 --> 0:02:34.800 billion itself in AI infrastructure, in the future of artificial intelligence. 0:02:35.000 --> 0:02:37.840 And then we have TDCN, which continues on this narrative 0:02:37.880 --> 0:02:41.360 of Microsoft. Are people feeling that at these valuations with 0:02:41.840 --> 0:02:44.240 more than a bear market ultimately and a lot of 0:02:44.240 --> 0:02:46.280 these names down more than twenty percent, as you say, 0:02:46.880 --> 0:02:48.840 is now the time to stop buying in Do we 0:02:48.880 --> 0:02:51.600 feel that that factors in that price is in moving 0:02:51.639 --> 0:02:52.280 out of the bubble? 0:02:52.919 --> 0:02:54.000 It depends on who you ask. 0:02:54.040 --> 0:02:56.880 But I interviewed fund a mutual fund manager, and he 0:02:56.960 --> 0:03:00.200 says that tech is still expensive, it's still volatile. Well, 0:03:00.240 --> 0:03:02.040 I mean, yes, it's come down. It's followed to twenty 0:03:02.080 --> 0:03:04.760 four times as demated profits from twenty seven last month, 0:03:04.840 --> 0:03:07.359 but the historical average is still around twenty so it's 0:03:07.360 --> 0:03:08.040 still expensive. 0:03:08.040 --> 0:03:09.040 But they still on it. 0:03:09.200 --> 0:03:11.120 He said, he has a little because he calls it 0:03:11.200 --> 0:03:13.880 caught risk management. So you really see that they still 0:03:13.880 --> 0:03:16.960 have a foothold on the market. But it's really interesting 0:03:17.000 --> 0:03:19.840 because the IPO market, you expect it to be hot, 0:03:20.000 --> 0:03:21.960 but it wasn't. You look at core Weep, it was 0:03:21.960 --> 0:03:25.200 a dudt. Although newsbacks maybe that's the exception that was exciting. 0:03:25.240 --> 0:03:28.560 It's surge around eight hundred percent yesterday. 0:03:28.560 --> 0:03:31.800 I meant retail name and find different business. 0:03:31.800 --> 0:03:34.120 MAT's fair in Corey's, but it's notable that corey is 0:03:34.120 --> 0:03:37.280 actually up more than ten percent today. Okay, so maybe 0:03:37.320 --> 0:03:39.440 we're getting a little bit of buying around the edges 0:03:39.640 --> 0:03:41.680 on what had been a pretty beaten up name. It's 0:03:41.800 --> 0:03:44.680 it's now just above its IPO listing price, but it 0:03:45.280 --> 0:03:48.360 does just seem so murky for public marketing investors when 0:03:48.360 --> 0:03:50.560 they're looking at private markets and they're looking at a 0:03:50.720 --> 0:03:53.560 forty billion dollar round for Open AI Sam Altman saying 0:03:53.560 --> 0:03:57.280 that there's basically insatiable demand and his GPUs of melting 0:03:57.320 --> 0:04:02.000 because everyone's using his product. Is that still the tariff 0:04:02.120 --> 0:04:06.200 overhang that perhaps lends to the downside for these names. 0:04:06.360 --> 0:04:06.960 Absolutely. 0:04:07.240 --> 0:04:10.200 Before the narrative was just like tech valuations AI, but 0:04:10.280 --> 0:04:13.040 now it's like Liberation Day tomorrow. I was just on 0:04:13.240 --> 0:04:16.120 talking in six floor upstairs with Anna Malaria of Allspring, 0:04:16.120 --> 0:04:19.200 and she said, we will get some information tomorrow, but 0:04:19.279 --> 0:04:22.360 not the clarity that everyone is hoping for. It's liberation Day, 0:04:22.400 --> 0:04:24.520 but I mean, what does that mean? So she was 0:04:24.560 --> 0:04:26.919 saying that we're still on the defensive, We're still on 0:04:26.960 --> 0:04:28.559 the weight and see because what will happen. 0:04:28.560 --> 0:04:29.640 I mean, everyone's. 0:04:29.279 --> 0:04:32.440 Hoping that we will have a magical list tomorrow per country, 0:04:32.560 --> 0:04:33.919 per tariff, but we won't see that. 0:04:34.000 --> 0:04:35.480 So she's still very concerned. 0:04:35.480 --> 0:04:37.919 If you look at Bitcoin, which is really the risk proxy, 0:04:38.160 --> 0:04:40.479 it's down around ten percent this year, but from its 0:04:40.480 --> 0:04:43.359 peak it's down twenty percent. And I know that bitcoin 0:04:43.520 --> 0:04:46.680 is a lot of fans but also skeptics, but one 0:04:46.760 --> 0:04:49.640 can't deny that it's a broad gauge of risk sentiment. 0:04:49.800 --> 0:04:52.800 And for now the gloom is palpable. It is well 0:04:52.839 --> 0:04:55.400 said Isabelle Lee. We thank you for that breakdown. 0:04:55.680 --> 0:04:58.400 Let's just get into the weeds on chips specifically, now, 0:04:58.560 --> 0:05:02.559 COMMA Secretary Howard Littnan may withhold chipsack grants to push 0:05:02.600 --> 0:05:05.599 companies to expand their US projects. That's according to sources, 0:05:05.880 --> 0:05:08.760 his goal is to generate tens of billions of dollars 0:05:08.800 --> 0:05:12.880 in additional semiconductor investment commitments for not actually increasing federal grants. 0:05:13.000 --> 0:05:14.880 Blombergs Peter Elstrom joins us on this. 0:05:15.040 --> 0:05:18.280 Now, we'd all known that President Trump was not a 0:05:18.320 --> 0:05:22.360 fan of the Biden Harris Administration's Chips Act, even though 0:05:22.360 --> 0:05:25.400 it was bipartisan nature. But it looks as though they're 0:05:25.440 --> 0:05:27.200 looking in a different way to orchestrate it. 0:05:28.560 --> 0:05:29.760 Yeah, that's exactly right. 0:05:30.120 --> 0:05:32.200 So just to back up a step, the Chips Act, 0:05:32.279 --> 0:05:35.400 of course was passed with bipartisan support. The whole idea 0:05:35.440 --> 0:05:37.640 is getting these chips companies to invest more in the 0:05:37.720 --> 0:05:40.719 United States. It's fifty two billion dollars in grants and 0:05:40.760 --> 0:05:43.320 then tax credits, which are very very important here too. 0:05:43.640 --> 0:05:46.479 So the Biden administration scrambled in their last days to 0:05:46.560 --> 0:05:49.120 try to finalize the agreements with a bunch of the 0:05:49.120 --> 0:05:52.400 most important chip companies in the world, including TSMC and 0:05:52.480 --> 0:05:55.719 Samsung and Intel and Micron. They finalized the terms of 0:05:55.760 --> 0:05:59.279 these accords, but they didn't disperse all the money. The 0:05:59.320 --> 0:06:01.719 whole idea was that these companies would hit benchmarks and 0:06:01.720 --> 0:06:03.800 then the money would go out. So what Ludnik has 0:06:03.880 --> 0:06:06.960 decided to do is he's decided to use those disbursements 0:06:07.160 --> 0:06:09.560 as leverage with these companies to try to get them 0:06:09.600 --> 0:06:12.000 to commit even more money to the United States, so 0:06:12.040 --> 0:06:13.600 the chips awards are not going to go up in 0:06:13.680 --> 0:06:16.360 terms of value. But before he actually writes those checks, 0:06:16.560 --> 0:06:19.320 he wants companies to come forward and pledge more money. 0:06:19.480 --> 0:06:21.080 The example for this is TSMC. 0:06:21.160 --> 0:06:23.560 TSMC originally was going to invest about sixty five billion 0:06:23.600 --> 0:06:26.080 dollars in chip capacity in the United States. It came 0:06:26.080 --> 0:06:27.679 forward and they said they're going to put in another 0:06:27.680 --> 0:06:30.840 one hundred billion dollars. The Trump administration loves to be 0:06:30.880 --> 0:06:34.240 able to have those kinds of announcements, especially TSMC's the 0:06:35.040 --> 0:06:37.480 most important chip maker in the world right now, so 0:06:37.520 --> 0:06:39.240 for them to say we'll put another one hundred billion 0:06:39.240 --> 0:06:40.920 dollars in the market is very important. 0:06:41.560 --> 0:06:44.719 The administration would say that was the effect of tariffs. 0:06:44.760 --> 0:06:48.200 TSMC has said they just like the American market and want. 0:06:48.080 --> 0:06:48.839 To invest there. 0:06:49.160 --> 0:06:52.080 But what's also interesting is the nuance on the tax 0:06:52.120 --> 0:06:55.640 credit Peter, because in many ways that's more important than 0:06:55.680 --> 0:06:56.680 the grants. 0:06:57.080 --> 0:06:59.919 Right for many of these companies, including TSMC and probably 0:07:00.040 --> 0:07:00.960 Samsung and Intel. 0:07:01.040 --> 0:07:03.080 Also, the tax credit is very very important. 0:07:03.080 --> 0:07:05.080 It could be a lot more money, and so there 0:07:05.120 --> 0:07:08.040 are discussions about maybe increasing that tax credit. 0:07:08.279 --> 0:07:09.800 It has been twenty five percent. 0:07:10.160 --> 0:07:12.320 It could be even more in the future, and that's 0:07:12.360 --> 0:07:14.880 important for companies that actually have the money right now. 0:07:15.040 --> 0:07:17.240 If you can put in one hundred billion dollars, it 0:07:17.320 --> 0:07:18.960 s easy to do the math on that. That's twenty 0:07:18.960 --> 0:07:20.960 five billion dollars in tax credits for you. That can 0:07:21.000 --> 0:07:22.640 save you a lot of money down the line. 0:07:22.720 --> 0:07:25.160 And you're right. TSMC sees a lot of opportunities in 0:07:25.160 --> 0:07:25.880 the United. 0:07:25.640 --> 0:07:28.280 States market to be able to make investments, build some 0:07:28.320 --> 0:07:30.400 of those cutting age chips here and then sell them 0:07:30.400 --> 0:07:33.560 to domestic customers. You also have companies like Samsung and 0:07:33.640 --> 0:07:36.240 Intel that could do things like this are embarking on 0:07:36.280 --> 0:07:38.760 these kinds of projects. But lud Nick is exerting a 0:07:38.760 --> 0:07:40.800 lot of leverage right now in these companies to try 0:07:40.800 --> 0:07:44.480 to get bigger numbers, more eye popping numbers into the headline, 0:07:44.520 --> 0:07:46.280 so that they can take credit for bringing some of 0:07:46.280 --> 0:07:47.920 this production back to the United States. 0:07:48.640 --> 0:07:52.480 At a time when with a lot of uncertainty, particularly 0:07:52.520 --> 0:07:56.480 with tariffs hanging over the semiconductor industry, it must be 0:07:56.480 --> 0:07:59.960 a difficult time to commit to more spending from these CEOs. 0:08:00.280 --> 0:08:03.280 Right You're just talking about the tariff uncertainty out there. Well, 0:08:03.320 --> 0:08:05.560 I guess we'll find out some things tomorrow, but there 0:08:05.600 --> 0:08:07.080 are a lot of this we just don't know at 0:08:07.080 --> 0:08:10.440 this point. And you're right, Lutnik and the Trump administration 0:08:10.480 --> 0:08:13.160 have pointed to tariffs is part of the reason that 0:08:13.200 --> 0:08:15.520 some of these companies are investing more in the United 0:08:15.560 --> 0:08:18.160 States in the tech sector, the chip sector in particular. 0:08:18.320 --> 0:08:20.760 It's unclear. We don't really know what the tariffs are 0:08:20.760 --> 0:08:21.280 going to look like. 0:08:21.320 --> 0:08:24.240 There's been talk about putting tariffs on the chips themselves, 0:08:24.520 --> 0:08:27.000 maybe the products, the end products that chips go into. 0:08:27.080 --> 0:08:29.120 It's not clear exactly how that's going to play out. 0:08:29.160 --> 0:08:31.600 So I think they need more information. And of course, 0:08:31.960 --> 0:08:34.560 the time frames are totally different. They're changing these policies 0:08:34.559 --> 0:08:36.760 almost by the week, as we've seen, and when you 0:08:36.800 --> 0:08:38.679 invest in a chip company, you have to plan for 0:08:38.760 --> 0:08:41.360 decades at a time, so the time frames really don't 0:08:41.360 --> 0:08:44.000 match up here. They're gonna have to resolve some of 0:08:44.000 --> 0:08:45.920 those conflicts going down the line. 0:08:45.960 --> 0:08:49.000 Peter Alstrom, brilliant to have you, Thank you very much, indeed, 0:08:49.200 --> 0:08:52.319 thank you. Let's stick on chips and chip makers Global Foundries, 0:08:52.600 --> 0:08:55.360 and it's exploring a potential merger with the Taiwanese chip 0:08:55.400 --> 0:08:58.040 maker United micro Electronics as a way to create a 0:08:58.080 --> 0:09:01.320 more resilient manufacturer of all the generation semiconductors. It's all 0:09:01.320 --> 0:09:04.720 according to sources that a deal would face multiple hurdles, 0:09:04.800 --> 0:09:09.080 including financing, potential opposition from Taiwan's government, and regulatory approval 0:09:09.200 --> 0:09:12.560 from China and another chip name that of course is 0:09:12.559 --> 0:09:17.040 affected by potential Chipsack grants, but also the new change 0:09:17.040 --> 0:09:19.920 of CEO is intel of by two point four percent, 0:09:20.600 --> 0:09:23.520 and that's after lip Bhutan took to the stage yesterday. 0:09:23.520 --> 0:09:26.440 We heard him for the first real time articulating the 0:09:26.440 --> 0:09:29.000 future of this business under his leadership and is saying 0:09:29.280 --> 0:09:32.480 they liked his reality check, they like his focus on 0:09:32.720 --> 0:09:36.440 talent key and client secondary, but maybe lacking a little 0:09:36.440 --> 0:09:39.160 bit of detail on what next product innovation will be coming. 0:09:39.160 --> 0:09:42.240 We're off by two point three percent, but coming up Tesla. 0:09:42.320 --> 0:09:45.000 It's slumping again in Europe when it comes to sales. 0:09:45.320 --> 0:09:47.559 The shares are interestingly on the higher side for the 0:09:47.640 --> 0:09:50.840 latest numbers in terms of sales from France, Dismal. 0:09:51.200 --> 0:09:52.120 We'll discuss that next. 0:09:52.120 --> 0:10:00.200 This is BLUEMBG Technology. 0:10:05.160 --> 0:10:07.800 Let's just check in on the shares of Tesla now. 0:10:07.800 --> 0:10:10.880 They're actually rebounding this day up more than five percent 0:10:11.000 --> 0:10:14.400 after what, of course was a pretty horrific quarter previous 0:10:14.440 --> 0:10:15.600 doub thirty five percent. 0:10:15.679 --> 0:10:17.200 In Q one, we're up five percent. 0:10:17.280 --> 0:10:21.480 Even though sales in France fell thirty seven percent, they 0:10:21.480 --> 0:10:22.679 actually fell further. 0:10:22.600 --> 0:10:23.880 In countries like Denmark. 0:10:24.000 --> 0:10:26.559 And that's as we expect Tesla's global auto deliveries for 0:10:26.600 --> 0:10:28.839 the first quarter to come out tomorrow. Bloomgs David Welts 0:10:28.960 --> 0:10:31.840 joins US for more Tesla's woes when it comes to 0:10:31.920 --> 0:10:35.400 real fundamentals, when it comes to sales looking ugly worldwide, 0:10:35.480 --> 0:10:37.920 right now, that's right. 0:10:38.559 --> 0:10:41.480 They've got a few different pressure points here. Clearly in Europe, 0:10:42.520 --> 0:10:45.840 given what's going on politically and eon musks involving with 0:10:45.840 --> 0:10:50.080 the Trump administration, some buyers are shying away, to say 0:10:50.080 --> 0:10:52.600 the least, But there are some other factors here. There's 0:10:52.600 --> 0:10:55.520 a lot more competition in the EV space now in Europe, 0:10:55.600 --> 0:10:58.880 in the US especially and in China, bids coming out 0:10:58.960 --> 0:11:01.600 strong and taking a lot of moreeare and we do 0:11:01.679 --> 0:11:03.760 have a model YE change over here and they make 0:11:03.760 --> 0:11:06.400 that vehicle on every Teslo plant, which means you're going 0:11:06.440 --> 0:11:08.679 to be losing a certain amount of production. It's hard 0:11:08.720 --> 0:11:11.760 to quantify how much that's biting into sales. I think 0:11:11.760 --> 0:11:14.280 that's very real. So it's not get too carried away 0:11:14.280 --> 0:11:16.960 with buyers don't like you on Musk's politics. There are 0:11:17.000 --> 0:11:19.080 some who don't. I think that's real. But there are 0:11:19.120 --> 0:11:23.000 some just regular business factors here with Tesla and their 0:11:23.040 --> 0:11:25.240 product change over that are affecting it. And also he's 0:11:25.240 --> 0:11:28.320 got a lot of competition and bid with record sales. 0:11:28.320 --> 0:11:31.040 They just keep growing and growing, doubling sales since last year. 0:11:31.320 --> 0:11:33.559 They're a real force in Tesla has a real business 0:11:33.640 --> 0:11:36.480 in China. So add those together and sales are done 0:11:36.520 --> 0:11:39.440 and we'll see what happens tomorrow when the numbers come out. 0:11:39.880 --> 0:11:43.160 I think that's really important to know the competition, the 0:11:43.240 --> 0:11:46.000 element there's interesting. Wells Fargo putting out a note today 0:11:46.040 --> 0:11:49.360 saying Testa just needs some magic at this particular point, 0:11:49.480 --> 0:11:51.679 because they do say, yes, you've got this turnover in 0:11:51.760 --> 0:11:54.080 terms of production, but are people really going to be 0:11:54.120 --> 0:11:56.800 rushing out for a new iteration of the model. Why 0:11:56.960 --> 0:12:00.400 they worry about cannibalization of any cheaper product. Also, the 0:12:00.440 --> 0:12:04.280 fundamentals of the US in terms of that five hundred 0:12:04.280 --> 0:12:09.400 dollars buyer credit there's likely to come away right that's right. 0:12:09.440 --> 0:12:13.520 Look, you could see a little bit of a bounce 0:12:13.520 --> 0:12:15.920 for Tesla, particularly in the US because. 0:12:17.280 --> 0:12:18.959 Tesla is at least. 0:12:18.800 --> 0:12:21.120 Affected by tariffs among the car companies, but they still 0:12:21.120 --> 0:12:24.080 would get hit with some and some buyers may say, hey, 0:12:24.160 --> 0:12:26.880 Tesla has parts that are imported, so I don't want 0:12:26.880 --> 0:12:29.439 to have to pay more for a Tesla in three 0:12:29.520 --> 0:12:31.800 or four months because of tariffs, and then some people 0:12:31.840 --> 0:12:34.960 may We've seen this so far with numbers that are out. 0:12:35.880 --> 0:12:38.839 Buyers are going out there thinking that if Donald Trump 0:12:38.880 --> 0:12:40.280 is going to make go down his tariff threats, he 0:12:40.320 --> 0:12:42.000 will probably make go down in his threats to get 0:12:42.080 --> 0:12:45.520 rid of the seventy five hundred dollars EV tax credits. 0:12:45.640 --> 0:12:46.760 So we've seen it jump. 0:12:46.760 --> 0:12:48.400 We saw in the fourth quarter, we're seeing it again 0:12:48.520 --> 0:12:50.959 so far with the companies who've reported in the first quarter. 0:12:51.280 --> 0:12:53.480 Ford and Honda both had big jumps in their EV 0:12:53.600 --> 0:12:56.520 sales so far, and st at Hundai. So people are 0:12:56.559 --> 0:12:58.920 going out Americans, I should say, going out and buying 0:12:58.920 --> 0:13:02.440 evs before before the credits go away, and Tessel will 0:13:02.480 --> 0:13:05.560 probably take advantage of that and get a bounce from 0:13:05.600 --> 0:13:06.120 it as well. 0:13:06.520 --> 0:13:09.800 We'll see how those deliveries shake out when they published 0:13:09.840 --> 0:13:10.400 later in the week. 0:13:10.480 --> 0:13:12.840 David Welch, thanks for the latest on all things Tesla. 0:13:12.960 --> 0:13:14.199 Let's dig in further. Jimhang. 0:13:14.240 --> 0:13:16.480 Lee's with us, founder and CEO of jl WARN Capital. 0:13:16.679 --> 0:13:19.640 You're an independent equity research firm focusing on Chinese companies 0:13:19.679 --> 0:13:23.160 but also listed multinationals in China. You bring such expertise 0:13:23.160 --> 0:13:25.960 when it comes to Tesla It's history in China and 0:13:26.000 --> 0:13:29.280 the fact that it's kind of losing its edge over there, 0:13:29.559 --> 0:13:32.559 how much we're seeing it lose out to competition right now. 0:13:32.600 --> 0:13:37.920 Jianhang, it's very interesting. Tesla has a luscio lot of 0:13:38.080 --> 0:13:42.000 history in China. GF three, which was the largest the 0:13:42.000 --> 0:13:46.880 factory in Shahai now accounts for about fifty five percent 0:13:46.920 --> 0:13:50.600 of the global shipment, was only started to make cars 0:13:50.640 --> 0:13:53.959 back in that twenty twenty that's five years ago. So 0:13:54.720 --> 0:13:59.720 since twenty twenty, the EV adoption China accelerated initially at 0:14:00.200 --> 0:14:03.160 sixty percent year over year, then gradually comes down to 0:14:03.280 --> 0:14:07.160 ninety percent, set seventy percent and fifty percent year of 0:14:07.320 --> 0:14:11.319 year last year. So in the process, Tesla has been 0:14:11.400 --> 0:14:15.160 losing market to share to to in a market that 0:14:15.240 --> 0:14:19.680 it has created and helped the to accelerate. So twenty twenty, 0:14:19.800 --> 0:14:23.000 Tesla's market share in China with double digits about eleven 0:14:23.080 --> 0:14:26.360 twelve percent, and today it's only four percent. So it's 0:14:26.360 --> 0:14:29.640 really interesting. Even though China remains to be the only 0:14:30.120 --> 0:14:34.960 major market that grows itself for the brand, it's trading 0:14:35.040 --> 0:14:39.040 the overall growth of the China brad EV market. 0:14:39.240 --> 0:14:42.440 Yeah, give us the competition. Is it all about BYD. 0:14:42.560 --> 0:14:45.760 There's also show Me, which is flipped from a phone 0:14:45.800 --> 0:14:49.560 manufacturer to a car manufacturer. Now there's current headlines about 0:14:49.600 --> 0:14:52.920 show Me and a fatal accident that occurred, many worrying 0:14:52.920 --> 0:14:58.040 about FSD and ultimately av issues with that particular model. 0:14:58.320 --> 0:14:59.960 Is that something to be keeping an eye on. 0:15:01.040 --> 0:15:04.040 Yeah, I think it's in the case of the deep 0:15:04.120 --> 0:15:08.880 seek uh. If anything, that story tells you how fast 0:15:08.920 --> 0:15:14.000 the Chinese can commoditize a software. Same is the case 0:15:14.640 --> 0:15:19.200 with the hardware. So it's not just BID, it's everybody. 0:15:19.440 --> 0:15:22.200 It created the market, has helped to create the market 0:15:22.240 --> 0:15:24.840 that introduced a lot of competition. So over the course 0:15:24.880 --> 0:15:28.000 of five years, show Me is the latest competition. But 0:15:28.120 --> 0:15:32.640 meanwhile there's the three large independent EV makers that are 0:15:32.680 --> 0:15:36.760 listed in the US. Not saying like everyone is as 0:15:36.840 --> 0:15:41.520 profitable as the TESTLA, but incrementally on the incremental scale, 0:15:41.560 --> 0:15:44.080 Test has been losing market share because it's just not 0:15:44.200 --> 0:15:47.320 able to keep up with the product and new launch 0:15:47.520 --> 0:15:53.200 that the market uniques. China market uniques uniquely demands. So 0:15:54.320 --> 0:15:58.880 and show me a report this morning is very uttuching 0:15:58.920 --> 0:16:02.880 a sense that how EV is no longer just a vehicle, right, 0:16:02.920 --> 0:16:06.600 I mean it has elevated to a technologlogically like a 0:16:06.680 --> 0:16:11.440 new uh new height, So FSB uh you know, as 0:16:11.520 --> 0:16:16.600 driving it really invites a lot new issues, such as 0:16:16.880 --> 0:16:20.800 who is responsible in case there's a bug in the 0:16:20.880 --> 0:16:26.120 software that causes accidents that develops that becomes a you know, 0:16:26.280 --> 0:16:29.680 tragedy or like a death. So is it the software maker, 0:16:29.920 --> 0:16:34.120 the driver, or the battery maker or any components uh 0:16:34.360 --> 0:16:37.440 maker of the car? So I mean those really those 0:16:37.440 --> 0:16:42.800 issues need to be addressed before a commercial adoption of 0:16:42.840 --> 0:16:44.960 the FSB can be seen anywhere in the. 0:16:44.960 --> 0:16:46.760 World, Junghang. 0:16:46.800 --> 0:16:50.880 What we haven't discussed is politics, many would say, if 0:16:50.920 --> 0:16:54.280 you look at Apple, for example, there was an erosion 0:16:54.280 --> 0:16:56.600 of market share. Some people felt that it was because 0:16:56.800 --> 0:17:01.320 Chinese purchases wanted to buy domestic made products. 0:17:01.560 --> 0:17:02.800 Is that happening in the e V. 0:17:02.920 --> 0:17:05.600 Space at all, or is it more that the competition 0:17:05.680 --> 0:17:07.560 is face and the price point is better. 0:17:09.680 --> 0:17:12.680 I don't think Tesla has the same issue Apple has 0:17:12.800 --> 0:17:16.800 just yet. I think the brand is strong. China's issue 0:17:16.840 --> 0:17:20.560 is really product issue, competition issue. I mean, it's very 0:17:20.600 --> 0:17:23.080 different from what we see in the Western markets, where 0:17:23.240 --> 0:17:27.960 you know, Testla's they almost polarizing political politics, you know, 0:17:29.320 --> 0:17:35.520 cannibalizes the buyer's demographics. In China though you know the 0:17:35.560 --> 0:17:40.680 price yes, yes, you know in the upper middle UH 0:17:41.000 --> 0:17:45.760 sector and the brand is strong, it's just very slow 0:17:46.040 --> 0:17:50.679 in launching new products, and there's a product fatigue, and 0:17:50.720 --> 0:17:54.359 then the competition is really offering a lot more attractive, 0:17:54.760 --> 0:17:58.679 exciting newness that the consumers in China demand. 0:18:00.080 --> 0:18:02.800 Junghang is so good to get your expertise on China 0:18:02.960 --> 0:18:09.359 and the demand there, Junghangli from One Capital, We appreciate it. 0:18:14.200 --> 0:18:16.919 Time now for talking tech and first up SpaceX Well 0:18:16.960 --> 0:18:19.680 Let's launched the first ever human spaceflight over the Earth 0:18:19.800 --> 0:18:23.040 polar regions. The RAM two mission took off a Fulcon 0:18:23.160 --> 0:18:26.280 nine rocket Monday evening, carrying four passengers. The trip is 0:18:26.280 --> 0:18:28.359 expected to take three to five days and will be 0:18:28.440 --> 0:18:31.119 used to conduct research on the impact of spaceflight on 0:18:31.240 --> 0:18:35.560 human health. Plus, the ECB president Christine Lagarde says that 0:18:35.600 --> 0:18:38.480 the use of AI could up in Europe's social model. 0:18:38.720 --> 0:18:42.240 Speaking and an ECB conference, Laguard recognize the productivity gains. 0:18:42.040 --> 0:18:44.720 That could be achieved with AI, but warns. 0:18:44.400 --> 0:18:47.520 That the technology also has the potential to increase labor 0:18:47.520 --> 0:18:51.679 market inequality across the region. Meanwhile, soft Bank is seeking 0:18:51.720 --> 0:18:53.560 a loan of as much as sixteen and a half 0:18:53.600 --> 0:18:56.119 billion dollars to help fund its AI investments in the 0:18:56.200 --> 0:18:56.840 United States. 0:18:57.000 --> 0:18:58.200 It's all according to sources. 0:18:58.520 --> 0:19:01.000 The Bridge loan would help to find finance that five 0:19:01.080 --> 0:19:04.320 hundred billion dollar AI infrastructure project, as well as the 0:19:04.359 --> 0:19:07.040 forty billion dollar funding round of which is committing thirty 0:19:07.040 --> 0:19:10.560 billion to which it leads on Open AI. Talks with 0:19:10.600 --> 0:19:13.040 banks are in early stages and details may change over 0:19:13.080 --> 0:19:15.359 the coming weeks, but we're going to stick with soft 0:19:15.359 --> 0:19:16.080 Bank's funding of. 0:19:16.000 --> 0:19:16.760 Open AI now. 0:19:16.840 --> 0:19:19.760 The company behind Chatchubt, of course, says it has finalized 0:19:19.800 --> 0:19:23.800 that funding round of a record forty billion dollars. It 0:19:23.880 --> 0:19:25.920 was led by soft Bank, and it's putting the company 0:19:25.960 --> 0:19:28.880 now at a three hundred million dollar valuation for morblommegs, 0:19:28.960 --> 0:19:30.400 Seth Thiegeman joins us. 0:19:30.680 --> 0:19:32.960 So it's interestingly structured. 0:19:33.040 --> 0:19:35.920 But SoftBank basically is giving thirty billion, and then there's 0:19:36.160 --> 0:19:38.399 other investors co To and the like that are chipping 0:19:38.400 --> 0:19:39.240 in the other ten bill. 0:19:39.480 --> 0:19:42.280 Yeah, I mean, this is an incredibly complex deal. Soft 0:19:42.280 --> 0:19:45.040 Bank is basically creating a syndicate in investors to help 0:19:45.080 --> 0:19:48.119 them finance this. But the round is not happening all 0:19:48.160 --> 0:19:51.280 at once. There's ten billion now, thirty billion later, but 0:19:51.400 --> 0:19:53.560 also maybe not thirty billion later. It depends on whether 0:19:53.600 --> 0:19:56.679 this company, open Ai, can restructure as a for profit 0:19:56.760 --> 0:19:58.960 or not. So as far as these rounds go, unprecegentive 0:19:59.080 --> 0:20:02.720 in size, we're also kind of unpressicundating complexity and. 0:20:02.600 --> 0:20:07.320 Also a new relationship being formed between Microsoft and open Ai, 0:20:07.480 --> 0:20:10.040 because before they were the biggest backer. 0:20:10.119 --> 0:20:12.240 Really for sure, I mean, I think we've all felt 0:20:12.280 --> 0:20:15.119