WEBVTT - China Targets Nvidia Over 2020 Deal, Straining Trade Talks 

0:00:02.759 --> 0:00:10.600
<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news. You're listening to the

0:00:10.640 --> 0:00:14.600
<v Speaker 1>Bloomberg Intelligence Podcast. Catch us live weekdays at ten am

0:00:14.640 --> 0:00:17.880
<v Speaker 1>Eastern on Apple, Cocklay and Android Auto with the Bloomberg

0:00:17.960 --> 0:00:21.080
<v Speaker 1>Business app. Listen on demand wherever you get your podcasts,

0:00:21.400 --> 0:00:23.120
<v Speaker 1>or watch us live on YouTube.

0:00:24.079 --> 0:00:25.919
<v Speaker 2>Up next, Carlo, we have this big news today. I

0:00:25.920 --> 0:00:27.560
<v Speaker 2>feel like I was preparing for the show and then

0:00:27.560 --> 0:00:30.360
<v Speaker 2>suddenly crossing the vire is China targets Nvidia over a

0:00:30.440 --> 0:00:33.479
<v Speaker 2>two hunt over a twenty twenty deal, and with us

0:00:33.479 --> 0:00:35.960
<v Speaker 2>to explain all of that is Bloomberg Intelligence, Globalhead of

0:00:35.960 --> 0:00:40.080
<v Speaker 2>Technology Research, Mandy Singh. So, Mandy Mason, what we know

0:00:40.159 --> 0:00:43.080
<v Speaker 2>so far? How serious are the alleged conditions that Invidio

0:00:43.159 --> 0:00:46.680
<v Speaker 2>may have breached this Melanox acquisition and is this noise

0:00:46.760 --> 0:00:49.239
<v Speaker 2>or should this be something that we should take seriously?

0:00:49.680 --> 0:00:52.440
<v Speaker 3>Well, I mean typically what we have seen in cases

0:00:52.560 --> 0:00:56.520
<v Speaker 3>like this when a regulator investigates, you know, an acquisition

0:00:56.600 --> 0:00:59.240
<v Speaker 3>that was done in the past, is there could be

0:00:59.280 --> 0:01:02.440
<v Speaker 3>a fine. There could be a hefty fine given you know,

0:01:03.040 --> 0:01:06.679
<v Speaker 3>the size of the acquisition. Although we don't know what

0:01:06.880 --> 0:01:10.200
<v Speaker 3>the you know, the investigation was all about, so they

0:01:10.200 --> 0:01:15.600
<v Speaker 3>are very little details on what are transpired, but my

0:01:15.760 --> 0:01:19.360
<v Speaker 3>sense is this is the timing is influenced by you know,

0:01:19.480 --> 0:01:24.080
<v Speaker 3>the trade negotiations and what's going on with the US. Look,

0:01:24.120 --> 0:01:27.039
<v Speaker 3>at the end of the day, China knows that Nvidia

0:01:27.160 --> 0:01:32.520
<v Speaker 3>has some of its largest potential customers in China, and

0:01:32.640 --> 0:01:38.280
<v Speaker 3>they would prefer those customers to get off of Nvidia dependency.

0:01:38.319 --> 0:01:41.240
<v Speaker 3>I mean, that's the one thing that it's very obvious

0:01:41.280 --> 0:01:45.640
<v Speaker 3>from the Chinese government. They don't want their largest customers

0:01:45.640 --> 0:01:49.280
<v Speaker 3>of large anguid models to be relying on Invidia chips.

0:01:49.080 --> 0:01:52.360
<v Speaker 4>Right, It's a national security issue for them. China had

0:01:52.360 --> 0:01:55.720
<v Speaker 4>approved the in Vidia purchase of Melanox, a seven billion

0:01:55.760 --> 0:01:59.720
<v Speaker 4>dollar deal, on the condition that Nvidia not discriminate against

0:01:59.800 --> 0:02:00.680
<v Speaker 4>China these companies.

0:02:00.760 --> 0:02:03.520
<v Speaker 5>That's that wording is very vague. How do you interpret that?

0:02:04.200 --> 0:02:07.080
<v Speaker 3>Well, so, I mean, look at you know, how many

0:02:07.200 --> 0:02:10.880
<v Speaker 3>architectures have been released by Nvidia since then, and so

0:02:11.120 --> 0:02:14.440
<v Speaker 3>from that standpoint, the fact that you know, in the

0:02:14.520 --> 0:02:18.600
<v Speaker 3>prior administration and Vidia was barred from selling their latest

0:02:18.680 --> 0:02:24.320
<v Speaker 3>chips to the customers in China is just an illustration that. Yeah,

0:02:24.360 --> 0:02:27.639
<v Speaker 3>I mean, all the other customers had you know, the

0:02:27.720 --> 0:02:31.560
<v Speaker 3>latest and video chips accessible that wasn't the case with

0:02:31.680 --> 0:02:35.360
<v Speaker 3>the Chinese customers. So there could be a lot of

0:02:35.440 --> 0:02:38.120
<v Speaker 3>things that could be in play here in terms of

0:02:38.160 --> 0:02:44.360
<v Speaker 3>the exact conduct that they found, you know, was not proper.

0:02:44.400 --> 0:02:48.040
<v Speaker 3>But to my mind, it is just a negotiation lever

0:02:48.360 --> 0:02:52.680
<v Speaker 3>that the Chinese government is pulling here. And look that

0:02:52.800 --> 0:02:54.920
<v Speaker 3>in terms of the size of the market we know

0:02:55.280 --> 0:02:58.920
<v Speaker 3>NVIDIAs said it's a fifty billion dollars addressable market for

0:02:59.240 --> 0:03:02.720
<v Speaker 3>GPUs in China and it's expected to grow at a

0:03:02.760 --> 0:03:05.920
<v Speaker 3>fifty percent plus cager. So it is a pretty big

0:03:05.960 --> 0:03:09.119
<v Speaker 3>opportunity for a company like Nvidia and for other chip

0:03:09.160 --> 0:03:13.200
<v Speaker 3>providers here in the US. And from that standpoint, you know,

0:03:13.639 --> 0:03:16.560
<v Speaker 3>they could see the stakes up pretty high for companies

0:03:16.600 --> 0:03:18.000
<v Speaker 3>that want to do business in China.

0:03:18.480 --> 0:03:20.959
<v Speaker 2>The stock opened lower today, it's down by one and

0:03:21.000 --> 0:03:24.560
<v Speaker 2>a half percent. How do you see this affecting investors

0:03:24.600 --> 0:03:27.400
<v Speaker 2>sentiment around in Nvidia? Like, what are potential downside the

0:03:27.480 --> 0:03:29.640
<v Speaker 2>risk to the stock? You alluded it. It could be

0:03:29.720 --> 0:03:32.240
<v Speaker 2>just noise and the timing is curious, but still investors

0:03:32.320 --> 0:03:34.360
<v Speaker 2>must be a little bit rattled at the very least.

0:03:34.480 --> 0:03:37.840
<v Speaker 3>So what Nvidia has started doing is they've started embedding

0:03:37.880 --> 0:03:40.520
<v Speaker 3>that in the guide. They said, if they were allowed

0:03:40.560 --> 0:03:43.520
<v Speaker 3>to sell H twenties to China in three Q it

0:03:43.640 --> 0:03:47.160
<v Speaker 3>could add another two to five billion dollars for the quarter.

0:03:47.440 --> 0:03:49.920
<v Speaker 3>So that's how they guide going forward because of all

0:03:49.920 --> 0:03:52.720
<v Speaker 3>the uncertainty. And remember the US government maybe getting a

0:03:52.760 --> 0:03:57.320
<v Speaker 3>fifteen percent cut of those Nvidia or black Belt sales

0:03:57.360 --> 0:04:01.120
<v Speaker 3>in China, so that's where the administration is negotiating. They

0:04:01.200 --> 0:04:03.600
<v Speaker 3>want a cut of the chip sales. So I think

0:04:03.680 --> 0:04:06.800
<v Speaker 3>everyone is involved, which is very surprising. You know, you

0:04:06.840 --> 0:04:11.120
<v Speaker 3>would think it's you know, a company that is doing business,

0:04:11.160 --> 0:04:14.160
<v Speaker 3>but in this case, there's a big geopolitical dimension to

0:04:14.400 --> 0:04:16.000
<v Speaker 3>the entire thing that's going on here.

0:04:16.080 --> 0:04:19.479
<v Speaker 4>Yeah, so it makes it extra complicated. At the same time,

0:04:19.760 --> 0:04:22.480
<v Speaker 4>or maybe separately, I'm not sure which one it is,

0:04:22.760 --> 0:04:26.359
<v Speaker 4>China has opened an anti dumping investigation into some US

0:04:26.360 --> 0:04:29.520
<v Speaker 4>made analog chips. So the companies affected here would be

0:04:29.600 --> 0:04:34.600
<v Speaker 4>Texas Instruments, Analog Devices, Broadcom, and on Semi. What can

0:04:34.640 --> 0:04:35.480
<v Speaker 4>you tell us about this?

0:04:36.160 --> 0:04:39.320
<v Speaker 3>Well, so again, I think when it comes to the

0:04:39.440 --> 0:04:42.600
<v Speaker 3>analog side, the drivers are very different. Like we are

0:04:43.240 --> 0:04:48.000
<v Speaker 3>supply constrained on the GPU accelerator side. On the analog side,

0:04:48.040 --> 0:04:52.680
<v Speaker 3>the auto chip market has been pretty lackluster when you

0:04:52.720 --> 0:04:55.760
<v Speaker 3>compare that to the overall chip complex, and so from

0:04:55.800 --> 0:04:59.560
<v Speaker 3>that perspective, everyone is trying to find a lever to

0:04:59.640 --> 0:05:03.880
<v Speaker 3>boost their sales given the lackluster demand. And I don't

0:05:03.920 --> 0:05:06.400
<v Speaker 3>think there was any anti dumping, but that's where the

0:05:06.480 --> 0:05:10.760
<v Speaker 3>negotiation aspect comes into play. That okay TI is another

0:05:10.920 --> 0:05:13.840
<v Speaker 3>company that does business in China. What have they been

0:05:13.960 --> 0:05:16.120
<v Speaker 3>up to? Is there anything in the conduct that they

0:05:16.120 --> 0:05:18.680
<v Speaker 3>could point to? And so do my mind, you know,

0:05:18.800 --> 0:05:21.080
<v Speaker 3>it's probably a reflection of that.

0:05:21.760 --> 0:05:25.279
<v Speaker 2>Maybe very briefly, what lessons should other US and foreign

0:05:25.320 --> 0:05:28.719
<v Speaker 2>semiconductor companies take from this experience in terms of risk

0:05:28.760 --> 0:05:33.440
<v Speaker 2>to China regulatory backlash or conditional approval being revisited after

0:05:33.520 --> 0:05:33.920
<v Speaker 2>a deal.

0:05:34.400 --> 0:05:37.560
<v Speaker 3>That doing business in China is getting harder and harder.

0:05:37.600 --> 0:05:40.120
<v Speaker 3>I mean, if you're a company that relied, like look

0:05:40.120 --> 0:05:44.279
<v Speaker 3>at Synopsis, the stock top thirty percent partly was because

0:05:44.279 --> 0:05:48.520
<v Speaker 3>of Intel pairing back on the license consumption, but also

0:05:48.600 --> 0:05:52.479
<v Speaker 3>in China. They couldn't sign long term agreements in China,

0:05:52.560 --> 0:05:55.359
<v Speaker 3>and they have a pretty sizable customer base in China.

0:05:55.440 --> 0:05:58.920
<v Speaker 3>So that's just another illustration of the risk with China sales.

0:05:59.160 --> 0:06:02.839
<v Speaker 4>The goalpost are constantly moving for companies operating in China,

0:06:02.880 --> 0:06:05.520
<v Speaker 4>and you could argue for companies operating in the US

0:06:05.640 --> 0:06:06.080
<v Speaker 4>as well.

0:06:06.200 --> 0:06:07.920
<v Speaker 5>All right, man, Deep Sink, thank you so much.

0:06:07.960 --> 0:06:11.840
<v Speaker 4>Bloomberg Intelligence, Global head of Technology Research, joining us here

0:06:11.880 --> 0:06:14.880
<v Speaker 4>and again we are looking at shares of Nvidia isabel

0:06:15.000 --> 0:06:19.560
<v Speaker 4>lower today because Beijing unexpectedly ruled that the company violated

0:06:19.640 --> 0:06:21.000
<v Speaker 4>anti monopoly laws.

0:06:20.720 --> 0:06:23.920
<v Speaker 5>With its twenty twenty acquisition of Melanox. Stay with us.

0:06:23.960 --> 0:06:26.160
<v Speaker 5>More from Bloomberg Intelligence coming up after this.

0:06:30.120 --> 0:06:33.839
<v Speaker 1>You're listening to the Bloomberg Intelligence podcast. Catch us live

0:06:33.920 --> 0:06:37.000
<v Speaker 1>weekdays at ten am Eastern on Apple, Cockplay and Android

0:06:37.000 --> 0:06:40.320
<v Speaker 1>Auto with the Bloomberg Business app. Listen on demand wherever

0:06:40.400 --> 0:06:43.520
<v Speaker 1>you get your podcasts, or watch us live on YouTube.

0:06:44.320 --> 0:06:46.480
<v Speaker 4>Let's move on now to the headline we got this

0:06:46.520 --> 0:06:50.080
<v Speaker 4>morning that this TikTok deal has been secured, or at

0:06:50.160 --> 0:06:53.080
<v Speaker 4>least a framework deal has been reached, according to Scott Besson,

0:06:53.120 --> 0:06:56.480
<v Speaker 4>our Treasury Secretary. President Trump says he will now speak

0:06:56.480 --> 0:06:59.480
<v Speaker 4>with Chinese President Shi Jinping on Friday to complete the deal.

0:06:59.560 --> 0:07:03.160
<v Speaker 4>Let's bring Matthew Shettenhelm. He has Bloomberg Intelligence media litigation

0:07:03.200 --> 0:07:07.599
<v Speaker 4>analysts from Washington, DC. Matt, where does this leave TikTok's

0:07:07.839 --> 0:07:09.000
<v Speaker 4>legal status.

0:07:10.080 --> 0:07:12.840
<v Speaker 6>Well, Scarlett, it looks like we may finally be seeing

0:07:12.880 --> 0:07:17.080
<v Speaker 6>some movement here. This has been an extended legal limbo,

0:07:18.000 --> 0:07:22.320
<v Speaker 6>as President Trump has extended this law three times, even

0:07:22.360 --> 0:07:26.960
<v Speaker 6>though it's not really clear that that's what Congress envisioned.

0:07:28.160 --> 0:07:33.400
<v Speaker 6>He's been able to adopt these extensions in January, in April,

0:07:33.560 --> 0:07:37.360
<v Speaker 6>and in June. And that extension set to expire on

0:07:37.480 --> 0:07:39.880
<v Speaker 6>Wednesday of this week. And as you said, it sounds

0:07:39.920 --> 0:07:42.160
<v Speaker 6>like there may be at least the shape of a

0:07:42.240 --> 0:07:46.000
<v Speaker 6>deal coming into place to maybe be finalized after those

0:07:46.040 --> 0:07:48.880
<v Speaker 6>talks on Friday. So it looks like there probably will

0:07:48.920 --> 0:07:51.760
<v Speaker 6>be another extension since since the law is set to

0:07:52.240 --> 0:07:55.280
<v Speaker 6>take effect on Wednesday, and we might not be done then.

0:07:55.360 --> 0:07:57.080
<v Speaker 6>But this at least seems like progress.

0:07:57.800 --> 0:07:59.800
<v Speaker 2>So it is progress indeed, and I feel like there

0:07:59.800 --> 0:08:02.520
<v Speaker 2>has and one extension after the other. What outcome are

0:08:02.600 --> 0:08:05.520
<v Speaker 2>we hoping to expect on Friday when President Donald Trump

0:08:06.120 --> 0:08:09.600
<v Speaker 2>will speak with Chinese leaders? She didn't ping it's a

0:08:09.880 --> 0:08:12.480
<v Speaker 2>share of American company or like, tell us what you're

0:08:12.520 --> 0:08:12.920
<v Speaker 2>looking at.

0:08:13.560 --> 0:08:17.200
<v Speaker 6>Well, it's really hard to know exactly what you know.

0:08:17.280 --> 0:08:22.960
<v Speaker 6>The law contemplates a divestiture, so that the company that

0:08:23.600 --> 0:08:28.160
<v Speaker 6>runs the US operations would not be controlled by byte Dance,

0:08:28.720 --> 0:08:32.120
<v Speaker 6>and so what the way you read the law, it

0:08:32.200 --> 0:08:35.720
<v Speaker 6>contemplates that there would be a divestiture likely to a

0:08:35.880 --> 0:08:41.520
<v Speaker 6>US entity, probably where byte Dance owns less than twenty

0:08:41.559 --> 0:08:44.520
<v Speaker 6>percent of that company, and that there would be no

0:08:44.720 --> 0:08:49.439
<v Speaker 6>cooperation between those two companies they would be formerly affiliated

0:08:49.679 --> 0:08:52.560
<v Speaker 6>under the law. I think the really interesting thing to

0:08:52.600 --> 0:08:55.040
<v Speaker 6>watch is how much is this deal going to stick

0:08:55.080 --> 0:08:57.480
<v Speaker 6>to the terms of the law. You could make a

0:08:57.480 --> 0:09:01.720
<v Speaker 6>pretty strong argument that that president hasn't exactly adhered to

0:09:01.760 --> 0:09:04.280
<v Speaker 6>the law so far, and he hasn't gotten any pushback.

0:09:04.760 --> 0:09:08.840
<v Speaker 6>So it's not clear how much any deal will need

0:09:08.880 --> 0:09:11.520
<v Speaker 6>to stick to the law or not right.

0:09:11.360 --> 0:09:14.280
<v Speaker 4>Right right now, that's an important point, and you know

0:09:14.640 --> 0:09:16.360
<v Speaker 4>it could not stick to law, But it doesn't matter

0:09:16.360 --> 0:09:20.200
<v Speaker 4>if everyone's okay with it, Matthew In terms of companies

0:09:20.240 --> 0:09:24.600
<v Speaker 4>affected by some kind of framework deal reached, for which

0:09:24.600 --> 0:09:25.839
<v Speaker 4>companies is this good news?

0:09:26.559 --> 0:09:26.760
<v Speaker 3>Well?

0:09:26.760 --> 0:09:29.360
<v Speaker 6>Sure? I mean so Apple and Google have been hosting

0:09:29.480 --> 0:09:34.000
<v Speaker 6>TikTok in their app store at enormous legal risk with

0:09:34.080 --> 0:09:36.920
<v Speaker 6>this law in place, in theory that they are potentially

0:09:36.960 --> 0:09:41.240
<v Speaker 6>exposed to liability of five thousand dollars per TikTok user,

0:09:41.320 --> 0:09:43.920
<v Speaker 6>and you do that math and it's absurd, and so

0:09:44.160 --> 0:09:46.800
<v Speaker 6>no one wants to operate with that cloud hanging over

0:09:46.840 --> 0:09:49.920
<v Speaker 6>your head. So in that sense, you know, some clarity

0:09:49.920 --> 0:09:52.480
<v Speaker 6>in the law here is good for those companies. I'm

0:09:52.480 --> 0:09:56.880
<v Speaker 6>not sure it's so good for TikTok's competitors like Meta,

0:09:57.040 --> 0:10:00.959
<v Speaker 6>that had the opportunity to have one of their top

0:10:01.000 --> 0:10:04.199
<v Speaker 6>competitors in the US knocked out of the market, and

0:10:04.280 --> 0:10:07.840
<v Speaker 6>it looks like that is going away. So looks like

0:10:07.920 --> 0:10:11.760
<v Speaker 6>TikTok will remain a fierce competitor in the United States,

0:10:11.760 --> 0:10:14.040
<v Speaker 6>and so Meta won't be able to use this law

0:10:14.080 --> 0:10:15.120
<v Speaker 6>to its advantage.

0:10:15.600 --> 0:10:17.960
<v Speaker 2>We also have a story published less than thirty minutes ago.

0:10:18.080 --> 0:10:20.560
<v Speaker 2>It's about Treasury Secretary Scott bess and saying that the

0:10:20.640 --> 0:10:23.240
<v Speaker 2>threat of allowing TikTok to go dark in the US

0:10:23.320 --> 0:10:26.120
<v Speaker 2>was what ultimately sealed a framework deal. Can you talk

0:10:26.120 --> 0:10:29.800
<v Speaker 2>to us more about how this strong arm negotiations may

0:10:30.600 --> 0:10:34.760
<v Speaker 2>shape future negotiations between foreign companies in the US, and

0:10:34.840 --> 0:10:38.679
<v Speaker 2>at least for this one specifically, in isolation, it looks successful.

0:10:39.960 --> 0:10:42.920
<v Speaker 6>It does look like this may have worked. This is

0:10:42.960 --> 0:10:48.320
<v Speaker 6>not the way that these things typically work. But here

0:10:48.559 --> 0:10:52.440
<v Speaker 6>Congress really gave President Trump a lot of leverage by

0:10:52.600 --> 0:10:57.600
<v Speaker 6>passing this law. I think there it was questionable whether

0:10:57.760 --> 0:11:01.800
<v Speaker 6>President Trump was using that level bridge by letting TikTok

0:11:01.840 --> 0:11:04.640
<v Speaker 6>continue to operate. You could make the case that he

0:11:04.640 --> 0:11:07.440
<v Speaker 6>could have made a stronger or leverage if you hadn't.

0:11:07.520 --> 0:11:09.679
<v Speaker 6>But it seems to be working.

0:11:10.200 --> 0:11:14.200
<v Speaker 4>Matthew, always a pleasure, Matthew Schuttenhelm, Bloomberg Intelligence media litigation

0:11:14.320 --> 0:11:17.679
<v Speaker 4>analysts from Washington TC on TikTok's legal status now that

0:11:17.720 --> 0:11:19.280
<v Speaker 4>there has been a framework deal.

0:11:19.120 --> 0:11:22.720
<v Speaker 5>Reached on TikTok, according to Scott Besant, stay with us.

0:11:22.840 --> 0:11:25.040
<v Speaker 5>More from Bloomberg Intelligence coming up after this.

0:11:29.000 --> 0:11:32.680
<v Speaker 1>You're listening to the Bloomberg Intelligence podcast. Catch us live

0:11:32.760 --> 0:11:35.880
<v Speaker 1>weekdays at ten am Eastern on Apple, Cocklay and Android

0:11:35.880 --> 0:11:39.160
<v Speaker 1>Auto with the Bloomberg Business App. Listen on demand wherever

0:11:39.240 --> 0:11:42.360
<v Speaker 1>you get your podcasts, or watch us live on YouTube.

0:11:43.200 --> 0:11:45.400
<v Speaker 2>Now, we're going to talk all about Tesla and Elon

0:11:45.480 --> 0:11:48.679
<v Speaker 2>Musk buying one billion dollars worth of Tesla shares. Were

0:11:48.720 --> 0:11:51.880
<v Speaker 2>joined by Craig Trudell. He's the Bloomberg Global Autos editor,

0:11:52.120 --> 0:11:56.240
<v Speaker 2>joining us from London. So Ed, Craig, what can you

0:11:56.240 --> 0:11:58.520
<v Speaker 2>tell us about Elon Musk purchasing one billion worth of

0:11:58.559 --> 0:12:01.160
<v Speaker 2>Tesla shares? What signal do you think he's trying to

0:12:01.200 --> 0:12:03.320
<v Speaker 2>send markets and shareholders with this move?

0:12:04.640 --> 0:12:06.400
<v Speaker 7>I think I think it's pretty clear. There was an

0:12:06.440 --> 0:12:09.720
<v Speaker 7>all out push on Friday, with Robin Denholm, the chair

0:12:09.760 --> 0:12:13.520
<v Speaker 7>of the company, speaking with at Bloomberg Television, speaking with

0:12:14.440 --> 0:12:16.280
<v Speaker 7>you know, the New York Times, the Wall Street Journal,

0:12:16.320 --> 0:12:20.160
<v Speaker 7>all sorts of major news organizations about the merits of

0:12:20.200 --> 0:12:22.600
<v Speaker 7>this pay package that the board is proposing. There's going

0:12:22.640 --> 0:12:26.520
<v Speaker 7>to be a big shareholder vote in November on handing,

0:12:26.760 --> 0:12:30.880
<v Speaker 7>you know, Musk, this this potentially up to one trillion

0:12:30.960 --> 0:12:35.120
<v Speaker 7>dollars worth of stock. There's a lot of caveats all

0:12:35.160 --> 0:12:37.680
<v Speaker 7>that that Musk would have to sort of, you know,

0:12:37.760 --> 0:12:40.680
<v Speaker 7>pull a rabbit out of the hat again after you know,

0:12:40.760 --> 0:12:44.679
<v Speaker 7>doing so after a twenty eighteen pay package where the

0:12:45.000 --> 0:12:48.000
<v Speaker 7>board laid out out all these really ambitious you know,

0:12:48.040 --> 0:12:52.080
<v Speaker 7>market value and performance milestones. Musk, you know, at that

0:12:52.160 --> 0:12:55.440
<v Speaker 7>time it was kind of perceived as this moonshot pay package.

0:12:55.960 --> 0:12:59.679
<v Speaker 7>He proceeded to knock them all out, and they're now

0:12:59.679 --> 0:13:03.120
<v Speaker 7>calling this next paypackage a mark Dot pay package. So,

0:13:04.440 --> 0:13:06.640
<v Speaker 7>you know, I think there's this This is all sort

0:13:06.640 --> 0:13:09.079
<v Speaker 7>of part of a piece, right of trying to get

0:13:09.360 --> 0:13:13.120
<v Speaker 7>investors to sort of you know, focus on you know,

0:13:13.720 --> 0:13:16.800
<v Speaker 7>far out there targets objectives from us that would make

0:13:17.080 --> 0:13:20.080
<v Speaker 7>shareholders a whole lot of money. And it comes amid

0:13:20.480 --> 0:13:22.920
<v Speaker 7>you know, real signs of stress for the core here

0:13:22.920 --> 0:13:26.120
<v Speaker 7>and now business for Tesla where their sales have just

0:13:26.280 --> 0:13:30.200
<v Speaker 7>really struggled this year and there haven't really been signs

0:13:30.240 --> 0:13:32.560
<v Speaker 7>of of sort of meaningful change in that trend even

0:13:32.600 --> 0:13:33.319
<v Speaker 7>into this quarter.

0:13:33.600 --> 0:13:36.120
<v Speaker 4>Right, so this will properly motivate him. I'm so glad

0:13:36.120 --> 0:13:38.240
<v Speaker 4>you brought up the twenty eighteen pay package and some

0:13:38.360 --> 0:13:41.760
<v Speaker 4>of the moonshot milestones that laid out for Elon Musk.

0:13:42.000 --> 0:13:43.959
<v Speaker 4>What was the most I don't want to use the

0:13:43.960 --> 0:13:47.120
<v Speaker 4>word outrageous, but the most ambitious of those milestones? And

0:13:47.600 --> 0:13:51.000
<v Speaker 4>did he surpass each and every one of them?

0:13:51.679 --> 0:13:55.199
<v Speaker 7>Yeah? I mean in terms of the milestones there, I

0:13:55.280 --> 0:13:57.920
<v Speaker 7>mean just even the market cap figures I think, you know,

0:13:57.960 --> 0:14:00.840
<v Speaker 7>when they were laid out, you know, it was it

0:14:00.920 --> 0:14:03.360
<v Speaker 7>was just sort of unfathomable that you know, a car

0:14:03.360 --> 0:14:06.319
<v Speaker 7>company could be you know, a trillion dollar company, and

0:14:06.679 --> 0:14:09.079
<v Speaker 7>you know, give give the guy credit. He went out

0:14:09.080 --> 0:14:12.400
<v Speaker 7>there and and made it happen. You know, I think

0:14:12.920 --> 0:14:16.679
<v Speaker 7>Tesla now is trying to sort of, you know, incentivize

0:14:16.760 --> 0:14:20.480
<v Speaker 7>him to you know, turn Tesla into a company that

0:14:20.560 --> 0:14:24.800
<v Speaker 7>has many multiples of even Navidia, the most valuable company

0:14:24.800 --> 0:14:28.480
<v Speaker 7>in the world in the here and now. And yet

0:14:28.520 --> 0:14:30.160
<v Speaker 7>you know, the sort of path to getting there is

0:14:30.520 --> 0:14:34.200
<v Speaker 7>really uncertain because you know, you've you've heard Musk make

0:14:34.240 --> 0:14:39.320
<v Speaker 7>these pitches about robotaxis and about humanoid robots. But you know,

0:14:39.720 --> 0:14:42.880
<v Speaker 7>he's starting essentially from zero from a humanoid robot perspective

0:14:43.280 --> 0:14:46.280
<v Speaker 7>and from a ROBOTAXI perspective. He's got you know, a

0:14:46.400 --> 0:14:49.480
<v Speaker 7>very very small number of cars on the roads in Austin,

0:14:49.520 --> 0:14:52.520
<v Speaker 7>Texas that still have people you know, in the in

0:14:52.560 --> 0:14:56.400
<v Speaker 7>the front row minding those cars and in certain cases

0:14:56.400 --> 0:14:59.680
<v Speaker 7>actually still behind the wheel. So you know, he is

0:14:59.720 --> 0:15:02.160
<v Speaker 7>a long long way from accomplishing some of these new

0:15:02.160 --> 0:15:03.760
<v Speaker 7>objectives that the board has set form.

0:15:04.280 --> 0:15:08.160
<v Speaker 2>This must buying shares personally, is governance concerns or could

0:15:08.160 --> 0:15:12.320
<v Speaker 2>it even actually reinforce skepticism about how closely Tesla's board

0:15:13.040 --> 0:15:16.320
<v Speaker 2>is aligned with his self interest, his being Musk.

0:15:17.720 --> 0:15:21.600
<v Speaker 7>You know, I think just generally whenever a CEO or

0:15:21.640 --> 0:15:24.240
<v Speaker 7>an insider of a company is buying shares. That's taken

0:15:24.240 --> 0:15:27.040
<v Speaker 7>as a good thing and not necessarily you know, something

0:15:27.080 --> 0:15:30.160
<v Speaker 7>to look at skins at from a corporate governance perspective.

0:15:30.520 --> 0:15:33.880
<v Speaker 7>It does, however, I think it's worth sort of you know,

0:15:34.040 --> 0:15:37.080
<v Speaker 7>thinking about this billion dollar purchase and context. This is

0:15:37.360 --> 0:15:40.280
<v Speaker 7>a guy who's you know, sort of you know, a

0:15:40.280 --> 0:15:42.680
<v Speaker 7>billion dollars can be found in his couch cushions, right

0:15:43.360 --> 0:15:47.080
<v Speaker 7>he is is the top person on the Bloomberg Billionaires Index.

0:15:47.800 --> 0:15:50.880
<v Speaker 7>He was very briefly, you know, not from that spot

0:15:51.200 --> 0:15:54.720
<v Speaker 7>last week by Larry Ellison. But he's worth about you know,

0:15:54.840 --> 0:15:58.720
<v Speaker 7>four hundred and twenty billion dollars at the moment, and

0:15:59.200 --> 0:16:02.520
<v Speaker 7>so you know just how meaningful this is. With any

0:16:02.560 --> 0:16:04.760
<v Speaker 7>other CEO, you would look at a billion dollar Stoft

0:16:04.800 --> 0:16:07.840
<v Speaker 7>purchase and maybe take, you know, take real note of that.

0:16:08.200 --> 0:16:12.200
<v Speaker 7>With Musk, is it that you know, huge a show

0:16:12.200 --> 0:16:14.520
<v Speaker 7>of confidence? Maybe not in the context of, you know,

0:16:14.600 --> 0:16:17.200
<v Speaker 7>just how much wealthy has Craig.

0:16:17.440 --> 0:16:19.920
<v Speaker 4>All of this emphasis on what Elon Musk can do

0:16:19.960 --> 0:16:22.320
<v Speaker 4>and what Elon Musk can achieve by a certain period

0:16:23.160 --> 0:16:25.960
<v Speaker 4>really raises a key man risk. Here is there succession

0:16:26.000 --> 0:16:28.800
<v Speaker 4>plan for Elon Musk if something should happen to him.

0:16:28.800 --> 0:16:32.280
<v Speaker 4>I mean, I'm looking at the company management and he's

0:16:32.320 --> 0:16:35.280
<v Speaker 4>got seventeen years tenure at Tesla. The person in the

0:16:35.320 --> 0:16:39.800
<v Speaker 4>next closest tenure or the next longest tenure is Shaotong

0:16:39.920 --> 0:16:41.520
<v Speaker 4>Ju tom Ju at.

0:16:41.360 --> 0:16:44.680
<v Speaker 5>Two point four years. He's the senior vice president of APAK.

0:16:46.200 --> 0:16:48.480
<v Speaker 7>Yeah, it's a very good question, and it's something that's

0:16:48.520 --> 0:16:52.800
<v Speaker 7>sort of considered actually in this new proxy where you know,

0:16:53.040 --> 0:16:56.720
<v Speaker 7>the board sort of lays out this idea of getting

0:16:56.960 --> 0:16:59.320
<v Speaker 7>you know, some some buy in from Musk in terms

0:16:59.360 --> 0:17:03.720
<v Speaker 7>of how being and assisting on succession. At the same time,

0:17:04.040 --> 0:17:07.840
<v Speaker 7>you're hearing Robin Denholm, the chair of the board, you know,

0:17:07.920 --> 0:17:10.840
<v Speaker 7>tell Bloomberg TV last week that there aren't any other

0:17:10.880 --> 0:17:13.640
<v Speaker 7>people out there like Elon who can actually lead this

0:17:13.680 --> 0:17:17.119
<v Speaker 7>company over the next decade or so. And so, you know,

0:17:17.600 --> 0:17:19.280
<v Speaker 7>I think they want to kind of have it both ways,

0:17:19.359 --> 0:17:22.320
<v Speaker 7>right of we must, you know, incentivize this guy because

0:17:22.359 --> 0:17:24.399
<v Speaker 7>he's the only one who can do this, and yet

0:17:24.520 --> 0:17:27.680
<v Speaker 7>we do realize we need to sort of assuage these

0:17:27.720 --> 0:17:29.119
<v Speaker 7>concerns about succession.

0:17:29.640 --> 0:17:32.439
<v Speaker 4>Correct Trudell always a pleasure of Bloomberg Global Autos editor

0:17:32.440 --> 0:17:35.680
<v Speaker 4>on Elon Musk buying a billion dollars worth of Tesla's shares.

0:17:36.280 --> 0:17:41.000
<v Speaker 1>This is the Bloomberg Intelligence Podcast, available on Apple, Spotify,

0:17:41.200 --> 0:17:45.120
<v Speaker 1>and anywhere else you get your podcasts. Listen live each weekday,

0:17:45.359 --> 0:17:48.639
<v Speaker 1>ten am to noon Eastern on Bloomberg dot com, the

0:17:48.720 --> 0:17:52.600
<v Speaker 1>iHeartRadio app, tune In, and the Bloomberg Business app. You

0:17:52.640 --> 0:17:55.919
<v Speaker 1>can also watch us live every weekday on YouTube and

0:17:56.119 --> 0:17:58.080
<v Speaker 1>always on the Bloomberg terminal