WEBVTT - xAI to Raise $20 Billion After Nvidia and Others Boost Round 

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news. You're listening to the

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<v Speaker 2>All right, let's stay with the tech space and move

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<v Speaker 2>over to Xai, which is Elon Musk's ai startup. It's

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<v Speaker 2>raising more financing than initially planned, and Ed Ludlow, our

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<v Speaker 2>Bloomberg Tech co host, joining us from San Francisco to

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<v Speaker 2>give us a little more context here. Xai is backed

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<v Speaker 2>by a number of big companies, including in Nvidia.

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<v Speaker 3>Tell us how much money it's raising.

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<v Speaker 4>Yes, So it's a very specific mechanism where a special

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<v Speaker 4>purpose vehicle will split between about twelve and a half

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<v Speaker 4>billion dollars of debt and seven and a half billion

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<v Speaker 4>dollars of equity, use the funds to go out and

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<v Speaker 4>buys specifically in video GPUs. Xai then basically rents or

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<v Speaker 4>leases those GPUs from the investment vehicle over a period

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<v Speaker 4>of five years. Is what we've been reporting and is

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<v Speaker 4>our understanding. And as part of that, we have broken

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<v Speaker 4>the news that Nvidia is going to contribute about two

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<v Speaker 4>billion dollars to the equity piece. But basically what it

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<v Speaker 4>means is that the investors own the GPUs, they get

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<v Speaker 4>guaranteed return because Xai has to pay them a fee

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<v Speaker 4>or a rental fee over the course of the term.

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<v Speaker 4>But Xai doesn't take all the debt onto its balance sheet,

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<v Speaker 4>and so this could be a bit of a template,

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<v Speaker 4>you know, for how these mega infrastructure deals go going forward.

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<v Speaker 5>Where is Xai ed in this Ai story here?

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<v Speaker 6>What's the feeling in the inally?

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<v Speaker 4>Yeah, it's very hard to place because Xai and in

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<v Speaker 4>particular Elon Musk move very quickly, and they have two

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<v Speaker 4>specific data enters. One is more complete Colossus one, and

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<v Speaker 4>what we're reporting around this financing is the chips for

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<v Speaker 4>Colossus two, which they started building in March. And so

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<v Speaker 4>from an infrastructure standpoint, Jensen Wong has talked about this,

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<v Speaker 4>saying that he's betting Elon Musk can get to one

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<v Speaker 4>giga what of capacity first, because that's what Elon Musk does.

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<v Speaker 4>On the actual output side, their large language model and GROC.

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<v Speaker 4>We don't have as much evidence or data of the

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<v Speaker 4>user base and usership of GROC like in the enterprise setting,

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<v Speaker 4>for example, we don't know it about how that particular

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<v Speaker 4>software that Xai develops is in a competitive environment against

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<v Speaker 4>like an open Ai or Enthropic, but largely noises from

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<v Speaker 4>Xai themselves, but others in the valley talk about how

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<v Speaker 4>it's somewhere that people really want to work, you know,

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<v Speaker 4>they want to go and work for Elon, and in

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<v Speaker 4>the talent war context, that's you know, a big story.

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<v Speaker 3>Okay, thanks for that context.

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<v Speaker 2>One thing you mentioned when explaining this deal that Xai

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<v Speaker 2>has put together the fundraising is that in Video is

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<v Speaker 2>one of the backers, but the SPV, the special purpose Vehicle,

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<v Speaker 2>is going to then go out and buy in Video chips.

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<v Speaker 2>This all feels kind of circular, incestuous if you want

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<v Speaker 2>to put it in another way, is this going to

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<v Speaker 2>create problems? I mean, are people raising their eyebrows over this?

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<v Speaker 2>That this all feels very like I'm putting money in

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<v Speaker 2>so that you can go then buy some of my

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<v Speaker 2>other stuff.

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<v Speaker 4>So important. Jensen Wang, the in Video CEO, went on

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<v Speaker 4>another network an hour ago and basically confirmed our reporting

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<v Speaker 4>that in Video was going to participate that he wished

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<v Speaker 4>he could have put more money into this what he called,

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<v Speaker 4>you know, fundraising, But he also talked about the idea

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<v Speaker 4>that this mechanism was not traditional venture and it nor

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<v Speaker 4>is it straight vendor vendor financing. The circular part is

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<v Speaker 4>the is the bit that people are most focused on,

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<v Speaker 4>because on page it's in Vidia saying here's two billion dollars,

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<v Speaker 4>which we know Xai is going to use indirectly through

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<v Speaker 4>the SPV to buy two billion dollars worth of Nvidia chips.

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<v Speaker 4>But Jensen Wog did go on to say in that

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<v Speaker 4>interview that if you take, for example, the open ai

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<v Speaker 4>deal announced in the last ten days, that's a one

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<v Speaker 4>hundred billion dollar agreement over many years, and according to

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<v Speaker 4>Nvidia and Jensen Wang, there is no mandatory requirement that

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<v Speaker 4>open Ai used that.

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<v Speaker 6>Money.

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<v Speaker 4>I'm pausing, guys, because we actually have no idea if

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<v Speaker 4>it's cash. We have no idea if it's just equity.

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<v Speaker 4>But according to Gensen Wong, it's not mandatory for open

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<v Speaker 4>Ai to use the proceeds to buy in video gear.

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<v Speaker 4>They are free to go out and do other deals

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<v Speaker 4>like they did with AMD.

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<v Speaker 6>Stay with us. More from Bloomberg Intelligence coming up after this.

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<v Speaker 1>You're listening to the Bloomberg Intelligence podcast. Catch US Live

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<v Speaker 1>weekdays at ten am Eastern on Apple Coarclay, and Android

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<v Speaker 5>A new administration had a lot of industry saying, hey,

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<v Speaker 5>maybe we're gonna get some deregulation in our business with

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<v Speaker 5>this Trump administration. One of those industries is a television

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<v Speaker 5>broadcast industry. There are limits on how many stations you

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<v Speaker 5>can own nationally. A company can own nationally, there's limits

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<v Speaker 5>on how many stations a company can own it in

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<v Speaker 5>a particular market. But there was recently those would be

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<v Speaker 5>loosened and maybe significantly. And actually some couple M and

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<v Speaker 5>A deals have been announced in anticipation of those rules loosing.

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<v Speaker 5>So let's check out with the expert here, Matt Schuttinghelm,

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<v Speaker 5>these immediate litigation analyts for Bloomberg Intelligence.

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<v Speaker 6>He's down there in DC.

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<v Speaker 5>So, Matt, my FCC they meet I think sometime this month.

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<v Speaker 5>Are they going to loosen TV ownership rules?

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<v Speaker 7>Yeah, there was some expectation that the deregulatory actions could

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<v Speaker 7>start as early as this month for the TV broadcasters. Unfortunately,

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<v Speaker 7>for the industry, it doesn't look like October is going

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<v Speaker 7>to be the month for movement on that national ownership cap.

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<v Speaker 7>Brendan Carr, the FCC chairman, put out the agenda for

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<v Speaker 7>the FCC's monthly meeting, and this item was not listed

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<v Speaker 7>on that agenda. Now, he could still add it as

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<v Speaker 7>late as seven days before the meeting, but that's unlikely.

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<v Speaker 7>Typically these things are announced three weeks before, so I

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<v Speaker 7>still expect the FCC to move pretty quickly on this.

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<v Speaker 7>The FCC took comments on this earlier in the summer.

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<v Speaker 7>It really should should be a pretty simple order to

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<v Speaker 7>write up to ease that thirty nine percent US ownership limit.

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<v Speaker 7>It's just a matter of getting it done. And also

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<v Speaker 7>the FCC is, you know, eighty percent of the employees

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<v Speaker 7>are off right now because we have a government shutdown

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<v Speaker 7>which could be impacting things.

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<v Speaker 2>Okay, So which companies, first of all, are most affected

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<v Speaker 2>by this. Paul mentioned that there was some deal making

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<v Speaker 2>and anticipation of this. We know that next Our Media

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<v Speaker 2>made a bid for Tegna. It was a six point

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<v Speaker 2>two billion dollars all cash deal. Is that the most

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<v Speaker 2>glaring example of companies that are directly affected.

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<v Speaker 7>That's the biggest one Scarlett Sinclair is also a big

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<v Speaker 7>name in this space. Scripts Gray Media also big owners

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<v Speaker 7>of TV stations. But the one you pointed to, the

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<v Speaker 7>Next Star TEG deal is the biggest one. Is six

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<v Speaker 7>point two billion dollar deal announced in August. And as

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<v Speaker 7>we as we said, currently the LAG limits you to

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<v Speaker 7>basically reaching thirty nine percent of US households. That deal

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<v Speaker 7>would let Nextstar reach seventy eighty percent of US households.

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<v Speaker 7>So the deal only can move ahead if this rule

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<v Speaker 7>is changed. If the rule is eased by the FCC,

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<v Speaker 7>there's no way the FCC can approve the deal without

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<v Speaker 7>a change in that rule making first. And so that's

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<v Speaker 7>what we're really waiting for is action on to ease

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<v Speaker 7>those rules. And then we're inevitably going to have a

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<v Speaker 7>court fight on that question because there are wrong arguments

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<v Speaker 7>on both sides of that one. One side says, look,

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<v Speaker 7>the FCC might like to do that, but this is

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<v Speaker 7>Congress's role to ease that thirty nine percent US cap.

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<v Speaker 7>The FCC can't do it itself. I think there's going

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<v Speaker 7>to be a tough fight on that. The FCC probably

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<v Speaker 7>can win it, but it's coming.

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<v Speaker 5>It just seems kind of silly in digital world here

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<v Speaker 5>that there are ownership caps for traditional broadcasters which are

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<v Speaker 5>fighting for their lives in the world.

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<v Speaker 6>Of cord cutting. I mean, the economics seem like, why wouldn't.

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<v Speaker 8>You do it?

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<v Speaker 7>That's exactly the case that the National Association of Broadcasters

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<v Speaker 7>have been pushing with the FCC really for many years,

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<v Speaker 7>but they've really raised the volume on that argument recently,

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<v Speaker 7>and it's really resonating with Republicans at the FCC. I

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<v Speaker 7>think Brendan Carr, the FCC Chairman, is really sympathetic to

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<v Speaker 7>that argument that look, in this world of all forms

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<v Speaker 7>of new media online, all the ways that can get

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<v Speaker 7>media today, and most of those are largely unregulated, that

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<v Speaker 7>the traditional TV broadcast industry would face these these strict

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<v Speaker 7>limits on how many stations they can own in local

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<v Speaker 7>markets in each you know, in Chicago, in New York,

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<v Speaker 7>in DC, and a national cap. Both of those don't

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<v Speaker 7>really make as much sense, according to NAB and I

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<v Speaker 7>think that that argument is really resonating with Republicans. Republicans

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<v Speaker 7>have a majority at the FCC, so they're likely to

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<v Speaker 7>do their best to move ahead to ease these rules

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<v Speaker 7>if they can.

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<v Speaker 2>That's for traditional broadcasting, then you've got the streamers right. Skydance,

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<v Speaker 2>which is of course the owner of Paramount Global is

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<v Speaker 2>or was reportedly planning to make a bit for Warner

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<v Speaker 2>Brothers Discovery that actually hasn't come through yet, but that

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<v Speaker 2>is something that is outside the FCC's jurisdiction. The SEC

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<v Speaker 2>plays no part in any of this.

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<v Speaker 7>Well, so it's it's a debated point that some have

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<v Speaker 7>pushed to say, Look, maybe the FCC should be regulating

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<v Speaker 7>those over the top video providers like YouTube TV, like

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<v Speaker 7>these streamers. Again, the problem though, is that the FCC

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<v Speaker 7>is confined by a law that was written in nineteen

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<v Speaker 7>thirty four and then updated in nineteen ninety six, and

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<v Speaker 7>it's often a struggle for the FCC to extend its

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<v Speaker 7>authority to online providers. And so the Obama FCC was

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<v Speaker 7>actually ready to move ahead with a rulemaking to do

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<v Speaker 7>just that, but it never went anywhere. And I think

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<v Speaker 7>the reason is when you read the law, it's really

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<v Speaker 7>a stretch to say that the FCC can reach those

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<v Speaker 7>new online providers the way it has traditionally regulated broadcasters.

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<v Speaker 6>Stay with us. More from Bloomberg Intelligence coming up after this.

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<v Speaker 1>You're listening to the Bloomberg Intelligence podcast. Catch us Live

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<v Speaker 1>weekdays at ten am Eastern on Apple Coarclay, and Android

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<v Speaker 1>Auto with the Bloomberg Business app. Listen on demand, hover

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<v Speaker 1>you get your podcasts, or watch us live on YouTube.

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<v Speaker 2>One of the big movers of late, of course, is Dell,

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<v Speaker 2>and that's because of its AI server business. That part

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<v Speaker 2>of the business has really taken off, and we want

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<v Speaker 2>to bring in now Wujin Ho Bloomberg Intelligence senior technology

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<v Speaker 2>analysts on the highlights from Dell's investor day and Ujin

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<v Speaker 2>One of the things that Dell did was kind of

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<v Speaker 2>layout a vision as Ed Ludlow was telling us an outlook,

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<v Speaker 2>a plan for the next couple of years, which I

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<v Speaker 2>find remarkable given that this is such a fast moving

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<v Speaker 2>industry that you know, companies need to update their guidance

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<v Speaker 2>every quarter, and this company is talking about it's guidance

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<v Speaker 2>out to twenty thirty.

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<v Speaker 9>Yeah.

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<v Speaker 10>Hey, Scarlet, so I know how you ended the last

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<v Speaker 10>segment with Kyle Bunga. I'm going to start this segment

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<v Speaker 10>with to get you got to get a Dell, right,

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<v Speaker 10>So look, this is this is a very seasoned management team.

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<v Speaker 10>They have a tendency to give out three to four

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<v Speaker 10>year guidance plans. I think the surprise here is what's

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<v Speaker 10>driving that seventy nine percent growth outlook for from twenty

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<v Speaker 10>twenty six to twenty twenty twenty thirty, And it's going

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<v Speaker 10>to be AI servers, right, And one of the things

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<v Speaker 10>that they said at the analyst day that AI servers

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<v Speaker 10>are going to grow at a twenty to twenty five

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<v Speaker 10>percent compounded rate. I think there was some skepticism there

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<v Speaker 10>heading into the print in terms of is there an

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<v Speaker 10>AI bubble? And by laying out a twenty to twenty

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<v Speaker 10>five percent AI server growth going through twenty thirty off

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<v Speaker 10>of already high numbers, shows that there is some durability

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<v Speaker 10>to the aserver demand.

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<v Speaker 5>All right, I'm looking at the ANR function for Dell Technologies.

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<v Speaker 6>Twenty three buys on the wall street.

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<v Speaker 5>Six holds and no cells. So it looks like the

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<v Speaker 5>streets buying off on what on the message here? So

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<v Speaker 5>when you get an analyst meaning together, it's a big

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<v Speaker 5>day for a company. They put a lot of time

0:12:49.320 --> 0:12:52.040
<v Speaker 5>and effort in putting getting their senior management together, putting

0:12:52.040 --> 0:12:54.320
<v Speaker 5>together presentations, presenting a vision here.

0:12:54.720 --> 0:12:56.040
<v Speaker 6>What were some of the two or three.

0:12:55.920 --> 0:12:58.280
<v Speaker 5>Takeaways from you from this Investor Day yesterday.

0:12:58.640 --> 0:13:03.080
<v Speaker 10>Yeah, So the one highlight here is the a server demand,

0:13:03.280 --> 0:13:08.360
<v Speaker 10>their durability of a sever demand. But more importantly, and

0:13:08.400 --> 0:13:10.800
<v Speaker 10>we talk about this all the time, you know, Paul,

0:13:11.240 --> 0:13:14.120
<v Speaker 10>It's about earnings and cash flow, right And at the

0:13:14.240 --> 0:13:17.080
<v Speaker 10>end of the day, we're talking about EPs growth about

0:13:17.080 --> 0:13:19.760
<v Speaker 10>fifteen percent, and how do we get to that fifteen percent?

0:13:20.080 --> 0:13:24.240
<v Speaker 10>We're talking about eight percent of the sales growth dropping

0:13:24.280 --> 0:13:26.280
<v Speaker 10>down to the bottom line. But given all of that

0:13:26.360 --> 0:13:29.480
<v Speaker 10>cash generation that they're given, all that cash generation, there's

0:13:29.520 --> 0:13:32.439
<v Speaker 10>going to be a fair amount of capital returns through buybacks,

0:13:32.760 --> 0:13:34.800
<v Speaker 10>So you're going to get a lift on EPs there.

0:13:34.800 --> 0:13:37.840
<v Speaker 10>So share olders aren't going to be happy from an

0:13:37.840 --> 0:13:41.559
<v Speaker 10>EPs standpoint, and we're already seeing that from evaluation standpoint,

0:13:42.000 --> 0:13:45.360
<v Speaker 10>because it is lifting from an eight to ten times

0:13:46.080 --> 0:13:48.920
<v Speaker 10>PE to about fifteen times growth, which makes it into

0:13:48.960 --> 0:13:49.839
<v Speaker 10>a one times.

0:13:49.600 --> 0:13:53.760
<v Speaker 2>Peg Wogin another story that we're tracking here and that

0:13:53.880 --> 0:13:56.680
<v Speaker 2>I've been fascinated by, is this idea of legacy tech

0:13:56.679 --> 0:14:02.160
<v Speaker 2>companies finding their feet in this AI wave, whether it's Oracle,

0:14:02.200 --> 0:14:03.600
<v Speaker 2>whether it's Dell, and now.

0:14:03.520 --> 0:14:04.320
<v Speaker 3>Cisco as well.

0:14:04.400 --> 0:14:08.160
<v Speaker 2>Cisco is releasing a new chip and networking system to

0:14:08.240 --> 0:14:10.719
<v Speaker 2>connect AI data centers, and this is a move that

0:14:10.920 --> 0:14:14.160
<v Speaker 2>pretty much puts it in more direct competition with Broadcom.

0:14:14.559 --> 0:14:17.520
<v Speaker 2>How big of an opportunity is this for Cisco? And

0:14:17.559 --> 0:14:18.880
<v Speaker 2>should Broadcome be worried?

0:14:20.000 --> 0:14:24.600
<v Speaker 10>Yeah, so we published and react this morning, and essentially

0:14:24.760 --> 0:14:27.400
<v Speaker 10>I don't think Broadcom should be fully worried. There's a

0:14:27.440 --> 0:14:30.160
<v Speaker 10>couple of things that I'll say, Right, Cisco is actually

0:14:30.240 --> 0:14:35.240
<v Speaker 10>one of the biggest chip networking chip manufacturers globally, but

0:14:35.320 --> 0:14:39.840
<v Speaker 10>more for their legacy enterprise IT chips. Right, they produce

0:14:39.880 --> 0:14:42.880
<v Speaker 10>their own chips that powers their own networking gear. They're

0:14:42.880 --> 0:14:47.960
<v Speaker 10>fairly newer to the game in the networking chip side.

0:14:48.320 --> 0:14:51.480
<v Speaker 10>From a revenue standpoint, it's really not a big driver,

0:14:52.160 --> 0:14:54.720
<v Speaker 10>but it may be able to push more boxes. A

0:14:54.800 --> 0:14:56.760
<v Speaker 10>couple of things that I'll say, They did about one

0:14:56.800 --> 0:15:00.880
<v Speaker 10>billion dollars in AI back end revenue, but to put

0:15:00.880 --> 0:15:04.440
<v Speaker 10>that into context, you know they're doing about fifty five

0:15:04.480 --> 0:15:08.240
<v Speaker 10>to fifty six billion dollars in total sales. So you know,

0:15:08.400 --> 0:15:11.680
<v Speaker 10>from from an overall percentage of AI as an overall

0:15:11.720 --> 0:15:13.440
<v Speaker 10>percentage of sales, it's still about two to three percent

0:15:13.480 --> 0:15:16.680
<v Speaker 10>of total sales. Are they going to challenge Broadcom? I

0:15:17.400 --> 0:15:19.280
<v Speaker 10>doubt it, but I do think there'll be a second

0:15:19.400 --> 0:15:26.160
<v Speaker 10>source to the cloud providers versus Broadcom.

0:15:24.960 --> 0:15:26.440
<v Speaker 6>Which in your coverage area.

0:15:26.600 --> 0:15:29.240
<v Speaker 5>What's your best AI play, because I'm sure you get

0:15:29.240 --> 0:15:30.960
<v Speaker 5>that call from clients all the time.

0:15:32.040 --> 0:15:36.560
<v Speaker 10>You know, I mean I have a handful. Dell was one,

0:15:38.440 --> 0:15:41.000
<v Speaker 10>you know. Hp is another one to take a look

0:15:41.040 --> 0:15:44.040
<v Speaker 10>out for. They have an analyst day next week. But

0:15:44.360 --> 0:15:46.920
<v Speaker 10>from from a networking standpoint, Arista has actually been one

0:15:46.920 --> 0:15:49.560
<v Speaker 10>of the high flyers from from a from from a

0:15:49.600 --> 0:15:53.760
<v Speaker 10>networking standpoint, so I will look at Arista and people

0:15:53.800 --> 0:15:59.920
<v Speaker 10>have been taking the AI networking angle and using Arista

0:16:00.120 --> 0:16:01.000
<v Speaker 10>as one of the tools.

0:16:01.200 --> 0:16:01.960
<v Speaker 3>I like that Arisa.

0:16:02.000 --> 0:16:03.520
<v Speaker 2>I haven't heard that one come up yet, you know,

0:16:04.320 --> 0:16:07.520
<v Speaker 2>HPE or HPQ Just to clarify, oh, HPE.

0:16:07.800 --> 0:16:11.400
<v Speaker 10>So think of it as a mini Dell and a

0:16:11.520 --> 0:16:12.760
<v Speaker 10>mini Cisco in one.

0:16:13.360 --> 0:16:16.440
<v Speaker 6>Stay with us. More from Bloomberg Intelligence coming up after this.

0:16:19.960 --> 0:16:23.640
<v Speaker 1>You're listening to the Bloomberg Intelligence podcast. Catch us live

0:16:23.720 --> 0:16:27.160
<v Speaker 1>weekdays at ten am Eastern on Applecarplay and Android Auto

0:16:27.200 --> 0:16:30.280
<v Speaker 1>with the Bloomberg Business app. Listen on demand wherever you

0:16:30.320 --> 0:16:33.520
<v Speaker 1>get your podcasts, or watch us live on YouTube.

0:16:34.320 --> 0:16:37.120
<v Speaker 5>Let's get back to the market here, the auto business

0:16:37.120 --> 0:16:39.920
<v Speaker 5>in particular, BMW took some guidance down here today's citing

0:16:39.920 --> 0:16:41.480
<v Speaker 5>week demand out of China.

0:16:41.560 --> 0:16:42.120
<v Speaker 6>That can't be good.

0:16:42.160 --> 0:16:43.520
<v Speaker 5>So let's get the latest on what's happening in the

0:16:43.520 --> 0:16:47.040
<v Speaker 5>global auto space. Here, Steve Man joins his Bloomberg Intelligence

0:16:47.040 --> 0:16:50.080
<v Speaker 5>Global autos and Industrials research analysts. So let's start with

0:16:50.120 --> 0:16:55.960
<v Speaker 5>the BMW news here, Steve, BMW cuts annual guidance on

0:16:56.000 --> 0:16:58.360
<v Speaker 5>week China sales and tariff costs.

0:16:58.360 --> 0:16:59.080
<v Speaker 6>What's going on there?

0:17:00.080 --> 0:17:02.280
<v Speaker 8>Yeah, it seems like it never It seems like it's

0:17:02.320 --> 0:17:07.440
<v Speaker 8>a never ending cycle here. What's happening to BMW in

0:17:07.560 --> 0:17:10.720
<v Speaker 8>China is not new, It's not new to them. Everybody,

0:17:10.880 --> 0:17:14.600
<v Speaker 8>every foreign automaker is actually facing the pressure there. It's

0:17:14.640 --> 0:17:19.159
<v Speaker 8>a hyper competitive market. Pricing has been spiraling down, and

0:17:19.400 --> 0:17:23.479
<v Speaker 8>you know, the the automakers, the local automakers there are

0:17:23.520 --> 0:17:26.919
<v Speaker 8>actually gaining a lot of traction with the consumer. Consumers

0:17:26.920 --> 0:17:31.000
<v Speaker 8>there are you know, tech savvy. They're looking for tech

0:17:31.080 --> 0:17:35.560
<v Speaker 8>heavy vehicles. And even though the foreign automakers are you know,

0:17:35.800 --> 0:17:40.439
<v Speaker 8>redesigning the screens to make it look jazzy, colorful, but

0:17:40.480 --> 0:17:45.080
<v Speaker 8>it's still I think lacks the capabilities that the consumer

0:17:45.160 --> 0:17:45.920
<v Speaker 8>wants over there.

0:17:46.680 --> 0:17:49.159
<v Speaker 2>Are there any foreign automakers that are holding on to

0:17:49.359 --> 0:17:50.160
<v Speaker 2>market share.

0:17:51.240 --> 0:17:53.760
<v Speaker 9>Not really, I mean relatively speaking.

0:17:53.840 --> 0:17:56.879
<v Speaker 8>I think the Japanese are a little bit better, but

0:17:56.920 --> 0:18:00.720
<v Speaker 8>they are still losing market share, you know, like companies

0:18:00.760 --> 0:18:04.520
<v Speaker 8>like Ford has you know, dwindled down the operation to

0:18:04.560 --> 0:18:10.760
<v Speaker 8>a minimum over there. Even other European automakers like Pugio Citron,

0:18:11.040 --> 0:18:15.080
<v Speaker 8>you know, they've essentially exited that market. So you know,

0:18:15.119 --> 0:18:18.080
<v Speaker 8>the Chinese local automakers like by D and j Ly

0:18:18.800 --> 0:18:22.840
<v Speaker 8>are really coming out with really attractive product and at

0:18:22.920 --> 0:18:25.720
<v Speaker 8>prices that are you know, hard to beat.

0:18:26.000 --> 0:18:28.080
<v Speaker 2>Yeah, I remember a long time ago it seemed like

0:18:28.119 --> 0:18:31.040
<v Speaker 2>every Chinese government official was in a black Audi. Audi

0:18:31.160 --> 0:18:34.560
<v Speaker 2>was like the car, the foreign car in China. Those

0:18:34.840 --> 0:18:36.520
<v Speaker 2>are those days are long gone, aren't they?

0:18:36.920 --> 0:18:39.040
<v Speaker 9>Those days are long gone. You know, when chi Jin

0:18:39.080 --> 0:18:40.080
<v Speaker 9>Pain came in and.

0:18:40.000 --> 0:18:45.200
<v Speaker 8>Started cracking down on corruption, those types of exhibition of

0:18:45.760 --> 0:18:50.080
<v Speaker 8>wealth is pretty much disappeared. And you know, then the

0:18:50.080 --> 0:18:54.760
<v Speaker 8>consumer there are actually getting more sophisticated, right, They're looking

0:18:54.760 --> 0:18:55.800
<v Speaker 8>for value for money.

0:18:56.240 --> 0:18:58.199
<v Speaker 9>And over the past couple of.

0:18:58.280 --> 0:19:02.400
<v Speaker 8>Decades, you know, the low automakers have actually learned quite

0:19:02.400 --> 0:19:06.280
<v Speaker 8>a bit from the foreign automakers setting up shops there

0:19:06.320 --> 0:19:08.840
<v Speaker 8>and They've learned a lot about product design, They've learned

0:19:08.880 --> 0:19:14.119
<v Speaker 8>about a lot about manufacturing, and obviously the local automakers

0:19:14.119 --> 0:19:18.240
<v Speaker 8>there have an advantage, right they understand the consumer over

0:19:18.240 --> 0:19:20.520
<v Speaker 8>there and what they want, really want.

0:19:21.160 --> 0:19:25.880
<v Speaker 5>Switch Gears, Steve Ta Tesla. They've launched their cheaper version.

0:19:25.920 --> 0:19:29.600
<v Speaker 5>I guess it's under forty thousand dollars. What's your reaction,

0:19:29.680 --> 0:19:30.560
<v Speaker 5>what's the market's reaction?

0:19:31.640 --> 0:19:36.240
<v Speaker 8>Yeah, I think the market is somewhat disappointed because Elon

0:19:36.320 --> 0:19:39.960
<v Speaker 8>Musk has projected, you know, for the last few years

0:19:39.960 --> 0:19:43.479
<v Speaker 8>that they would introduce a vehicle that's twenty five thousand

0:19:43.520 --> 0:19:47.320
<v Speaker 8>dollars or maybe even cheaper. Obviously there's inflation, but I

0:19:47.359 --> 0:19:53.040
<v Speaker 8>think the market is expecting something more price competitive. But

0:19:53.119 --> 0:19:57.000
<v Speaker 8>in any case, it is a cheaper model. It's about,

0:19:57.119 --> 0:20:00.840
<v Speaker 8>you know, six seven thousand dollars cheaper than the higher

0:20:01.640 --> 0:20:05.560
<v Speaker 8>the next variant up for the Model Y Model three.

0:20:06.320 --> 0:20:08.600
<v Speaker 9>Really look, it's I don't.

0:20:08.480 --> 0:20:11.560
<v Speaker 8>Think it's going to make a huge impact on Tesla sales,

0:20:11.600 --> 0:20:14.240
<v Speaker 8>given that a lot of sales being pulled forward right

0:20:14.359 --> 0:20:16.880
<v Speaker 8>just before the end of the seventy five hundred EV

0:20:17.040 --> 0:20:21.960
<v Speaker 8>tax credit. But it does create a more intense competitive

0:20:21.960 --> 0:20:25.320
<v Speaker 8>market in the US. Look these vehicles are actually directly

0:20:25.359 --> 0:20:29.480
<v Speaker 8>competing with the likes of the Chevy Equinox EV from

0:20:29.520 --> 0:20:34.280
<v Speaker 8>GM and the Ford Monkey. So you know, I think,

0:20:34.800 --> 0:20:37.479
<v Speaker 8>you know, we got cheaper vehicles coming in in a

0:20:37.560 --> 0:20:41.480
<v Speaker 8>softening market, so it's going to be interesting to see.

0:20:41.760 --> 0:20:44.479
<v Speaker 2>Wait, so the Ford and the Chevy cars, those models

0:20:44.480 --> 0:20:46.720
<v Speaker 2>you cited, those are the cheapest on the market right now.

0:20:46.720 --> 0:20:48.360
<v Speaker 3>What do they retail for right now?

0:20:48.840 --> 0:20:53.080
<v Speaker 8>Yeah, they're around thirty three thirty four to thirty five thousand.

0:20:52.880 --> 0:20:54.840
<v Speaker 3>Okay, which is the same five thousand then?

0:20:56.080 --> 0:20:59.880
<v Speaker 9>Uh no, well not yet. I think we'll have to see.

0:21:00.200 --> 0:21:03.720
<v Speaker 8>It looks like, you know, GM will is expected to

0:21:03.800 --> 0:21:07.000
<v Speaker 8>launch the Chevy Bolt if you remember, Chevy Bolt is

0:21:07.160 --> 0:21:08.960
<v Speaker 8>you know, one of the most popular.

0:21:09.000 --> 0:21:11.080
<v Speaker 9>GM EV's, and it's like a relaunch pop.

0:21:11.720 --> 0:21:15.560
<v Speaker 8>Yeah, it's a relaunch redesign with new battery, a lower

0:21:15.600 --> 0:21:18.600
<v Speaker 8>cost structor. Now, I don't think that vehicles are going

0:21:18.640 --> 0:21:21.720
<v Speaker 8>to get down to twenty five thousands. It looks like

0:21:21.760 --> 0:21:23.199
<v Speaker 8>it's going to be below thirty thousand.

0:21:24.520 --> 0:21:26.879
<v Speaker 6>So what I mean, are you an EV person?

0:21:27.160 --> 0:21:29.879
<v Speaker 2>No, because I don't have a garage, and so if

0:21:29.880 --> 0:21:31.040
<v Speaker 2>I don't have a garage, how am I going to

0:21:31.160 --> 0:21:32.359
<v Speaker 2>charge this vehicle point.

0:21:32.440 --> 0:21:34.040
<v Speaker 6>You know, I want the hybrid route for the most

0:21:34.080 --> 0:21:35.120
<v Speaker 6>recent I like the.

0:21:35.040 --> 0:21:37.880
<v Speaker 2>Idea of a hybrid route, but apparently those I don't

0:21:37.920 --> 0:21:39.840
<v Speaker 2>know the car parts, but it's easy to steal, and

0:21:39.840 --> 0:21:42.600
<v Speaker 2>therefore you can be lauch you know. Thanks.

0:21:42.880 --> 0:21:47.560
<v Speaker 1>This is the Bloomberg Intelligence Podcast, available on Apple, Spotify,

0:21:47.760 --> 0:21:51.720
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0:21:51.920 --> 0:21:55.239
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0:21:55.280 --> 0:21:59.159
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0:21:59.200 --> 0:22:02.480
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0:22:02.680 --> 0:22:04.640
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0:22:08.240 --> 0:22:08.600
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