Speaker 1: Bloomberg Tech is alive from coast to coast, with Caroline
Speaker 1: Hyde in New York and Edva Lowe in San Francisco.
Speaker 2: This is Bloomberg Tech coming up. The battle between Elon
Speaker 2: Musk and President Trump is refueled, clashing over the tax
Speaker 2: bill and the EV subsidy question.
Speaker 1: Plus Musk is taking oversight of sales in Europe and
Speaker 1: the US as investors brace for another ugly delivery number
Speaker 1: for Q two, and.
Speaker 2: Apple is considering using AI technology from Manthropic or open Ai,
Speaker 2: potentially sidelining its own in house models. All right, let's
Speaker 2: get straight to our top story. Tesla is down six percent.
Speaker 2: It is off session lows. But the President in the
Speaker 2: last few minutes reiterating something that he said earlier this morning,
Speaker 2: basically that doades should look at Elon Musk. There was
Speaker 2: a question to him about whether must should be deported.
Speaker 2: There is a clash over a bill. Let's get to
Speaker 2: those comments from earlier today, Rob, thank your luck.
Speaker 3: We might have to put doge on Elon. You know,
Speaker 3: you know, doj Doji is the monster that has that
Speaker 3: might have to go back and eat Elon.
Speaker 4: Will that be there?
Speaker 3: Of He gets a lot of subsidies, Peter, But Elon's
Speaker 3: very upset that the easy mandate you're gonna be terminated.
Speaker 3: And you know what, when you look at it, who
Speaker 3: wants not everybody wants to electric car.
Speaker 1: Let's get more on the feud Elon Musk versus the
Speaker 1: White House remokes Kaylee lines joins us for more and
Speaker 1: yet further comments coming from the President that he's going
Speaker 1: to be looking more deeply into Elon's businesses.
Speaker 5: Yeah, and Caroline, this was really reignited after Elon Musk
Speaker 5: has refired up his criticism of this one big, beautiful bill,
Speaker 5: whether or not you assign the blame for that because
Speaker 5: of fiscal responsibility concerns, Musks has, in his view that
Speaker 5: this adds too much to the deficit and undermines the
Speaker 5: work of Doge or what President Trump and other Republicans
Speaker 5: have suggested, which is just that Musk is upset about
Speaker 5: ev subsidies. Either way, Elon Musk has gone as far
Speaker 5: as to say that any Republican who campaigned on lessening
Speaker 5: the debt burden of the United States and then voted
Speaker 5: for a big addition to the debt would face a
Speaker 5: primary funded potentially by Elon Musk. He said they will
Speaker 5: lose their primary next year if it is the last
Speaker 5: thing I do on this earth keeping in mind, of course,
Speaker 5: he deployed almost two hundred and eighty million dollars in
Speaker 5: the twenty twenty.
Speaker 6: Four election cycle.
Speaker 5: So that is what President Trump and part has responded
Speaker 5: to here. He just reiterated down in Florida that he
Speaker 5: wants the Department of Government Efficiency, which Elon Musk was running,
Speaker 5: to look into Musk's businesses, calling him the most subsidized
Speaker 5: person on Earth, suggesting if those government subsidies were to
Speaker 5: go away, Elon Musk might have to go back to
Speaker 5: South Africa, though it's unclear how exactly that would work.
Speaker 5: Is Yes, there is a rollback of EV subsidies, for example,
Speaker 5: in this legislation that could hit Tesla, But for another
Speaker 5: Musk company like SpaceX, which basically is the only reliable
Speaker 5: way to get US astronauts too and from the International
Speaker 5: Space Station, that may be a lot harder of a
Speaker 5: relationship to disrupt. Then there's the other threat, of course,
Speaker 5: that President Trump has suggested he may act on today.
Speaker 5: When he was asked directly if you would look at
Speaker 5: deporting Elon Musk, he said he'll have to look into
Speaker 5: that knowing that, yes, Elon Musk was born in South Africa,
Speaker 5: but he is a US citizen, so it's not clear
Speaker 5: either how that would work. And it's also not clear
Speaker 5: whether we could see an escalation in this tension as
Speaker 5: we saw last month. Elon Musk for now was saying
Speaker 5: that while he is tempted to escalate, he'll refrain from
Speaker 5: doing so.
Speaker 2: Bloomberg's Katie Lines in Washington, d C. Thank you very much.
Speaker 2: Let's stick with Tesca Tesla. Bloomberg broke the story this
Speaker 2: morning that Elon Musk is set to take over the
Speaker 2: reins of the company's European and US sales following the
Speaker 2: departure of long time lieutenant Ohmead Afshaft. For more, I
Speaker 2: want to get out to Bloomberg's Craig Trudell. This comes
Speaker 2: in advance of likely global sales data tomorrow, right. But
Speaker 2: what we're learning from sources we broke this colleage story
Speaker 2: of our colleagues in Asia is the kind of sense
Speaker 2: of who's steering the ship right now at Tesla.
Speaker 7: Yeah, I think this is interesting in light of the
Speaker 7: last few months. Right when April rolled around, we saw
Speaker 7: that I had really disappointing first quarter deliveries. In May,
Speaker 7: Bloomberg spoke with Elon Musk at an economic forum, where
Speaker 7: he said, you know what, sales have turned around. We
Speaker 7: don't expect to see any shortfall in sales.
Speaker 6: You know.
Speaker 7: I think as the quarter progressed, it became clear that
Speaker 7: that was premature, you know, at least to put it charitably,
Speaker 7: that Tesla sales had in fact continued to decline. The
Speaker 7: expectation among analysts is again for another, you know, call
Speaker 7: it in the ballpark of twelve to thirteen percent drop
Speaker 7: similar to the first quarter. And you know, Tesla, it
Speaker 7: does seem now is looking to sort of shake things
Speaker 7: up with Musk, you know, it certainly seems dismissing Afshar
Speaker 7: and also taking over those reporting lines from him Craig.
Speaker 1: The irony here, though, is that many would say Elon
Speaker 1: is the problem and why sales fell in Europe at least,
Speaker 1: maybe not so much in Asia where it's a competition
Speaker 1: issue in particular. But meanwhile, the issue, the focus he
Speaker 1: had in politics that has so hurt his sales is
Speaker 1: now biting him back.
Speaker 6: From a White House perspective.
Speaker 2: It feels like.
Speaker 7: I think that's a perfect, perfectly good sort of counter
Speaker 7: argument to make here right in that in Asia we
Speaker 7: have not necessarily seen the blowback that we've seen in
Speaker 7: the US or Europe, where it doesn't necessarily matter all
Speaker 7: that much to a consumer in China how close Elon
Speaker 7: Musk is to Donald Trump necessarily, but it does matter
Speaker 7: when Musk is exerting himself over the US government to
Speaker 7: American car buyers, and over here in Europe Trump is
Speaker 7: not particularly popular. He's also inserted himself into European politics,
Speaker 7: most notably, I would say, in Germany getting behind the AfD,
Speaker 7: which of course is a very polarizing party to say
Speaker 7: the least, not only in that country, but in Europe
Speaker 7: more broadly. And you know, those sort of combination of factors.
Speaker 7: I think, you know, there was a real sort of
Speaker 7: question earlier this year how much of this is a
Speaker 7: backlash against Musk and how much is it you know,
Speaker 7: things going on within the business, the changeover to.
Speaker 6: Right, a refresh model why.
Speaker 7: I think we're seeing more indications that it's not just
Speaker 7: the model why, and that the Musk factor is looming
Speaker 7: large here as well.
Speaker 2: Shares have paired some of their decline, now down five percent,
Speaker 2: the session low was seven point seven percent decline. Where
Speaker 2: you're showing this chart, Craig, that amidst all of the headlines,
Speaker 2: Tesla's market values fall and below one trillion dollars. Let's
Speaker 2: go back to the political Kaylee was explaining the tension
Speaker 2: between Musk and President Trump around the Big Beautiful Bill
Speaker 2: and the issue of EV subsidy.
Speaker 6: Elon.
Speaker 2: Musk has been very consistent to his credit that actually
Speaker 2: he'd be fine if America did away with subsidies, because
Speaker 2: I think my understanding of it is that he feels
Speaker 2: Tesla has a lower cost base and more pricing power,
Speaker 2: and if subsidies were to go away, which President statements contradict,
Speaker 2: it would be more beneficial to Tesla than it would
Speaker 2: be other American automakers.
Speaker 6: Yeah.
Speaker 7: And I think our colleague in Bloomberg opinion, Liam Denning,
Speaker 7: has has probably made the most you know, convincing counter
Speaker 7: argument to that, right, that this is not a matter
Speaker 7: of people deciding, you know, whether to buy a Tesla
Speaker 7: or another another electric vehicle, that there's also the potential
Speaker 7: for consumers to you know, decide, you know what, Rather
Speaker 7: than buy a Tesla, I made buy a combustion car
Speaker 7: from uh, you know from say a General Motors or
Speaker 7: a hybrid from a Toyota, right, and so it's not
Speaker 7: necessarily the case that a consumer is only going to
Speaker 7: buy an electric vehicle. And sort of stuck on that,
Speaker 7: I do think that subsidies. While Musk absolutely to your point,
Speaker 7: he's been quite consistent over the years and saying and saying,
Speaker 7: you know, do away with subsidies, Tesla will be fine,
Speaker 7: I think it's it's hard to sort of take him
Speaker 7: at his word in saying that when we're not talking
Speaker 7: about a small amount of money for the consumer in
Speaker 7: the US. We're talking about up to seventy five hundred
Speaker 7: dollars for the you know buyer who who you know.
Speaker 7: If this is taken away as the Senate Republicans want
Speaker 7: to expedite this, you know, phasing it out in September,
Speaker 7: that's a huge deal for Tesla. And it's not just
Speaker 7: that that you know, the company is sort of you know,
Speaker 7: coming under target from Republicans. It's also you know, things
Speaker 7: like funding for manufacturing tax credits, you know, ZEV credits,
Speaker 7: regulatory credits set the company sells to other automakers. So
Speaker 7: this is a much broader sort of you know, offering
Speaker 7: of subsidies or you know, forms of government support that
Speaker 7: would really hurt Tesla if they were to go away.
Speaker 1: Roughly forty percent of Tesla's profits are at risk due
Speaker 1: to the shifting regulatory landscape. That's what JP Morgan Analysts
Speaker 1: are currently putting an estimate of th most Creatrudell brilliant
Speaker 1: to have you, thank you. Let's talk about owning this
Speaker 1: stock should be included and ETFs like that of define
Speaker 1: sylviagel Blonski's with us, She's defines ETF CEO CIO and
Speaker 1: we start with Tesla and Mosk. I think you've articulated
Speaker 1: that you don't have exposure across the ets particularly to Tesla.
Speaker 1: Is that because of the role Musk plays or other things?
Speaker 8: Good morning and thank you for having me. No, that's
Speaker 8: not really defiant. Specific Our ETFs are in the quantum
Speaker 8: computing space, right and six G, which is the next
Speaker 8: shed of communication really, So it's just that we don't
Speaker 8: happen to you know, track the space or that particular
Speaker 8: product within those funds. But that being said, you know,
Speaker 8: I think that if there were an opportunity to hold Tesla,
Speaker 8: it's not something that we would necessarily be opposed to, right,
Speaker 8: I think that a lot of what's happening now is
Speaker 8: noise around politics. And you know there is some potential
Speaker 8: downside if this tax bill removed seventy five hundred dollars
Speaker 8: with of credit. I mean that subsidies affect sales in
Speaker 8: the long run. They rarely go on skate if passed.
Speaker 8: But you know that aside, I mean, Elon Musk is
Speaker 8: still Elon Musk. And you know the genius of robotaxis
Speaker 8: and driverless cars in home robots which one day could
Speaker 8: could be a staple in all of our homes. You know,
Speaker 8: I don't count the company or the CEO out regardless
Speaker 8: of this feud.
Speaker 1: So do you not even bake in as a potential
Speaker 1: ire of You know, you got plenty of leverage dtfs
Speaker 1: for example on single names, and whether or not eventually
Speaker 1: it'd want to be giving that sort of volatile exposure
Speaker 1: to your own client based Sylvia, would you ever hypothesize
Speaker 1: that such a leader in technology could be asked to
Speaker 1: leave the country even that seems to me what's being
Speaker 1: implied by the president.
Speaker 8: That seems to be it's being implied, And there there
Speaker 8: are levered Tesla ETFs out there and they're you know,
Speaker 8: they're they're quite popular and are seeing you know, steady
Speaker 8: AUM growth and that's just you know, consequence of first
Speaker 8: movers got there. But you know, I can't really kinment
Speaker 8: too much on the citizenship aspect of it, but it
Speaker 8: is my understanding that Elon Musk is the US citizens
Speaker 8: I'm not sure you know.
Speaker 6: How that would go, Sylvia.
Speaker 2: When you compose an ETF is key man risk and
Speaker 2: the leadership of any given name part of the consideration.
Speaker 8: Yeah, so that that can always be a factor in
Speaker 8: terms of you know, it depends on the type of
Speaker 8: ETF that is structured and what it does. So you know,
Speaker 8: there have certainly been products in the market before where
Speaker 8: people are looking at you know, specific leaders and basing
Speaker 8: ETFs off of the types of CEOs that they want
Speaker 8: to invest in. You know, sometimes that's been in the
Speaker 8: ESG space. Sometimes that's been around DEI factors. Other times
Speaker 8: it's been around you know, kind of the tech lords
Speaker 8: and things like this. And so that's certainly a factor
Speaker 8: that can can play in. But I think most of
Speaker 8: the time, like when you're thinking about thematic ETX, for example,
Speaker 8: you're thinking about a theme and then you try to
Speaker 8: build in the products that X fit that theme, so
Speaker 8: quantum stocks for example. Right, you're not thinking so much
Speaker 8: about the CEO, but more about the company itself and
Speaker 8: what it does.
Speaker 1: Apple it is considering using AI technology from Anthropic or
Speaker 1: from open Ai to power a new version of Siri,
Speaker 1: sidelining its own in house models. If Apple moves forward
Speaker 1: with using third party models, it will represent a significant
Speaker 1: reversal and an acknowledgement that the company is struggling to
Speaker 1: compete in general to AI. Blue Meg's Mark German joins
Speaker 1: us for more. And this is a significant story, and
Speaker 1: it really puts the focus on the in house model
Speaker 1: builders and whether that's going to be something commit to.
Speaker 9: Absolutely right, this is a blockbuster idea for Apple. And
Speaker 9: I say it's an idea because they haven't made any
Speaker 9: final decisions here. Internally, they're investigating whether or not they
Speaker 9: should move away from their foundation models. That's their internal
Speaker 9: large language model system.
Speaker 6: Two chat GPT.
Speaker 9: From OpenAI, claud from Entthropic, or a different provider to
Speaker 9: power SII specifically, as you know, Siri hasn't really worked
Speaker 9: well for years, Right, and even with Apple Intelligence in
Speaker 9: a move to generative AI. It hasn't improved, and it's
Speaker 9: been over a year since they announced these AI features,
Speaker 9: and so they're taking a hard look if they should
Speaker 9: be using someone else's back end. Be a similar situation
Speaker 9: to Amazon, which uses claud for the new Alexa, and
Speaker 9: of course Samsung, which uses Google Gemini to power their
Speaker 9: AI system.
Speaker 2: Mark Apple's up one point seven percent today. It closed
Speaker 2: up two percent yesterday. There's a lot of evidence that
Speaker 2: the market is paying attention to this reporting. Part of
Speaker 2: what you reported is that Apple is asked Anthropic and
Speaker 2: open AI to go away and develop versions of their
Speaker 2: models that can run on Apple's cloud infrastructure, which also
Speaker 2: relies on custom silicon. Could you explain that a bit.
Speaker 9: So Right now, Apple has two types of AI, just
Speaker 9: to simplify it.
Speaker 6: They have on device AI and.
Speaker 9: That means the large language models run on the iPhone,
Speaker 9: the iPad.
Speaker 6: The Mac themselves. That's for lower.
Speaker 9: Tier tasks like summarizing an email. Then they have cloud
Speaker 9: based AI. They call that private cloud compute. This is
Speaker 9: for summarizing very long articles. This is for writing blocks
Speaker 9: of text. And Apple wants to use either Entropic or
Speaker 9: open AI, or at least they're considering them in the cloud.
Speaker 9: That's because those models require a lot more processing power
Speaker 9: and that can't be done on the phone itself. It's
Speaker 9: also more private. Instead of having models from a third
Speaker 9: party running deep into the iPhone infrastructure, they'll be running
Speaker 9: in the cloud, keep things more sectioned off from user data.
Speaker 9: And so that's the way they're looking about this. The
Speaker 9: idea here is that they're training these models right now
Speaker 9: in thropic and open AI. Apple's going to evaluate to
Speaker 9: see who's the best, and they very may well decide
Speaker 9: they're going to keep going with Apple Foundation models. Concurrently,
Speaker 9: they're developing a version of Siri for next spring that
Speaker 9: uses Apple Foundation models, but that it's a competing project
Speaker 9: to this open AI and anthropic idea.
Speaker 6: So we'll see what they end up doing.
Speaker 9: But the fact that they're heavily considering and evaluating this
Speaker 9: tells you everything you.
Speaker 6: Need to know.
Speaker 2: Bloomberg's Mark German, thank you very much. Now, Mark Zuckerberg
Speaker 2: has announced the restructuring of metas Artificial Intelligence group, now
Speaker 2: called Meta Superintelligence Labs, and he's stocking it full of
Speaker 2: hires from rival AI firms. Here with the story, bloombergs
Speaker 2: Kirt Wagner and actually This is confirmation via an internal
Speaker 2: memo from Zuckerberg and the team to metastaff of a
Speaker 2: lot of what we've reported over the last month. We
Speaker 2: have a superintelligence team. What was new in what Zuckerberg said, Yeah.
Speaker 10: I think what we learned today, to your point ed,
Speaker 10: is that this thing is official. We had been talking
Speaker 10: and reporting about this for a couple of weeks. Now
Speaker 10: I think what's new is that they listed in total,
Speaker 10: if you include Alexander Wang, team new hires for this team.
Speaker 10: So we did confirm a lot of the new members
Speaker 10: of the team.
Speaker 6: And we also learned that Nap Friedman, former.
Speaker 10: CEO GitHub, is going to sort of co run this
Speaker 10: new team with Alex Wang. So I get to sence
Speaker 10: alex Wange is perhaps in charge with Friedman as his
Speaker 10: number two, but either way, these two people are going
Speaker 10: to be atop this thing. It was something that I
Speaker 10: think we had long speculated and heard about. But again,
Speaker 10: all of this is now official, and this you know,
Speaker 10: it represents a huge restructuring and also a revision of
Speaker 10: what a meta wants to accomplish with AI.
Speaker 1: And the ability and willingness to spend. He articulated that
Speaker 1: he's willing to spend hundreds of billions on this race
Speaker 1: because there's no point coming second basically cut.
Speaker 10: I think that's the feeling is that if you are
Speaker 10: the first two AGI, if you are the first two
Speaker 10: human level AI intelligence, that's sort of all that's going
Speaker 10: to matter.
Speaker 6: At a certain point.
Speaker 10: I think everyone's going to catch up to this, right,
Speaker 10: If this is achievable, everyone will get there. But whoever
Speaker 10: is their first not only gets to sort of stake
Speaker 10: that claim, gets to use that to benefit recruiting and
Speaker 10: other things, but they're also going to be the first
Speaker 10: to sort of lower consumers to their various products that have,
Speaker 10: you know, an AI chatbot. So for example, if you're meta,
Speaker 10: you're looking at the ray band glasses and you think, wow,
Speaker 10: if we are the first people to come up with
Speaker 10: a human level AI assistant, then ray bands are going
Speaker 10: to fly off the shelves. At least that is the hope, right,
Speaker 10: And so I do think that while you know, presumably
Speaker 10: this might become ubiquitous tech, everyone wants to be there
Speaker 10: first for a number of reasons, the primary one being
Speaker 10: of course, to sell those products and to get consumers
Speaker 10: to their product first before the competitors.
Speaker 1: Big tech meets big football. Microsoft in the Premier League
Speaker 1: are launching a five year strategic partnership aimed at transforming
Speaker 1: how fans engage with the aim of football or soccer,
Speaker 1: however you call it, whether it's fantasy football, in match analysis,
Speaker 1: even a personal AI companion.
Speaker 2: Now we caught up.
Speaker 1: Exclusively with Microsoft UKCO. That's Darren Harnman and the Premier
Speaker 1: League Chief Commercial Officer Will Brass about the news.
Speaker 11: This is the partnership partnership like we have with the
Speaker 11: main Microsoft customers, transforming the core of how the Premier
Speaker 11: League works and operates and runs their business and extending
Speaker 11: into their customers, which is the fans. And so the
Speaker 11: fan experience is incredibly experienced.
Speaker 6: And it's just a privilege to be able to leverage.
Speaker 11: The power of the Microsoft co pilot and the broader
Speaker 11: AI technologies that we have to reach so many people
Speaker 11: in such a positive way.
Speaker 2: Well, same question to you, who's paying who? What's the
Speaker 2: commercial value of this deal to you?
Speaker 6: That's one for us.
Speaker 12: I think ed that what I would say is it's
Speaker 12: a truly mutual strategic partnership that we're entering into on
Speaker 12: a multi year basis. Were very excited about what the
Speaker 12: future may hold in that regard, and of course, as
Speaker 12: the Premier League, we're very lucky to work with a
Speaker 12: number of genuinely world class businesses and brands. We're a
Speaker 12: big part of our strate strategic work around the world.
Speaker 12: To add Microsoft to that family is really great moment
Speaker 12: for us.
Speaker 2: The wording you use will was add Microsoft. I've been
Speaker 2: tracking the Premier League from a data analytics standpoint for
Speaker 2: a number of years now. When I came to America
Speaker 2: in twenty eighteen, I really sort of took on board
Speaker 2: the role that the in game experience plays, but on
Speaker 2: the analytics and data side, fans have an essatial appetite
Speaker 2: for it. In twenty twenty one, you had a similar
Speaker 2: partnership with Oracle right on the analytics and data side.
Speaker 2: Is this announcement you replacing Oracle with Azure and Microsoft
Speaker 2: or is it in addition to.
Speaker 12: So the partnership with Oracle has now expired and this
Speaker 12: relationship with Microsoft is a new one. It Ultimately, all
Speaker 12: of our partnerships are different in nature, so there isn't
Speaker 12: a direct reader cross between the work that we did
Speaker 12: with Oracle the work that we do with Microsoft. Microsoft
Speaker 12: are becoming a partner in light of the technology transformation
Speaker 12: story that we're trying to go through. We think they're
Speaker 12: the perfect partner for that, and so we're excited to
Speaker 12: be to be moving ahead.
Speaker 6: To day together.
Speaker 1: Moving ahead today, Darren paint, what five years from now
Speaker 1: looks like it's a five year strategic partnership. How will
Speaker 1: my engagement with the Premier League have changed? You think?
Speaker 6: Yeah, I think this is the future of football.
Speaker 11: It's a data driven drama. It's smarter stats, it's deeper stories,
Speaker 11: it's a better connection of the fan to what's going on,
Speaker 11: and it's a life cycle.
Speaker 6: So you know, how do I start my experience.
Speaker 11: On the game day, what's my experience during the game,
Speaker 11: and how do I interact and engage post the game
Speaker 11: based on the experiences I've had. And so as we
Speaker 11: engage and as we grow this partnership, we'll take feedback
Speaker 11: from the fans directly and we'll begin to build out
Speaker 11: even more capability that you will you'll find on day
Speaker 11: one as we launched today, that.
Speaker 2: Was Microsoft UK CEO Darren Hardman and the Premier League
Speaker 2: Chief Commercial Officer Will Bruss Coming up, we're going to
Speaker 2: talk a lot more about Tesla as the stocks falls
Speaker 2: from this reunited reignited feud carry between Elon Musk and
Speaker 2: President Trump. Down five percent off session lows, but belower
Speaker 2: trillion dollars in market cap. For all the focus on
Speaker 2: robotaxi AI this week, it's all about selling cars. Welcome
Speaker 2: back to Bloomberg Tech. We're really zeroed in right now
Speaker 2: on ev makers around the world. We're just going to
Speaker 2: start with BYD, the Chinese ev maker, ten percent sales
Speaker 2: growth in June. But remember part of the strategy is
Speaker 2: to go for mass volume growth of BYD through heavy
Speaker 2: discounts in competition with Tesla down five point three percent.
Speaker 2: Carow We've been talking about how it's off session loads.
Speaker 2: I think at one point it was down seven point
Speaker 2: seven percent, But this is a company that has fallen
Speaker 2: below a trillion dollars of market value because Elon Musk
Speaker 2: and President Trump's relationship, well, I think it's changing.
Speaker 1: And the reignited feud is upon us because we already
Speaker 1: knew they had a monumental bust up but previous months
Speaker 1: and now that argument continues. Danahal breaks it all down
Speaker 1: for us, and this is going back to the frustration
Speaker 1: Elon Musk seems to have with the tax bill. But
Speaker 1: many would try and interpret that this is actually about
Speaker 1: ev subsidies.
Speaker 13: I think it's about a lot of things. I mean,
Speaker 13: Musk is very worried about the deficit and has been
Speaker 13: for quite some time. And the whole premise of DOGE
Speaker 13: was that it was going to cut government waste for
Speaker 13: odd and abuse.
Speaker 6: Simultaneously, you have this crazy.
Speaker 13: Bill moving through the Senate that adds an enormous amount
Speaker 13: of money to the deficit, gives billions of dollars to ICE,
Speaker 13: kind of expands the veillance state, cuts people off of
Speaker 13: Medicaid snap, And you know, Elon Overnight was like, this
Speaker 13: is a bad bill, and he is threatening to primary people,
Speaker 13: he's threatening to start a third party, and so he
Speaker 13: and he and President Trump have kind of gotten back
Speaker 13: into it. And so you know, Musk is using the
Speaker 13: power of his bully pulpit to really kind of warn
Speaker 13: the Senate and politicians that he is not a fan
Speaker 13: of this bill. And so it's kind of reignited this
Speaker 13: long shimmering feud between the two of them that has
Speaker 13: kind of, you know, been off and on for a while.
Speaker 2: In the last few minutes, the President has been speaking
Speaker 2: in Florida, ahead of ahead of his alligator Alcatraz tool.
Speaker 2: Let's just listen to what he said. Elon Musk is
Speaker 2: ripping into this bill again.
Speaker 14: Are you concerned that Republicans are going to be swayed
Speaker 14: by month and his money?
Speaker 6: No, I don't think so.
Speaker 3: I think what's going to happen is Doze is gonna
Speaker 3: look at Musk, and if those looks at Musk, We're
Speaker 3: gonna say, but fortune, thank you very much, everybody here.
Speaker 6: I don't think he should be playing that game with me.
Speaker 2: That there's two parts to the President's accusations will claim
Speaker 2: against must one that he does feel upset about the
Speaker 2: EB subsidy, but also that Musk himself is subsidized. And
Speaker 2: in the course of your reporting over the last month
Speaker 2: or so, we've explained how across Elon Inc. There is
Speaker 2: exposure that Elon Musk has across subsidies but also grants
Speaker 2: and key government contracts.
Speaker 6: Oh for sure.
Speaker 13: I mean if you look at SpaceX, I mean SpaceX
Speaker 13: is a key government contractor. They have loads billions of
Speaker 13: dollars in contracts with NASA and with the Pentagon, And
Speaker 13: I mean that is you know, I think I think
Speaker 13: that SpaceX is actually quite significant in terms of just
Speaker 13: the funding that it gets from the US government, and
Speaker 13: so you're seeing two alpha males kind of go at
Speaker 13: each other. It's curious to me that Trump is saying
Speaker 13: that Doge would look at Musk, because like, what is
Speaker 13: Doge without Musk?
Speaker 2: Really, Like, you know, I'm not.
Speaker 13: Entirely sure who's running the show there, but this is
Speaker 13: just yeah, this is just sort of wild. I mean,
Speaker 13: And the Senate has not voted yet as far as
Speaker 13: I know, but it's coming down to the wire and
Speaker 13: whether they have the votes to proceed.
Speaker 2: Yeah, I think we're getting headlines that are votes close
Speaker 2: blue most anahole from the Elon Inc. Team, Thank you
Speaker 2: very much. Let's stay with Tesla. Tesla shareholder, but also Elon.
Speaker 2: Musk's critic, Ross Gerbert, the Gerbert Kawazaki SIA and President
Speaker 2: took to X last night following comments from the President
Speaker 2: saying it seems Elon is destined to find out who
Speaker 2: is more powerful. Ross Gerbert is here with us. Ross,
Speaker 2: I just wanted to give the context of your position,
Speaker 2: Like you are a long term believer in the broader
Speaker 2: Tesla story, right, your concern and what you go on
Speaker 2: to say about the board in particular, is that this
Speaker 2: political fight between Elon Musk and the president is not
Speaker 2: to the benefit of the company. Have I got that right?
Speaker 13: Oh?
Speaker 6: Yeah, I mean it's horrific for the company, to be honest.
Speaker 1: Have you done the actual math ross, Because what's interesting
Speaker 1: is I think JP Morgan analysts have said maybe about
Speaker 1: forty percent of profits are exposed here to regulatory shifts
Speaker 1: and the landscape. Do you think that's as much as
Speaker 1: we could see a dentop? Is it more or less
Speaker 1: than that?
Speaker 6: No?
Speaker 14: I think it could be much more detrimental because when
Speaker 14: you look at pricing of evs like Tesla's in particular,
Speaker 14: there's a severe supply.
Speaker 6: And demanding balance because the demand for Tesla.
Speaker 14: Has dropped off, so people don't really want the cars,
Speaker 14: and the discounts that they get through the seventy five
Speaker 14: hundred dollars credit is a substantial amount of money relative
Speaker 14: to let's say a forty thousand dollars car, So the
Speaker 14: typical Tesla buyers is actually.
Speaker 6: Sort of like a millennial.
Speaker 14: So these price increases definitely are bad. And when you
Speaker 14: go into areas like I'm in Europe now, I mean
Speaker 14: the hate for Elon is huge.
Speaker 6: You know.
Speaker 14: I'm in Italy where this was a country that you know,
Speaker 14: Americans fought and died to end fascism here and had
Speaker 14: a horrible experience under Berlusconi, which is like a billionaire
Speaker 14: like Musk, and so people are just done with it.
Speaker 6: So this is just another like nail.
Speaker 14: In the coffin which I tweeted that really is going
Speaker 14: to hurt Tesla, and I'm very upset about it, you know,
Speaker 14: I just think this is totally unnecessary.
Speaker 1: I mean, I think we can bring up what you've
Speaker 1: been posting a little bit earlier, Ross, but I'm really
Speaker 1: interested as to the latest breaking news out of Bloomberg
Speaker 1: has been that Elon has helped reassert himself into the
Speaker 1: sales role in Europe in the US of Tesla. Now
Speaker 1: do you think that's.
Speaker 6: A good move?
Speaker 1: Do you want him more involved or is it the
Speaker 1: fact that you know, if he's impacting the way people
Speaker 1: feel in Italy and around the EU, is that a
Speaker 1: good thing or no?
Speaker 6: Well, there's no Tesla's in Italy. I mean, we're not
Speaker 6: selling any here.
Speaker 14: I've seen a handful at most, and I've driven all
Speaker 14: over the place, you know, and you know, the way
Speaker 14: I look at it is this Elon has a talent obviously,
Speaker 14: and he's a very successful engineer and manufacturer, has built Tesla.
Speaker 6: Up into being a huge company.
Speaker 14: But from a marketing and media perspective, he's destroyed his
Speaker 14: image and the more involved he is, it's actually worse
Speaker 14: from a marketing perspective, and especially because he's not coming
Speaker 14: out and saying, hey, you know, I'm sorry for you know,
Speaker 14: sort of pissing off everybody I've been wrong, you know
Speaker 14: about Trump and you know.
Speaker 6: Please buy my cars.
Speaker 14: It's more just fighting and political infighting and then threatening
Speaker 14: to start another party.
Speaker 6: You know, you're at this kind of point where it's.
Speaker 14: Like, what is this guy doing? You know, like you're
Speaker 14: supposed to be selling cars and Rogo taxis and instead
Speaker 14: we're in a fight with the President of the United States,
Speaker 14: which he enabled and helped empower. But I'm sorry, Elon,
Speaker 14: President Trump is way more powerful than you. I mean,
Speaker 14: he's literally bombing Iran and you're messing with this guy.
Speaker 14: So it's just, quite frankly, it's stupid.
Speaker 6: Ross Musk has.
Speaker 2: Been consistent through social media posts videos that he's okay
Speaker 2: with the idea that subsidies in particular direct consumer subsidies
Speaker 2: go away, because he argues Tesla has this lower cost
Speaker 2: base and pricing power, and the President obviously his comments
Speaker 2: to dispute that. You know, he keeps claiming that Elon
Speaker 2: is upset. What do you think about the doing away
Speaker 2: with subsidies and how Tesla's position in the market would
Speaker 2: be impacted.
Speaker 14: Well, it turns out that tesla real competition isn't as
Speaker 14: much evs as it turns out to be, like hybrid
Speaker 14: vehicles like the Audi I'm driving here in Italy, which
Speaker 14: is actually a great vehicle and it gets about twice
Speaker 14: the gas mileerge that a regular gas car would get.
Speaker 6: It's not an EV so it doesn't have the same benefit.
Speaker 14: But when you actually look at competitions just on a
Speaker 14: regular basis of all vehicles, you know, there's lots of
Speaker 14: choices consumers have and many of them are energy efficient,
Speaker 14: even if they're not EV's and they're making those choices,
Speaker 14: and we're seeing in the numbers, not to mention, we're
Speaker 14: seeing EV sales like.
Speaker 6: In Europe actually sore and it's just not Tesla. So
Speaker 6: this idea that it's not going to hurt.
Speaker 14: Tesla because the benefits are taken away, you know, is
Speaker 14: really just again, it just doesn't make any sense, and
Speaker 14: it goes against the fundamental theories of economics. So making
Speaker 14: the car more expensive means less people will buy it.
Speaker 14: It's simple as that, and they already have a hard
Speaker 14: time soul in the car.
Speaker 6: Ross.
Speaker 2: I see on the Blueberg terminal that gerber Kawasaki had
Speaker 2: around two hundred and thirty five thousand shares is at
Speaker 2: the end of March, and that you'd been a seller
Speaker 2: of the stock. And I just point out as the
Speaker 2: audience because when I said you were coming on, some
Speaker 2: people say, well, gerber Kawasaki doesn't even hold any shares
Speaker 2: at all. So I'm putting that out there. In your
Speaker 2: post on X you cited the board. The idea that
Speaker 2: Elon Musk's political statements are not helpful is not unique
Speaker 2: to you.
Speaker 6: Others share it.
Speaker 2: Have you had anything from the board or do you
Speaker 2: have any sense if the board has any plan to
Speaker 2: act on this.
Speaker 6: No, they're not going to do anything.
Speaker 14: And we all know that they are all paid by
Speaker 14: Elon and work for Elon, and it's not an independent board.
Speaker 6: And Delaware courts have said this over and over again.
Speaker 14: There's been one change to the board since they did
Speaker 14: have one independent board member recently. But you know, the
Speaker 14: fact of matter, they're not going to do anything about it,
Speaker 14: you know, and I think there's some confusion. I run
Speaker 14: an ETF GK ETF, and we sold our Tesla yesterday.
Speaker 14: We had a small position left, and that's just the
Speaker 14: you know, one small part of what we We manage
Speaker 14: over three and a half billion dollars for clients at
Speaker 14: Gerba Kolas Hockey.
Speaker 6: And many of them are big, long.
Speaker 14: Time Tesla diehard shareholders, and that's who I really represent.
Speaker 6: They love Tesla like I love Tesla, but Elon is
Speaker 6: not doing what's best for us shareholders.
Speaker 14: So we still have I checked yesterday over sixty million
Speaker 14: dollars in Tesla stock for our clients. And that's what
Speaker 14: I'm advocating for because I personally have sold a lot
Speaker 14: on my personal position. I still own some personally, and
Speaker 14: you know, my cost basis is two dollars and fifty
Speaker 14: cents of shares. But I like keeping some shares just
Speaker 14: because it was one of the best trades of my life.
Speaker 14: But you know, I just don't see with evaluation of
Speaker 14: one hundred and fifty times earnings when you have Microsoft, Nvidia,
Speaker 14: and Google and Meta all trading under let's say forty
Speaker 14: or thirty pes what's the justification for the valuation robots
Speaker 14: and a ROBOTAXI that doesn't really work.
Speaker 6: It just seems like there's a big disconnect here.
Speaker 14: And eventually this reckoning will come as the stock market
Speaker 14: ultimately does work these things out.
Speaker 6: So you know, I cost investors.
Speaker 14: There's going to be a cost at some time for
Speaker 14: all this, and it maybe hasn't happened yet. Even though
Speaker 14: the stock is down twenty five percent this year, you
Speaker 14: could easily see the stock drop in half if this continues.
Speaker 14: So I'm very concerned about the future of Tesla and
Speaker 14: for my shareholders. So that's why I'm a year and
Speaker 14: that's why I advocate on behalf of Tesla's shareholders.
Speaker 1: It's bloombag tech. You are looking at a live shot
Speaker 1: of the principle and check out the bloom mag Tech podcast.
Speaker 1: You'll find it on the terminal as well as online
Speaker 1: on Apple, Spotify and iHeart.
Speaker 6: This is bloombg.
Speaker 2: Time for the VC Spotlight and here with me is
Speaker 2: Mark Wigobba, managing director at jen Catalyst. You have something
Speaker 2: that's called roll up strategy, or rather AI enabled roll
Speaker 2: up strategy. So you say, we are a global investment firm,
Speaker 2: but we're also a global transformation firm.
Speaker 6: Yes, explain the strategy absolutely. Yeah.
Speaker 15: We're seeing AI having a huge potential in many industries
Speaker 15: such as legal, it call centers, hoy management, but these
Speaker 15: businesses are more traditionally services businesses. So what we're doing
Speaker 15: is we're backing teams that are enabling both services and
Speaker 15: software and we think that can be empowered by AI.
Speaker 2: Right, one of the portfolio companies or most recent investments
Speaker 2: is Udia. Correct and on the Facebook you say, well,
Speaker 2: is this a Harvey but it's not. The whole point
Speaker 2: is that it's kind of like back office help and
Speaker 2: AI makes it better.
Speaker 6: Absolutely.
Speaker 15: So with Udia, for example, it's really targeting the General Council,
Speaker 15: so the in house law firm versus the external law
Speaker 15: firm instead. And so Udia is a really powerful way
Speaker 15: to have services and software in one platform, really helping
Speaker 15: those in house legal teams versus third party law firms.
Speaker 1: It's a fascinating tactic in the way in which you
Speaker 1: are helping build create. How big is the creation portfolio?
Speaker 2: Now?
Speaker 1: How much money have you raised to put to work
Speaker 1: in this way.
Speaker 6: Yeah.
Speaker 15: General Catalysts raised eight billion dollars last year. The Creation
Speaker 15: Fund is a billion and a half. Of that, we're
Speaker 15: putting about half of the money into these hybrid AI
Speaker 15: native services plus software opportunities. So when we look at
Speaker 15: where the spend is, for example, in UDIA and in
Speaker 15: legal services, it's not necessarily in the software piece. A
Speaker 15: lot of the spend is on external third parties, and
Speaker 15: so can we bring in technology like AI software but
Speaker 15: also services pieces within the in house legal parties in
Speaker 15: order to really scale out their businesses.
Speaker 1: Under scale talent is needed, and I bring it back
Speaker 1: to some of the stories that we are talking about
Speaker 1: day in, day out of the megacat names and the
Speaker 1: fight for talent and how expensive it has become. How
Speaker 1: are you sourcing those want to be entrepreneurs who could
Speaker 1: be being paid phenomenal amounts if they just jump ship
Speaker 1: from an Apple or an AI over to Meta right now.
Speaker 15: Absolutely, a lot of the founders we're backing on Creation
Speaker 15: want to create these hybrid services plus software AI native
Speaker 15: style companies. So they want to be the next generation
Speaker 15: Constellation Software or transdim or Danaher. They really want to
Speaker 15: build these large compounders that can grow in the public markets.
Speaker 15: And so we're seeing the answer is not just in
Speaker 15: giving a software solution, but it's really in doing a
Speaker 15: hybrid services plus software business. And so many of them
Speaker 15: want to create these compounders that they see growing quickly
Speaker 15: in the public markets but empowered by AI. And the
Speaker 15: way we looked at it is we looked at over
Speaker 15: seventy industries and we found in ten of them AI
Speaker 15: software could automate over thirty percent of tasks. So those
Speaker 15: are the ten industries that we've been going after in
Speaker 15: order to actually buy out these companies and improve their
Speaker 15: operations so they can take on more revenue and they
Speaker 15: can have more business. So for us, this is really
Speaker 15: an AI growth story. How do we get AI software
Speaker 15: in the hands of these compound founders who can provide
Speaker 15: both software and service businesses and really grow and compound
Speaker 15: traditional accounting firms, traditional IT HIA management companies, really getting
Speaker 15: this AI native software and automation in the hands of
Speaker 15: these businesses.
Speaker 2: Mark Over the years, we're very used to seeing general
Speaker 2: catalyst flush left leading rounds or partnering very high up
Speaker 2: in the cap table, and all kinds of rounds, But
Speaker 2: it's competitive out there.
Speaker 6: Absolutely. It is the roll up.
Speaker 2: Strategy a point of difference because you know, as far
Speaker 2: as I can tell, founders right now have their pick
Speaker 2: when it comes to term sheets and who they might
Speaker 2: take capital from. Capital is almost like commoditized in some sense.
Speaker 15: Absolutely, it's an extremely busy time in venture and in
Speaker 15: private equity. So what we've been thinking about is what
Speaker 15: are the most ways to help and support a founder,
Speaker 15: And we really do think of General Catalyst that is
Speaker 15: our mantra.
Speaker 6: So we're helping incubate companies.
Speaker 15: We're helping companies buy out their distribution and the data
Speaker 15: they need to grow, which is the role up strategy.
Speaker 15: We're helping folks on customer acquisition with our CVF fund,
Speaker 15: We're incubating businesses in house. So General Catalyst is really
Speaker 15: working to find the most ways to partner with founders,
Speaker 15: and we think this AI needive trend is a really
Speaker 15: great way to do it. For the first time, there's
Speaker 15: an opportunity to actually buy out your client list and
Speaker 15: in doing so buy the data needed to have a
Speaker 15: better AI native solutions, whether that's for nursing, whether that's
Speaker 15: for call centers, whether that's for joy managers, actually owning
Speaker 15: the data and the distribution is extremely important in refining
Speaker 15: the model and having the best product on market.
Speaker 2: We can go back to Udia or Crescendo's case studies,
Speaker 2: what is the biggest cost at the moment they are
Speaker 2: not relying on their own infrastructure or necessarily requiring the
Speaker 2: talent to build their own models, So what is it
Speaker 2: that's expensive for them?
Speaker 15: The hardest part in all of this is really the
Speaker 15: go to market. Because we're seeing on the AI side,
Speaker 15: whether it's Anthropic or Open Ai or Google, every three
Speaker 15: to six months we see amazing improvements in logic and
Speaker 15: reasoning and math. The hardest part of this AI revolution
Speaker 15: is really getting it into the hands of the end customers.
Speaker 6: It's the go to market piece.
Speaker 15: Many of these industries are fragmented, they're hard to sell into,
Speaker 15: they don't like buying technology products, and even if they
Speaker 15: buy them.
Speaker 6: It's very difficult to implement them.
Speaker 15: So for us, I mean, the hardest part is really
Speaker 15: the go to market and getting the distribution, and that's
Speaker 15: why the AI enabled roll up approach is solving in
Speaker 15: many ways the hardest part of kind of an AI transformation.
Speaker 1: Story not to get too ahead of ourselves. But as
Speaker 1: you are creating, as you're harnessing, as you're transforming, I'm
Speaker 1: sure you're thinking about an exit strategy and eventually are
Speaker 1: you thinking as a man who's done M and A
Speaker 1: in the past, or to go meet the company you
Speaker 1: found before? Is M and A the real path here
Speaker 1: for some of these roll ups, it.
Speaker 15: Could be one path, but really the north shining star
Speaker 15: is to have these compounders in.
Speaker 6: The public market.
Speaker 15: If you look at the performance of a trans dime,
Speaker 15: or you look at Constellation Software or even Berkshire Hathaway
Speaker 15: or others holding companies historically that have had better operations
Speaker 15: and can buy smaller businesses and then improve them, allow
Speaker 15: them to take on more clients, to grow, to become
Speaker 15: more profitable, and continue to compound businesses. That has been
Speaker 15: a really successful strategy in the public markets.
Speaker 6: We think there's a whole new.
Speaker 15: Generation of these public compounders that are being started right now,
Speaker 15: and a lot of the improvements they'll do will be
Speaker 15: around AI automation.
Speaker 6: Automating.
Speaker 15: We're basic tasks like customer support or data entry or
Speaker 15: translation or summarization or creation of presentations. All of these
Speaker 15: things are getting easier and easier to do in AI.
Speaker 15: So we're putting together teams that have industry experience and
Speaker 15: emine experience coupled with this AI technology experience to go
Speaker 15: and actually buy businesses, improve them, and grow them, and
Speaker 15: continue to compound. It's a very classic story in the
Speaker 15: public market, but with an AI twist we think will
Speaker 15: have a major impact.
Speaker 2: As Elon Musk reignites a feud with President Trump over
Speaker 2: the tax bill, what does that entail for the company's
Speaker 2: autonomous ambitions. It's just a week or so since it
Speaker 2: launched its Robotaxi service in Austin, Texas. Mandeep Sing of
Speaker 2: Bloomberg Intelligence, our in house analysts, is here with us.
Speaker 2: In my reporting, it's been quite clear Elon Musk aligned
Speaker 2: himself with the President and went into the White House
Speaker 2: to get certain things. One of them was to influence
Speaker 2: federal level regulation and frameworks robotaxis. How have you modeled
Speaker 2: for that, because you've been writing a lot recently about
Speaker 2: weimo in competition with Tesla's autonomous ambitions.
Speaker 16: Yeah. Look, I mean when you size the robotaxi right now,
Speaker 16: you know it's pretty small. Uber and Lyft do about
Speaker 16: eleven to twelve million rides a day. WEMO at this point,
Speaker 16: even with the growth that they have had this year
Speaker 16: is about thirteen million annual rides. So really the number
Speaker 16: of rights in a day contrast with thirteen million anual rides.
Speaker 6: So that's what we're talking about.
Speaker 4: And with Tesla entering the market, the hope was they
Speaker 4: can scale much faster because obviously they can make the
Speaker 4: vehicle at one third of the cost and.
Speaker 6: A WAYO vehicle.
Speaker 4: But now I think getting those safety approval city by city,
Speaker 4: that's what's taken WEMO so long in terms of ramping
Speaker 4: across the five cities, and I think it'll be hard
Speaker 4: for Tesla to ramp up. So based on our expectations,
Speaker 4: Robotaxi will have a much slower growth than the Hockey
Speaker 4: state growth we have seen with chat Epte or you know,
Speaker 4: on the LLM side, this is going to be a
Speaker 4: much smaller market at least.
Speaker 6: For the foreseeable future.
Speaker 1: So given Mandy the stock is down six straight days
Speaker 1: and with some one trillion, is that priced in briefly please?
Speaker 4: Well, not really, because the expectation is Tesla will be
Speaker 4: a big player, and that's always been part of their
Speaker 4: premium valuation, so clearly there is a scope for expectations
Speaker 4: being reset if this robotaxi rollout is expected to come
Speaker 4: out much lower than consensus expectations.
Speaker 1: No names saying a Bloomberg Intelligence thank you so much
Speaker 1: for the breakdown. Now that does it for this edition
Speaker 1: of Bloomberg Tech Ed.
Speaker 2: Don't forget to check out the podcast. You know where
Speaker 2: to find. It's on all the Bloomberg platforms and online
Speaker 2: on Apple, Spotify, and iHeart from London and San Francisco
Speaker 2: this week. This is has been and will continue to
Speaker 2: be Bloomberg Tech hmm