Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Well, Elon Musk is
Speaker 1: now the richest person on the planet.
Speaker 2: More than half the satellites in space are owned and
Speaker 2: controlled by one man.
Speaker 1: Well, he's a legitimate super genius.
Speaker 2: I mean legitimate. He says he's always voted for Democrats,
Speaker 2: but this year it will be different.
Speaker 1: He'll vote Republican.
Speaker 2: There is a reason the US government is so reliant
Speaker 2: on him.
Speaker 3: Alon Musk is a scam artist and he's done nothing.
Speaker 4: Anything he does, he's fascinating people.
Speaker 2: Welcome to elan Ink, Bloomberg's weekly podcast about Elon Musk.
Speaker 2: It's Tuesday, February eleventh. I'm your host, David Papadopoulos. Today
Speaker 2: we're talking about what else do Since we last gathered here,
Speaker 2: Musk and his band of doze zealots have burrowed themselves
Speaker 2: into many corners of the federal government as they frantically
Speaker 2: pursued their goal of gutting what they deem wasteful. The
Speaker 2: pushback from courses across the country's mounting. Now the question,
Speaker 2: or one of the questions, is will Musk and the
Speaker 2: Trump administration heed the judge's warnings. And then yesterday afternoon,
Speaker 2: a bombshell dropped. Elon was leading a group of investors
Speaker 2: offering ninety seven zero point four billion dollars to acquire
Speaker 2: open Ai. Is Elon, sirius? Is he just trolling? Is
Speaker 2: he messing with rival? Sam Altman, who should be noted,
Speaker 2: quickly rejected the bid. To talk Doze, we have Dana Hall. Hey,
Speaker 2: they're Dana Hey, David and Max Schaffkin. Max, how you doing?
Speaker 3: David?
Speaker 2: Hello, Hello, as well as Bloomberg political reporter Josh Wingrove
Speaker 2: dialing in from Washington. Josh, welcome, sir.
Speaker 5: Thank you for having me. It's an eventful time.
Speaker 2: Indeed it is. And then later on we will welcome
Speaker 2: back a special guest, a guy fast on his way
Speaker 2: to earning official friend of POD's status. New York Magazine
Speaker 2: tech writer John Herman to talk about what he calls
Speaker 2: the Elon bailout, as well as the latest chapter of
Speaker 2: the musk Open Ai saga. Okay, Josh, so we're going
Speaker 2: to start with you there. Doge is on the rampage.
Speaker 2: Bring our audience up to speed. It's all happening fast
Speaker 2: and furious. Give us the last seventy two hours in
Speaker 2: the Doge universe.
Speaker 5: I mean, they are trying to dive into everything, and
Speaker 5: Trump has given them license to hit every department, including Defense,
Speaker 5: including education, including Treasury, of course, where a lot of
Speaker 5: the news has been focused in this past week. But
Speaker 5: just to give you a scene, like every time a
Speaker 5: headline drops on something they're doing or something that makes
Speaker 5: Democrats heads explode or you know whatever, we all go
Speaker 5: to the White House for comment, and they've been sort
Speaker 5: of like dancing around it a little bit, but Trump
Speaker 5: himself consistently really leans in on this to give sort
Speaker 5: of license essentially to what Elon Musk is doing with.
Speaker 2: Though Josh really leans into what exactly.
Speaker 5: Trump is leaning into endorsing what Musk is doing. He
Speaker 5: putting in caveats here and there, but generally speaking, when
Speaker 5: we asked him about it, as was the case a
Speaker 5: couple of days ago, as he flew to the super Bowl,
Speaker 5: you know, he's sort of blessing he's standing by Elon,
Speaker 5: and every time Musks gets in Trump, you kind of wonder, oh,
Speaker 5: is this the moment where they're going to crack, because
Speaker 5: this is the moment where Trump is going to start
Speaker 5: distancing himself, and we just haven't had that happen right
Speaker 5: now on the contrary, Trump is really you know, stuck
Speaker 5: close to him. And like, for an example, on Sunday,
Speaker 5: Trump called us up to the front of the plane
Speaker 5: as he flew to the super Bowl. You know, he
Speaker 5: had a big sign that's a Gulf of America. We
Speaker 5: were over the Gulf of Now, I guess you're.
Speaker 2: The Gulf of America. Yeah, by the way, now to
Speaker 2: be seen on Google maps the Gulf of America.
Speaker 5: Max apparently, depending on where you are. But he, you know,
Speaker 5: held court for a while and talked about this, and
Speaker 5: in particular wandered even into the notion of treasuries being something.
Speaker 2: So just for a second for our audience, treasuries, US
Speaker 2: treasury bonds. This is the debt the United States government
Speaker 2: has taken on to finance. It's spending when it spends
Speaker 2: more than it takes it in revenue, which is the
Speaker 2: case in just about each and every year. And I
Speaker 2: think nowadays there's roughly about thirty trillion dollars give or
Speaker 2: take of US treasury debt out there.
Speaker 5: It's more than that now, but yeah, there's a lot
Speaker 5: of it out there. Thirty six I think it was
Speaker 5: maybe a more recent number. And the reporting until now
Speaker 5: is that the Musk and the Doge team at Treasury
Speaker 5: have been focusing on payments that Treasury is sending out,
Speaker 5: but Trump sort of suggested that it went even beyond that,
Speaker 5: that it wasn't just sending out payments that Trump's team
Speaker 5: thinks you shouldn't send out. That it was oh, maybe
Speaker 5: the debt that we have isn't as big as we
Speaker 5: thought it was. And that really raised eyebrows because then
Speaker 5: it raised the notion that we were talking not just
Speaker 5: about treasury payments, but that this sort of fraud hunt
Speaker 5: extended even towards the debt. And of course, the notion
Speaker 5: that the US might start, you know, wavering on whether
Speaker 5: it consider it's it's debt legit or not, you know,
Speaker 5: has the potential to rattle market. So that kind of
Speaker 5: that that that rattled things. I think, I think just
Speaker 5: overall on this, Trump is framing this as fraud to
Speaker 5: give it political license. He's saying that he was elected
Speaker 5: to get rid of fraud and that Elon is doing
Speaker 5: his work for him. So he's pushing back on the
Speaker 5: suggestion that Musk is you know, an unelected guy sort
Speaker 5: of marauding through the government, controlling with the keys to
Speaker 5: everything right. So Trump is not only standing by him,
Speaker 5: he's like writing in a blanket.
Speaker 2: He's saying, you know, Elon Musk is my guy. Max fraud,
Speaker 2: fraud everywhere.
Speaker 3: I don't know what he's talking about with the Treasury thing.
Speaker 4: My best guess is that it's like a calculation question.
Speaker 4: It's like it's like how they're going to decide to
Speaker 4: calculate the amount of debt or something like.
Speaker 2: That, Max, are redefaulting. Just tell me we're defaulting. I
Speaker 2: want to know.
Speaker 4: I think one of the reasons that they're talking about fraud,
Speaker 4: I mean, I think it's both because of who Elon is,
Speaker 4: but also politically right, Like a lot of the stuff
Speaker 4: that Elon is walking towards is super unpopular, and you know,
Speaker 4: whether it's like cutting NIH funding. You know, the NIH
Speaker 4: is a major cause of a lot of jobs and
Speaker 4: a lot of red states, and you can kind of
Speaker 4: go down all these charities that they were attacking. There
Speaker 4: are lots of things they're doing that voters, senators, congress
Speaker 4: people are not gonna like. So that's why they're keeping
Speaker 4: it focused on fraud.
Speaker 6: I think I would just like to remind the listeners
Speaker 6: that this whole idea of doge was Elon's idea. He
Speaker 6: proposed it to Trump on an audio spaces in August
Speaker 6: and basically pushed Trump to say yes. And so I
Speaker 6: get super frustrated when I see stories that are like
Speaker 6: Trump has tapped Musk to like lead an efficiency effort.
Speaker 6: This was Musk's plan.
Speaker 2: This is Musk tap Musk.
Speaker 3: Musk pitch this.
Speaker 6: Job for himself and has been given carte blanche from
Speaker 6: the executive from the administration to do what he's doing.
Speaker 6: Congress is totally flat flooted and has been completely supine
Speaker 6: and has rolled over and abdicate. I mean, the whole
Speaker 6: concept of separation of powers is being eroded. And now
Speaker 6: you're seeing must go after the judiciary whenever there's like
Speaker 6: a judge filing like a stay or a tro like
Speaker 6: Musk is basically calling out the judge on X. So
Speaker 6: like we're seeing like the whole concept of balance of
Speaker 6: power completely be eroded, and nothing is going to stop
Speaker 6: Elin at the moment as far as I can tell,
Speaker 6: and they are already signaling that they're not going to
Speaker 6: go along with what the judge says. So and to
Speaker 6: Josh's point, like the fact that Musk is doing this
Speaker 6: with this sort of widespread power that Trump is supporting him,
Speaker 6: and that Congress is sort of left flat footed kind
Speaker 6: of works in the administration's favor.
Speaker 2: So Josh on that point that Dana raises on this
Speaker 2: administration and Musk's Doze team challenging courts and clearly pushing
Speaker 2: through things that they know themselves are very much in
Speaker 2: a gray area of the law, and then also to
Speaker 2: a certain extent saying well, well, you know, we'll see
Speaker 2: how much we abide by what the court says. Presidents
Speaker 2: going back for years have pushed the boundaries of the
Speaker 2: law and then seeing how the courts reacted. Just how
Speaker 2: different is this time around.
Speaker 5: I mean, Trump, with every day, you know, challenges, at
Speaker 5: the very least sort of the perceived limits of the
Speaker 5: power of the presidency. He really believes in consolidating power.
Speaker 5: Even his sort of go to move these first two
Speaker 5: weeks executive orders, those are usually pretty flimsy. I mean,
Speaker 5: they're sometimes not worth the paper that they're printed on,
Speaker 5: but Trump is wielding them like royal decrees and people
Speaker 5: are bound to that. So he kind of has kind
Speaker 5: of shifted the Overton window on what like an executive
Speaker 5: order is and therefore what presidential authority is, and so
Speaker 5: Elon continues to test that. I think there are a
Speaker 5: couple things to watch for. Number one is do the
Speaker 5: secretaries start pushing back, right because he's mucking around in
Speaker 5: the back rooms of the Department of the Treasury, the
Speaker 5: Department of Education, the Department of whatever. And as long
Speaker 5: as the secretaries are buying into that, you know, no problem.
Speaker 5: But if they start pushing back against that, then you
Speaker 5: start to get power struggles and power struggles. Of course,
Speaker 5: we're a defining feature of the first Trump administration so
Speaker 5: far sort of you know, kept down in the second
Speaker 5: Trump administration. But if that starts happening, you know, who
Speaker 5: knows how that's going to shake out.
Speaker 4: Scott Bessen is one that I yeah, Treasure Sector last week,
Speaker 4: you know, Musk they had this whole you know, back
Speaker 4: and forth over does he have read only access? And
Speaker 4: and Trump was saying, you know, Trump and the Trump
Speaker 4: administration was essentially saying that, look, he can he can
Speaker 4: look at the data, but he can't do anything with it.
Speaker 3: And then musco'es on Twitter and says there are still.
Speaker 4: Billions of payments in fraud going through the Treasury payment system,
Speaker 4: which kind of sounds like an attack on Scott Bessen, right,
Speaker 4: You're you're sort of saying like, uh, Scott Besson doesn't
Speaker 4: have control all this. And again, this thing that Josh
Speaker 4: brought up earlier, it's some idea that maybe some of
Speaker 4: the bonds that we have or you know, we don't
Speaker 4: have to pay the debt on or whatever like. It
Speaker 4: definitely seems like that is undermining part of what Scott
Speaker 4: Besen has to do, and you could imagine that leading
Speaker 4: to conflict.
Speaker 2: Now, Dana, as Josh was intimating, Musk and his crew
Speaker 2: are about to head into the Department of Defense. They
Speaker 2: are there already. The stakes once they're in there, for
Speaker 2: any number of reasons, suddenly really ratchet up quite a bit.
Speaker 6: Yeah, and that's because the Defense Department is a huge
Speaker 6: part of our overall budget, and because Musk is a
Speaker 6: defense contractor, so SpaceX has a lot of contracts with
Speaker 6: the Department of Defense for both rocket launches and starlink,
Speaker 6: and he has said quite publicly, including during a conversation
Speaker 6: at West Point, that the future of warfare is AI
Speaker 6: and drones. Well, guess who has an AI company? Elon Musk,
Speaker 6: Guess who has you know, makes military hardware and drones.
Speaker 6: You know his buddies at and Drurro. So you're going
Speaker 6: to see a real shift in terms of the way
Speaker 6: the Pentagon does procurement, and Elon and his friends have
Speaker 6: an enormous amount of gain.
Speaker 3: There attempted shift.
Speaker 4: Oh for sure that the it's just going to actually
Speaker 4: happen because again, same thing I brought up about the
Speaker 4: NIH and I've said this before on this podcast, these
Speaker 4: defense contractors are major job creators. I don't know that
Speaker 4: Musk is going to have as much rope as people
Speaker 4: think he will.
Speaker 3: Cutting the defense.
Speaker 4: Well, again because of the conflicts of interest, and because
Speaker 4: we're talking about jobs.
Speaker 2: I think going after USAID and it's roughly what Josh,
Speaker 2: forty billion dollars year budget that largely of course goes
Speaker 2: overseas to people who do not vote in US elections,
Speaker 2: is one thing. Going after large contracts for the military
Speaker 2: industrial complex I think is an entirely different thing. The
Speaker 2: Secretary Defense Pete has Get says he welcomes Elon with
Speaker 2: open arms. That one is going to be very interesting
Speaker 2: to see how it plays out now, Josh, but they're
Speaker 2: on the ground in DC. What is the mood on
Speaker 2: the Democrat side, my understanding is their phone lines are
Speaker 2: blowing up from irate constituents saying, damn it, do something.
Speaker 2: What's the sense there? Where do they stand in forming
Speaker 2: a credible opposition to Musk and Trump.
Speaker 5: They're in a really tough spot because conservatives are mostly
Speaker 5: delighting in what Musk is doing. I think that that's
Speaker 5: an important factor to look at here. If people think
Speaker 5: that there's some sort of pressure building up on Trump
Speaker 5: within the Republican Party, within the broader conservative movement, it's
Speaker 5: just not there. And so for Democrats when they go
Speaker 5: and do some you know, stunt or whatever, trying to
Speaker 5: like go into these agencies that are being dismantled, the
Speaker 5: problem is that that only sort of feeds the perception
Speaker 5: that is delighting conservatives who are wanting Trump to really
Speaker 5: make structural changes to the broader state. And so that
Speaker 5: is really the trap that they're in. Not only are Democrats,
Speaker 5: of course, you know, kind of rudderless right now, but
Speaker 5: more broadly, they don't really have any tools that would
Speaker 5: be effective to sort of crank up the pressure on this,
Speaker 5: whether it's at USA AID or others. The blowback that
Speaker 5: Max alluded to is going to come more from when
Speaker 5: they start hitting red states, for instance, when banks gets
Speaker 5: hit by funding cuts.
Speaker 2: Max. That is a good point that according to a
Speaker 2: CBS poll they came out. I believe on Monday, Donald
Speaker 2: Trump's approval numbers are up since his inauguration. I believe
Speaker 2: Americans a greater number of Americans now approve of him
Speaker 2: and what he's doing visa v from before.
Speaker 4: It's true, although Elon Musk's numbers are not haven't looked
Speaker 4: so good. There's been a couple of poles I haven't looked.
Speaker 4: I don't know if anything's come out this week, but
Speaker 4: last week there were two poles, you know, showing that
Speaker 4: Musk's numbers had fallen since the election pretty badly. So
Speaker 4: I think Josh is right, like I think, and what
Speaker 4: you're saying, like picking on these kind of soft targets
Speaker 4: like USAID or whatever, like the pain is going to
Speaker 4: come later.
Speaker 3: The pain for Trump politically is you've.
Speaker 4: Made a lot of promises and like, what have you
Speaker 4: actually done except for so a lot of chaos, right,
Speaker 4: Like fifty billion dollars is not that too much money
Speaker 4: in the scheme of things and a lot of these
Speaker 4: things that Musk has done either. They sound very dramatic,
Speaker 4: and there's been a real cost for the civil service,
Speaker 4: but it's not clear that he's gonna come away from
Speaker 4: this having achieved a whole lot. And then if you
Speaker 4: put that on top of you know, creating chaos in
Speaker 4: red states or or pissing off voters, I mean, you know,
Speaker 4: we are seeing some activation of grassroots Democrats.
Speaker 2: This reminds me actually that we're still playing out. I
Speaker 2: believe as we speak is the Musk team's offer of
Speaker 2: buyouts to all federal employees. I think we're still I
Speaker 2: think that's been paused by a judge. Yeah.
Speaker 4: Yeah, And so far they've got sixty thousand people. They
Speaker 4: get one hundred thousand retirements each year, so like that
Speaker 4: is not a big number, that's a small number. And
Speaker 4: so again like tons of talk, tons of chaos, pain
Speaker 4: in a very few specific areas. But I don't know
Speaker 4: that he's actually done all that much despite the crisis
Speaker 4: that that Dennis.
Speaker 2: Well, one thing that he has done, and with this
Speaker 2: we will wrap here on this first segment, is you know,
Speaker 2: I was dead wrong. I thought the first thing those
Speaker 2: was going after was daylight savings and that they were
Speaker 2: going to make it permanent. And I'm a little disappointed
Speaker 2: that they have not gone pennies. You got it a penny.
Speaker 2: Whoever's pushing back on the death of the penny, just
Speaker 2: zip it, man, I mean, the penny's gotta go it.
Speaker 2: The penny is truly absurd. And after they're done with
Speaker 2: the penny, Max, they can go for the nickel. Max
Speaker 2: Bold bold.
Speaker 3: Talk from Bobdopolis over here.
Speaker 2: Wow, when you're done Nix and the penny, Nicks the nickel,
Speaker 2: Josh Wingrove, you are going to be a or You
Speaker 2: already are a very very busy man, and you will
Speaker 2: continue to be so and as a result, we will
Speaker 2: have you back on again soon.
Speaker 5: Thank you all for having me. I'll keep letting you
Speaker 5: know when we see him in the White House.
Speaker 2: Okay, we're now joined by John Herman, New York Magazine
Speaker 2: tech writer. John. Welcome back to the show. Thanks for
Speaker 2: having me. Okay, John, So you were last on a
Speaker 2: year ago. Man, we were so young and innocent.
Speaker 3: Porn. We were talking about porn.
Speaker 2: We're just you know, and god, what do we you know?
Speaker 2: What do we know? We had no idea what we
Speaker 2: were in store for, and Musk was really if you
Speaker 2: think about it, he was essentially a nobody, right right,
Speaker 2: And now every time you shake the magic eight ball
Speaker 2: and see something goes on in the world, it just
Speaker 2: comes up Musk. Now, John, you have written a piece
Speaker 2: recently where you lay out what you believe to be
Speaker 2: the bailout, as you call it, that Elon is getting
Speaker 2: as he jumps into the government and does all these things,
Speaker 2: and is he buddies up with with Trump. I got
Speaker 2: to tell you just off the bat, I'm going and
Speaker 2: I'm a little dubious on this bailout thing here, So
Speaker 2: convince me of it.
Speaker 1: Yeah, I mean, as a term it's a little provocative,
Speaker 1: But I do think this is a strange time, confusing time,
Speaker 1: and it's helpful to sort of back up and try to,
Speaker 1: you know, in the spirit of the show, look at
Speaker 1: you know, Elon Musk first principles and try to figure
Speaker 1: out what's going on. On one hand, you've got someone
Speaker 1: who is very open about like attempting to mingle his
Speaker 1: own business interests in ways that are often unconventional and
Speaker 1: in some cases like challenged in court. So his portfolio
Speaker 1: of companies is like used, you know, to support one
Speaker 1: another in ways that are you know, he has a
Speaker 1: sort of fundamental belief that he his success is sort
Speaker 1: of fused with the fate of the world, that he
Speaker 1: is sort of destined to save the world. He says
Speaker 1: this all the time. You can, you know, doubt his sincerity,
Speaker 1: but in my view, it's it's you know, real in
Speaker 1: some sense, he's really like, you know, he believes that
Speaker 1: what he's doing is this, and I think.
Speaker 2: The three of us here, Max, Dan and I all
Speaker 2: very much believe that he does.
Speaker 1: So we've got those first principles. Now, what happens if
Speaker 1: you add the United States government to that portfolio of companies.
Speaker 1: In the view of someone who thinks this way, you
Speaker 1: start to think about how the government helps Musk, and
Speaker 1: he tends to talk about more how how Musk can
Speaker 1: sort of change the government. So you've already talked on
Speaker 1: this show about the obvious overlap with companies like SpaceX,
Speaker 1: which has enormous contracts with different agencies and different parts
Speaker 1: of the government. And and we'll have even more through
Speaker 1: through Starlink. We can talk about Tesla, various subsidies things.
Speaker 2: So, how does Musk's relationship with this administration, his very
Speaker 2: cozy relationship with this government help for instance, X right.
Speaker 1: So SpaceX is an obvious contractor X is like further
Speaker 1: away from what we think of as you know, the
Speaker 1: normal operations of government. But it's Elon Musk's probably most
Speaker 1: distressed asset, not his most financially important. He is using
Speaker 1: it now to sort of like you know, command his
Speaker 1: incursion into government, so it's become very very visible, but
Speaker 1: also like his his proximity to power has real value
Speaker 1: to X. He is currently in the process of suing
Speaker 1: advertisers for what he says is an illegal boycott of
Speaker 1: X right, which is a lawsuit that I think a
Speaker 1: lot of people didn't take very seriously when he first
Speaker 1: filed it. Well it's certainly unconventioned, certainly, but he amended
Speaker 1: it recently. And some of these advertisers are coming back
Speaker 1: because you know, maybe they were content to ignore Elon
Speaker 1: Musk before he was the president's right hand man.
Speaker 2: John John, I will just warn you that the last
Speaker 2: person who said on this podcast that that the advertisers
Speaker 2: were coming back got blown up by Max, So you know, no,
Speaker 2: they're not that coming back is coming back. Mean, Hey,
Speaker 2: here's two chits, here's two tokens. I'll put on your
Speaker 2: board to you know, to appease mister Musk. Are they
Speaker 2: really coming.
Speaker 1: Back the numbers, I mean, we don't know the full numbers,
Speaker 1: but they are signaling that they're, you know, more open
Speaker 1: to coming back than they were.
Speaker 2: That's one piece.
Speaker 1: Another piece is that AX is sort of becoming a
Speaker 1: little bit like truth social This extension of the government
Speaker 1: communications program the the NTSB, for example, announced in a
Speaker 1: in a post on X that was where they were
Speaker 1: going to be messaging about recent air disasters, which is,
Speaker 1: you know, a small thing but also potentially a sign
Speaker 1: of like a bigger thing.
Speaker 2: Right. This is an extension of the Max Chafkin theory
Speaker 2: that that's what X has become. It's become the media
Speaker 2: ar you're just I mean.
Speaker 4: But this is like the least important of Musks companies
Speaker 4: that are benefiting so went from the dynamic that you
Speaker 4: that's like it's like saying, well, how is Musks video
Speaker 4: game playing? How is the Trump administration benefiting his his
Speaker 4: status on path of exile? Like it actually might be baby,
Speaker 4: but like honestly spaceds Tesla are way bigger companies with so.
Speaker 3: Much more to game.
Speaker 1: Twitter's is the least important, but it's like really visible
Speaker 1: and really like I think a lot of people pointed
Speaker 1: to Musk's takeover of Twitter as like a playbook, which
Speaker 1: I think is useful, but you sort of extend that
Speaker 1: a little bit further and you're like, okay, how does
Speaker 1: it flow the other way? And there are these real
Speaker 1: benefits to being someone who everyone is a little bit
Speaker 1: scared of. The advertisers, maybe come back, People have to
Speaker 1: use your platform, people have to pay attention to your platform.
Speaker 2: Tell us though, how this is a net positive for Tesla,
Speaker 2: because that's not screamingly obvious.
Speaker 1: No, the Tesla situation is weird. I feel like that
Speaker 1: statement holds true pretty much at any time that you
Speaker 1: talk about Tesla's stock. For example, it's this weird company
Speaker 1: in that it's a major automaker that sells a ton
Speaker 1: of cars and has real financials. It is also, to
Speaker 1: a great degree kind of a mean stock, and that
Speaker 1: depends on Elon Musk's reputation promises about the future, some
Speaker 1: of which are kind of crazy and some of which
Speaker 1: just seem a little premature. You know, it's a mixture
Speaker 1: of like can he deliver?
Speaker 2: Will he deliver?
Speaker 5: Is this made up?
Speaker 2: Now?
Speaker 1: In addition to that, you've got this this you know,
Speaker 1: sort of implied connection to the establishment in the biggest
Speaker 1: possible sense. So not only does Elon Musk say, okay,
Speaker 1: listen to me, I know we had a bad quarter,
Speaker 1: which they did. Don't worry about our cars. Think about
Speaker 1: our cyber taxis, think about our humanoid robots that we're
Speaker 1: working on, think about AI, think about these things with
Speaker 1: you know, vague future dates, and you know, we're we're
Speaker 1: doing this cycle again. But also what if and think
Speaker 1: about this, investors, what if I now can't lose What
Speaker 1: if I am like the supreme government connected.
Speaker 6: There's some clear examples where Tesla is really well positioned.
Speaker 6: So example, one tariffs. Tesla does it make cars in Mexico.
Speaker 6: They make all of their cars that they sell in
Speaker 6: the United States in the United States, so they are
Speaker 6: sort of like insulated from tariffs compared to Ford and GM.
Speaker 6: The second thing is the Heavy Program, So like the
Speaker 6: Trump administration just funded just basically froze or halted all
Speaker 6: of the payments that go out to the states to
Speaker 6: build a network of high speed electric vehicle chargers. Halting
Speaker 6: those payments really disrupts all the plans that these states
Speaker 6: had to kind of build out a charging network, but
Speaker 6: it really helps Tesla, which actually already has a charging
Speaker 6: network that a lot of other automakers use. And so
Speaker 6: in small ways you're seeing the administration do things that
Speaker 6: do benefit Tesla. And what's you know, what I try
Speaker 6: to remind people is like, you know, Elon has very
Speaker 6: smartly played both sides of the aisle, because like Tesla
Speaker 6: got enormous benefit from the Inflation Reduction Act and now
Speaker 6: Trump is like walking back a lot of that. But
Speaker 6: it's it's it's like they're not walking back forty five X,
Speaker 6: which is the manufacturing text credit. So like Tesla wins
Speaker 6: no matter what, like they are going to be okay.
Speaker 6: The biggest risk to Tesla right now is just the
Speaker 6: brand and of Elon's craziness and the sales plummet in
Speaker 6: markets like Europe and the US.
Speaker 2: Yeah, and to that point, and max I in my
Speaker 2: absence last week, I do appreciate you guys talking about
Speaker 2: the collapse in sales in California, which were followed then
Speaker 2: by a collapse in sales in Germany and I think
Speaker 2: France that happened around the same time. And these are
Speaker 2: big numbers, down sixty percent or so all that, I
Speaker 2: guess certainly does seem to square with a drop and
Speaker 2: Musk's approval rating. And I guess if right now there
Speaker 2: are any checks or leverage that must detractors have on him,
Speaker 2: maybe this is the extent of it.
Speaker 4: The sales you mean, yeah, yeah, I just to want
Speaker 4: to reiterate one thing Danna said, which is like really important,
Speaker 4: Like it would be awesome for Musk if he could
Speaker 4: just like get the Defense Department to hand him like
Speaker 4: a ten billion dollar check for something, or to like
Speaker 4: just have the federal government like pay him directly, you
Speaker 4: buy some Starlink satellites by a Mars mission, make have
Speaker 4: Tesla as the new designer of military jeeps or some
Speaker 4: crazy stuff like. That'd be great, But that stuff is
Speaker 4: going to be more difficult, it's politically difficult. But just
Speaker 4: stopping stuff benefits his companies enormously, Like if he is
Speaker 4: able to like pull up the ladder behind him on
Speaker 4: tax credits, or if he is able to for evs,
Speaker 4: if he is able to slow down other providers of
Speaker 4: rural broadband, which he appears to be doing, like all
Speaker 4: these things with Starlink, all these things like help him
Speaker 4: and so he's gaining just by like cutting things, and
Speaker 4: we haven't even started talking about writing checks.
Speaker 2: I do think addition by some truck, I do.
Speaker 4: Think the thing that John is saying that is really
Speaker 4: smart is that people see Elon as this like, you know,
Speaker 4: he's this amazing capitalist. He has all this influence. He's
Speaker 4: the world's richest man, but he is vulnerable in certain ways.
Speaker 4: And like one of the reasons he did this with
Speaker 4: Trump is because I think he had vulnerabilities and and
Speaker 4: like those vulnerabilities continue today, and and by it's not
Speaker 4: just the sales thing, it's by by making himself a
Speaker 4: political force, by by allying this closely with Donald Trump,
Speaker 4: a guy who is, yeah, his pull numbers have gone
Speaker 4: up a little bit, but he's not that popular. Musk
Speaker 4: is eroding some of the things that have made him
Speaker 4: very powerful. And you're seeing that in the stock price, right,
Speaker 4: Like Tesla stock has fallen by like eighty bucks over
Speaker 4: the last few days, you.
Speaker 2: Know, since the inauguration. I was looking at this this morning.
Speaker 2: Twelve of the sixteen trading sessions since the inauguration, Tesla
Speaker 2: stock is down. It's not plunging each and every day,
Speaker 2: but it's down and it's down. Yeah, it's now down
Speaker 2: about seventy percent.
Speaker 4: I do think that the traders who have bid this
Speaker 4: stock up for no particularly good reason other than the
Speaker 4: fact that Elon has proximity toward Trump are thinking, like
Speaker 4: John says, hey, heads, he wins, tails, he wins whatever,
Speaker 4: but you are seeing more reasons to doubt him, and
Speaker 4: like that is what is driving the stock down.
Speaker 2: Okay, Dana Elon Musk says he and some other investors
Speaker 2: want to purchase open Ai. Tell us about this and
Speaker 2: where it currently stands.
Speaker 6: So I guess they made a bid for open Ai,
Speaker 6: and Sam Alton immediately responded and was like, open Ai
Speaker 6: is not for sale. So I don't know where this
Speaker 6: currently stands. I just think that like Elon is doing
Speaker 6: what Elon does, which is to sort of be like
Speaker 6: the big bully pulpit and in the middle of, you know,
Speaker 6: upending the American government, He's like trying to go on
Speaker 6: his m and a spree and and Sam is like, no, like,
Speaker 6: we're not.
Speaker 2: For sale, Max, is this a legit attempt? You're right
Speaker 2: furiously scrouching down.
Speaker 4: I was making sort of like a matrix on like
Speaker 4: how realistic is this acquisition offer?
Speaker 3: For Elon Musk. So like on one side you have.
Speaker 4: Threatening to buy Coca Cola to put the cocaine back
Speaker 4: in it, like clearly a joke offer. And then on
Speaker 4: the other side you have buying Solar City, which was
Speaker 4: like clearly a serious offer.
Speaker 2: Yes, Twitter swimming somewhere.
Speaker 4: In the middle because it was a joke, it seemed like,
Speaker 4: but then it became a serious thing, buying Liverpool Football Club,
Speaker 4: which has he has kind of joked about.
Speaker 3: I'd say, close to the Coca Cola thing.
Speaker 4: This feels like, I'd say, smack in the middle of
Speaker 4: this chart because it's not a serious.
Speaker 2: So to the right of Liverpool, to the.
Speaker 4: Right of if this, yeah, on the left, farthest on
Speaker 4: the left is the least serious.
Speaker 3: Farthest on the right, that's right dead center.
Speaker 4: And I say that because it's not a serious offer
Speaker 4: in the in terms of the size, this is like a.
Speaker 2: Low ball nine, wildly undervalues the company.
Speaker 4: But I do think he could create chaos for Sam
Speaker 4: Altman if he goes to the negotiating table, right and like,
Speaker 4: to me, this feels like, you know, in poker terms,
Speaker 4: like big stack bully, like if you have an insane
Speaker 4: amount of money you can, you and negotiations can do
Speaker 4: all sorts of things. You can sort of push people
Speaker 4: away from negotiating table, you can.
Speaker 3: So like, maybe he's just trying.
Speaker 2: To cause on the other side, isn't isn't Microsoft on
Speaker 2: the other side alongside Sam Altman.
Speaker 3: Yeah, but I think they have a pretty good stack too. No,
Speaker 3: I don't think.
Speaker 4: That Microsoft is necessarily as willing to raise hundred hundreds
Speaker 4: of billions of dollars to what buy out Microsoft.
Speaker 3: I mean, the Microsoft has already bet a lot of
Speaker 3: money on this company.
Speaker 4: So, like, I don't like again, like, I don't know,
Speaker 4: I don't know how, I don't know what open ass
Speaker 4: finances look like.
Speaker 3: This seems like a low ball offer.
Speaker 4: But I would have to think that if he started
Speaker 4: negotiating with them, he could create problems as sam Altman
Speaker 4: tries to raise, you know, additional funding and sam Altman
Speaker 4: is trying to negotiate an equity stake for himself as
Speaker 4: part of this conversion to a.
Speaker 2: Yeah, we actually have a clip of Sam Altman and
Speaker 2: some things he said to us I'm Bloomberg TV earlier today.
Speaker 3: Do you think Musk's approach then is from a position
Speaker 3: of insecurity about x Ayon probably his whole.
Speaker 2: Life is from a position of insecurity. I feel for
Speaker 2: the guy. I feel fair, I do. Actually I don't
Speaker 2: think he's like a happy person.
Speaker 1: I do feel for him.
Speaker 2: Okay, so John Herman, hit me with your theory on
Speaker 2: all this.
Speaker 1: I mean, with the caveat that none of this is
Speaker 1: inevitable and this could all go catastrophically wrong for a
Speaker 1: musk in a variety of different ways. He is I
Speaker 1: think like making this bid from a position of what
Speaker 1: he feels is strength again because of his sort of
Speaker 1: like incorporation with the government. So if we return to
Speaker 1: the sort of like bailout framework here, Xai is is
Speaker 1: by a lot of metrics doing very well. They're developing
Speaker 1: very quickly. They're catching up really.
Speaker 2: Fast, spending a bunch of money, Valuations climbing.
Speaker 1: Sure, and he's able to raise a bunch of money
Speaker 1: for Xai for you know whatever. But it's not like
Speaker 1: it's making any money. It's still catching up. It doesn't
Speaker 1: have customers, really, it's not in the conversation with like programmers.
Speaker 2: Does it not have the US government as a customer.
Speaker 2: That's the thing.
Speaker 1: Now, it might you know what, if you know open
Speaker 1: Ai the clear leader in this moment in the you know,
Speaker 1: sort of loosely defined AI industry that is getting its
Speaker 1: first big federal contracts, that is developing all these tools
Speaker 1: for major, major potential contracts. Here, what if they suddenly
Speaker 1: had a competitor that had, like right a first refusal
Speaker 1: for basically every federal federal contract that had the term
Speaker 1: artificial intelligence in it. And you talk about those intruding
Speaker 1: into all these different agencies and showing up this very
Speaker 1: small team claiming to use AI to do analysis to
Speaker 1: streamline operations. That's all kind of made up right now.
Speaker 1: They don't have the tools to really do that, but
Speaker 1: it is a pretty clear telegraphing of a plan to
Speaker 1: say like, hey, yeah, now we know everything, we have
Speaker 1: all the data, We are better positioned than anyone, and
Speaker 1: are politically connected for you know, a market that basically
Speaker 1: doesn't exist yet. Why don't we you know, why wouldn't
Speaker 1: we win this? I don't mean to spell this out
Speaker 1: as like a complicated plot, but it's more just like
Speaker 1: if you're Elon Musk, if you are this sort of
Speaker 1: like intuitive power seeking person, you're in the position you're in,
Speaker 1: You're like, all right, I've got an AI company. I
Speaker 1: hate Sam Altman. You know, I'm going to try to
Speaker 1: buy them, and I'm going to take every federal contract
Speaker 1: while I'm on this run.
Speaker 6: And by the way, I'm going to announce that I'm
Speaker 6: trying to buy them on the first day of this
Speaker 6: like Global AI summer in France, when like everyone is
Speaker 6: focused on AI and when everyone is like and Sam
Speaker 6: Altman is in France, and I'm just going to like
Speaker 6: put out this like news that I'm trying to buy
Speaker 6: his company while he's at this conference abroad. It's like,
Speaker 6: that's like a classic move to grab the news cycle.
Speaker 2: Yeah, and stick it to Sam and the process while
Speaker 2: he's trying.
Speaker 4: To raise money at a valuation that's four x right,
Speaker 4: undermining the fundraise too right.
Speaker 2: And that, by the way, beyond Sam Altman telling Bloomberg
Speaker 2: TV that Elon is just a very insecure man. He
Speaker 2: also his main theory was Elon is just messing with us.
Speaker 2: Elon is trying to throw sand in the gears here
Speaker 2: as we try to achieve certain things, and and we're
Speaker 2: going to do our darkness not to let him achieve it. Now, Max,
Speaker 2: when I guess I ask you this, you our feud
Speaker 2: watcher of all feud watchers. And I guess I just
Speaker 2: wonder if you strip out you just strip out Elon
Speaker 2: Musk versus the entire Democratic Party and all those who
Speaker 2: support the Democrats. So we're throwing that out as a feud.
Speaker 2: I guess of all the old feuds that Elon used
Speaker 2: to have and that used to watch and plot on
Speaker 2: your on your matrix, number one is this number one?
Speaker 2: Is it the only one that's left?
Speaker 3: You know? It does feel that way a little bit, right, David.
Speaker 4: And and it's it's such a juicy one too, because
Speaker 4: Sam Altman and Elon kind of have some things in
Speaker 4: common here, right. They're both these like guys who have
Speaker 4: these grandiose make these grandiose statements. You know, Sam Altman
Speaker 4: is talking about, Oh, we're gonna have agi, it's gonna
Speaker 4: cure cancer or whatever.
Speaker 3: You're just ask the AI to do something.
Speaker 4: It's like a lot of he's like writing a lot
Speaker 4: of checks with his mouth that he can't necessarily cash,
Speaker 4: you know, exactly like Elon Musk. And it does have
Speaker 4: this quality of these two like masterful self promoters suddenly colliding,
Speaker 4: which I think makes it great. I have been trying
Speaker 4: to just racking my brain trying to figure out ninety
Speaker 4: seven point four?
Speaker 3: Did I get that right?
Speaker 2: Now? That's right?
Speaker 3: Like what's that number?
Speaker 4: Like where's the twenty? Is it ninety seven point four two?
Speaker 4: Because otherwise, like I don't know where he got this number,
Speaker 4: Like where's the four to twenty joke?
Speaker 3: Where's the sixty nine jokes? I want to know where
Speaker 3: the number came from?
Speaker 2: Will I'm I bet you by the time we record
Speaker 2: next week, someone will have cracked the code.
Speaker 1: Or we'll get one of those delayed announcements like the
Speaker 1: Fork in the Road sculpture. Ye know, we'll get committee.
Speaker 2: Yeah, we'll get something like that. All right. So John,
Speaker 2: not to put you on the spot here, but you
Speaker 2: you heard you listened to Max beause he laid out
Speaker 2: the metrics of Elon Musk and his bids and how
Speaker 2: serious or not serious they are. When we have you
Speaker 2: back on a year from now, mister Hermann, is Elon
Speaker 2: Musk the owner of Open Ai? Yes or no?
Speaker 1: I'm going to say probably not, but no, that's that's
Speaker 1: my that's my guess. We'll have bigger things.
Speaker 2: To worry about. I see, Okay, we'll be talking about that.
Speaker 6: I'm gonna say no.
Speaker 4: No, Max, I mean I want to say yes to
Speaker 4: be different, but no, no, it's not gonna happen.
Speaker 2: No, no, and no. So it's totally happening, you know.
Speaker 2: Oh you know, by the way, Max, we almost forgot here. Uh,
Speaker 2: the biggest news of them all right, if you're really
Speaker 2: I mean, I can't believe we're leaving it for last.
Speaker 2: Elon has a new name on his x account.
Speaker 3: Oh god, I don't even want to say Harry Balls.
Speaker 3: It's Harry Balls. It's his name, okay Ball. This is
Speaker 3: like the most powerful person in the world.
Speaker 2: This is what he's doing with his time. There are
Speaker 2: a lot of you know, a lot of this.
Speaker 1: A lot of my feel probably this whole bailout, can
Speaker 1: see comes from the feeling of having to look at
Speaker 1: Twitter again and having to see Elon Musk post all
Speaker 1: the time, having to acknowledge the jokes, having to say
Speaker 1: doge the meme from twenty eleven or twenty twelve. Maybe
Speaker 1: I saw this, It's maybe I should sure go to
Speaker 1: a therapist about this, but you know.
Speaker 3: No, it is.
Speaker 2: It is true. Every time I read the word, I
Speaker 2: read doge, and I yeah, each tree one just thinks
Speaker 2: God this is become. This is all so absurd. I
Speaker 2: mean this was just a a meme, coin joke. That
Speaker 2: is now, before.
Speaker 1: That, ten years before that, it was just a meme, right,
Speaker 1: there were people writing about how it was worn out
Speaker 1: in twenty twelve, you know, just a cute little thing.
Speaker 1: And here we are, here, we.
Speaker 2: Are dedicating our lives to it. This is our lives work,
Speaker 2: mister Chaffkin, John, thank you for joining us. Thanks for
Speaker 2: having me back. Max, Dana, Thanks as always, you've brought
Speaker 2: me down, David.
Speaker 3: But it's great to be with you.
Speaker 6: Always a pleasure.
Speaker 2: This episode was produced by Stacy Wang Anna Masa Rakus
Speaker 2: is our editor, and Rayhan Harmanci our senior editor. Blake
Speaker 2: Maples handles engineering, and Dave Purcell fact checks. Our supervising
Speaker 2: producer is Magnus Henricson. The elon Ing theme is written
Speaker 2: and performed by Taka Yasuzawa and Alex Sugiira. Brendan Francis
Speaker 2: Newnham is our executive producer, and Sage Bauman is the
Speaker 2: head of Bloomberg Podcasts. A big thanks to our supporters
Speaker 2: Joe Weber and Brad Stone. I'm David Papadopoulos. If you
Speaker 2: have a minute, rate and review our show. It'll help
Speaker 2: other listeners find us. See you next week.